What’s The Purpose Of An Employment Contract?

When you hire a new employee, how important is it to have an employment agreement in place? As an employer in New Zealand, you have certain legal obligations that you need to uphold. Having a proper employment agreement is often essential to meeting these legal obligations, so it is important to understand how employment agreements fit into your business.

Who Are Your Employees & What Are Your Obligations?

Your team of employees makes your business possible. Your obligations to your employees depend on their type of employment – whether casual, part-time, or full-time – as well as a range of employment regulations. Not only is protecting employee entitlements a legal requirement, it is also important for maintaining a positive and productive workplace.

When Do You Need An Employment Agreement?

You should enter into an employment agreement with each of your employees when you bring them on board.

What Should An Employment Agreement Include?

A good agreement will cover the basics such as salary and leave, as well as other important matters such as probation periods, ownership of intellectual property, confidentiality, and termination rights.

You may also want to include restraint and/or non-solicitation clauses, to restrict the ability of employees to leave and compete with your business by stealing your customers and staff. It’s worth noting that New Zealand employment law requires that any restraint of trade must be reasonable and protect legitimate business interests. If you have any specific requirements, it’s worth getting a lawyer to draft your employment agreements.

What Else Do You Need To Consider?

As well as having an employment agreement in place, there are some other important considerations to keep in mind when hiring employees in New Zealand.

• Employment Relations Act 2000
• Holidays Act 2003
• Minimum Wage Act 1983
• Kiwisaver
• Pay slips
• Record Keeping
• PAYE Tax
• Work Health and Safety (WHS)
• Workplace policies and procedures
• Employment Information Statement

What If I’m Hiring Executive Level Employees?

If you’re thinking of hiring employees at an executive level, you might need a specific Executive-Level Employment Agreement.

Where the stakes are higher with executive employees, you might want to add extra clauses to protect your interests as an employer (especially if that employee has special conditions or requests that they want reflected in their contract).

Generally, this kind of employment agreement might cover:

• Conflicts of interest: this could define what your employee is and isn’t able to do (such as work with other businesses in the same industry).
• Management decisions: you might want to add in extra terms around when this C-level employee might be allowed to make certain management decisions.
• Competitor Notices: if your employee resigns with the intention of working with a competitor business, you can request that they disclose full details to allow a proper transition and hand-over to protect your business.

Need Help With An Employment Agreement?

Having properly drafted employment agreements is really important for your business – it will protect your company from exposing IP and confidential information, and it helps you comply with your legal obligations as an employer in New Zealand.

At Sprintlaw, we have a team of experienced lawyers who can assist you with drafting or reviewing an employment agreement for your business. Get in contact with one of our consultants for a no-obligation chat on how we can help you put together an employment agreement and help with any other legal issues your business may have. Call us on 0800 002 184.

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