Before the Employment Relationship begins

1. Do I need to have a written Employment Agreement?

Yes, all employees must have a written Employment Agreement which must comply with the requirements of the Employment Relations Act.  For example, both the hours of work and the place of work must be specified in the Employment Agreement.

2. Can I use a trial period?

The 90 day trial period can be used by all employers provided they have not employed the employee before (i.e. they must be a new employee).  The wording of the trial period must be compliant with the Act and the agreement must be signed before the employment relationship begins.

3. What can I ask in an interview?

You can ask almost anything you want.  However, you must be careful to not ask anything which might indicate that you will discriminate against an applicant on prohibited grounds.  Such prohibited grounds of discrimination include age, gender, race, religious beliefs, and family status.  You are able to confirm, however, that somebody is physically capable of performing the job.

4. Should I check references?

Short answer – Yes.  In our view the most helpful question to ask in checking references is “would you employ this person again?”

During the Employment Relationship

5. What are my requirements with respect to pay?

You must pay at least the minimum wage, which is reviewed in April every year.  If you provide board and lodging up to 15% of the Employee’s pay can be deducted.  However, you can only deduct this if you have the correct clause in your Employment Agreement.  This deductions clause stems from the Wages Protection Act 1983 and must provide for an Employee to give written consent to deduction.  The deduction clause can, in some circumstances, be used if you overpay your employee by mistake.

6. What are my requirements in terms of leave?

In terms of annual leave, under statute every employee is entitled to 4 weeks annual leave per annum, although employers can naturally provide more if they so wish.

As of 2012 employees can also request to cash up one week of their annual leave, although employers have the right to refuse such a request.  Employers can require employees to take their annual leave with 14 days’ notice should the parties not be able to agree on when annual leave is taken.

In terms of sick leave, employees are entitled under statute to 5 days per year having completed six months service.  Of course more than the statutory minimum is sometimes provided by employers.  Employees are entitled to take that leave when either they are sick, or to care for dependents who are sick.  Employers may request evidence of illness after three days’ absence, or after one day’s absence should there be a good reason for requesting a medical certificate (and that proof is requested as soon as possible).  Note that if an employer requires a medical certificate after one day’s absence, the employer must meet the cost of getting it.

In terms of public holidays, there are 11 per year and employees must be paid if the public holiday falls on a day which would have ordinarily been a working day.  If an employee is required to work on a public holiday they must be paid time-and-a-half for any hours worked and given an alternative day off, that day to be agreed between the parties.  It can be agreed between employers and employees to observe the public holiday on a different day.

7. What policies should I have in place?

It is advisable to have policies in place with respect to the following:

1. Health and Safety
2. Use of Internet and Computers
3. Smoking
4. If employees have work vehicles there should also be policies with respect to these.

8. How do I monitor my Employee’s performance?

An employee’s performance should be reviewed each year.  Most Employment Agreements provide for this.  Performance reviews are often, but not always, attached to pay reviews and these must be undertaken in good faith.  Performance review should be meaningful and not just a box-ticking exercise.

If an employee is performing poorly they must take steps to try and lift their performance by providing them with adequate help before taking any further action.  This may involve regular meetings and further training.

Ending the Employment Relationship

9. If an Employee resigns what are my obligations?

An Employee must serve out their notice period unless you choose to waive that notice.  Following termination of the employment the employee must abide by any confidentiality provisions together with any restraints of trade, including non-competition and non-solicitation of clients or other employees.

10. What are the grounds on which employers may terminate the employment Relationship?

One ground is redundancy following a restructure.  A restructure can only be undertaken for genuine business reason.  The correct process must be followed which involves consulting with the Employee before making any decisions.  Consultation must be in a meaningful way.

The employer can terminate the Employment Agreement for the employee’s breach of the Employment Agreement which generally arises from serious misconduct or sustained poor performance.  Strict process must be followed and you are advised to talk to your lawyer prior to making any decisions.

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For More Information please contact:

Nick Mason, Pitt & Moore

+64 3 5457897
nick.mason@pittandmoore.co.nz