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Contracts are an important part of any business engagement. If your contracts aren’t clear and your conduct doesn’t reflect the terms that you agreed to, then as an employer, you may find yourself dealing with conflicts and misunderstandings.
On the other hand, when done properly, contracts can help avoid that very scenario.
This is especially important when it comes to successive fixed term contracts.
When used correctly, successive fixed term contracts can be useful for both parties. However, if you’re not careful, then you could end up breaching employment laws and creating disputes with your employees.
It’s wise to learn everything you can about successive fixed term contracts so you can get the best out of them. Keep reading to learn more.
What Is A Successive Fixed Term Contract?
A successive fixed term contract is a temporary contract that is offered on an ongoing basis.
Let’s break the terms down a little more here.
Successive refers to something that occurs consecutively or regularly.
A fixed term contract is a legal agreement that lasts for a temporary period. For example, if a fixed term contract is for a 6 month period, the contract will end after 6 months unless the parties agree to extend the contract or enter into a new one.
Therefore, a successive fixed term contract is when two or more parties agree to continuously enter into temporary legal agreements, usually one after the other.
| Example Jordan owns a construction company where certain projects require the help of an electrician. In order to complete these tasks, Jordan hires Jamie, a talented electrician, under fixed term contracts for each job where Jamie’s services are required. Recently, a lot of projects have required Jamie’s knowledge and skill set causing Jordan to hire Jamie under a successive fixed term contract. |
Successive Fixed Term Employment Contracts
In a ‘gig economy’, fixed term contracts can provide employers and employees with an opportunity of equal value.
For employees, they are able to work on a job for a short period of time before moving on and employers are able to hire someone specifically to get a task done.
If the relationship is good and both parties continue to have a need for one another, they can continue to work together. This is usually carried out as a ‘successive fixed term contract’.
However, in order for this arrangement to work, there needs to be equal value to both parties.
This isn’t always the case. Fixed term contracts can put employees in an unfair position. The New Zealand government has recognised this and made an effort to try and combat the legal issues that arise with fixed term employment contracts.
What Does The Employment Relations Act Say?
There are certain situations where employees are most likely to be in a vulnerable position with their employers, which is why employment legislation exists.
The Employment Relations Act 2000 is the primary New Zealand legislation that aims to protect the rights of employees in the workforce.
For example, some employers may use fixed term contracts to avoid fulfilling certain employer obligations or payment obligations under New Zealand employment laws.
The main matters the Act covers includes:
- Renewal and extension
- Offences and penalties for the misuse of fixed term contracts
- Multiple uses of a fixed term contract
Essentially, the Act regulates the use of fixed term contracts in a number of circumstances. The regulations and exceptions can be confusing.
It’s always safe to get in touch with an Employment Lawyer and receive advice that is tailored specifically to your business.
Get A Lawyer To Review Your Contracts
One of the most important factors when it comes to a fixed term contract is clearly establishing the terms of the contract, including the date it is expected to end with the other party. Furthermore, the way you conduct yourself and your business operations can also impact the legitimacy of your agreement, so you need to make sure your actions and processes reflect this.
The first step to avoiding any unwanted disagreements with your employees is getting a strong Employment Contract in place. Whether or not you’re thinking of hiring employees for a fixed term, it’s important that the legal agreement you have in place is clear, concise and in line with Employment Relations Act obligations.
This is why it’s best to get legal experts to take a look at and draft your contracts for you. They’ll be able to pick up on things that you might not identify, and tailor the contract in a way that can protect your best interests.
Get in touch with our Specialist Employment Lawyers today!
Key Takeaways
Successive fixed terms contracts can be a useful way to hire an employee for their skill set, however, it’s important to be aware of any legal duties you may have. To summarise what we’ve discussed:
- Fixed term contracts are agreements with a specific end date
- Successive fixed term contracts refer to consistent legal agreements over a period of time i.e getting one right after another has ended
- Successive fixed term contracts are commonly found in employment arrangements
- The Employment Relations Act in New Zealand regulates contracts of these nature to protect employees
- Getting your contracts drafted by a legal expert and seeking the advice of an expert in employment law can help avoid disagreements and conflict down the line!
If you would like a consultation on your business’ agreements and contracts, you can reach us at 0800 002 184 or [email protected] for a free, no-obligations chat.
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