New Individual Employment Agreement Templates online

Over the last few weeks Clubs New Zealand has had its Individual Employment Agreements re-written to bring them up to date with the recent law changes.

There are now two individual employment agreement templates available for members to download in the websites resource room.

There is also an icon Guide to the Individual Employment Agreement (32 kB) which can be used in relation to these new templates. 

It must be remembered that these documents are templates and designed as a guide only, they must be adapted accordingly to reflect the agreement between the club and each individual employee.

Overview of the Employment Law Changes;

90-day trial periods

All employers are now able to implement 90-day trial periods for NEW employees.

The benefit of a valid trial period is that if an employee is given notice of dismissal during the trail period, he or she cannot bring a personal grievance for unjustified dismissal.  However, in order to be effective the trial period must be carefully recorded in writing in the employment agreement.  There are some specific requirements regarding the wording of the trial provision and it is recommended that specific advice be taken to ensure that these requirements are met, and that the immunity from dismissal grievances will apply.

There are some important points that employers need to bear in mind when using trial periods to ensure that these requirements are met, and that the immunity from dismissal grevances will apply.

  1. In order to be valid the trial period must commence at the beginning of the employee's employment.  It must be recorded in writing and it is important that the employment agreement (which includes the trial provision) is signed and returned BEFORE the employee commences work.
  2. The duty of good faith applies during trial periods.  This includes the obligatiosn imposed by the statutory duty of good faith to be "responsive and communicative" and "active and constructive".  In general, this will require the employer to provide training and guidance during the trial period.  If the employee is failing to meet the expected standards then, as a matter of good faith, the employer would be expected to clearly communicate any concerns.  Failure to comply with these requirements would not necessarily invalidate a trial provision, but may give rise to an unjustified disadvantage claim (which an employee is not precluded from bringing).
  3. Provided that notice is given before expiry of the trial period, the actual termination can take effect after that date.  It is important to accurately calculate the 90-day period as an employer dismissing an employee on the 91st day would not be immune from an unjustified dismissal claim.
  4. If the employee is dismissed in reliance on a trial period and requests the reason for this, then the employer is required to give an explanation.  The employee would be entitled to at least a brief explanation of why the employer considered the trial period had not been a success. There is no obligation to provide the reasons for termination in writing.

Medical Certificates:

Prior to 1 April 2011 employers were only entitled to request a medical certificate (or other proof of illness or injury) from an employee in limited circumstances. Proof could only be requested if the employer had reasonable grounds to suspect the illness was not genuine, or after three consecutive days of absence (whether or not these are all working days). This has now changed so that an employer is entitled to request proof of sickness or injury over three consecutive calendar days if:*

  1. the employer advises the employee that proof is required as soon as possible, and
  2. the employer agrees to meet the reasonable expenses of obtaining the proof.

This will be a useful tool for employers in dealing with frequent intermittent absence or regular Monday or Friday absences. Many employment agreements specifically refer to the former legislative right to request a medical certificate after three days. It will therefore be important for employers to update their employment agreements to ensure that they can take advantage of the law change.

Average daily pay:

Calculating payment for a public holiday, sick leave or bereavement leave was previously based on an employee's "relevant daily pay" (RDP). A new alternative method of calculating payment is now based on an employee's "average daily pay". This formula can be utilised where it is not possible or practicable to determine an employee's RDP or where the employee's daily pay varies within the pay period where the holiday or leave falls due.

Some employment agreements make specific reference to RDP. Depending on the wording of the relevant clause, an amendment to incorporate reference to the alternative calculation of average daily pay is advisable.

Alternative holidays:

Where an employee works on a public holiday that would otherwise be a working day, he or she is entitled to an alternative paid holiday. The law previously allowed an employee to have the final say on when he or she would take an alternative holiday when agreement could not be reached with the employer. This has now changed so that, where agreement cannot be reached, the employer may determine on a reasonable basis when the holiday will be taken by giving 14 days' notice to the employee.

If an employer's employment agreement refers to the previous position, it should be updated so that the employer may exercise the right to determine when the holiday will be taken in circumstances when agreement cannot be reached.

Cashing up annual leave and transfer of public holidays:

Employees are now able to make the following requests of their employer:

  1.  that up to one week of annual holidays each year be exchanged for cash
  2.  that observance of a public holiday be transferred to another day.

Employers may wish to implement a policy that sets out how requests of this nature will be dealt with when they arise. One permissible option is to simply have a policy not to consider such requests. This would reduce compliance costs associated with having to respond to numerous requests.

Bonuses - discretionary payments:

Purely discretionary payments made by an employer to an employee can be excluded from calculations to determine leave payments. The definition of "discretionary payments" has been clarified in the recent law changes as:

  1. meaning a payment that an employer is not bound by the employee's employment agreement to pay
  2. but does not include a payment that the employer is bound by the employee's employment agreement to pay even though the actual amount is discretionary, or where the employee must meet certain eligibility criteria before becoming entitled to the payment.

Employers would be wise to review bonus or incentive scheme policies and/or relevant terms and conditions of employment to ascertain whether payments are in fact discretionary or non-discretionary.

If payments are incorrectly classified as discretionary payments, and consequently excluded from leave calculations, an employee could potentially claim up to six years of any shortfall in holiday pay.

Disciplinary policy:

In determining whether a dismissal (or other action by an employer) is fair and reasonable, the Employment Relations Act 2000 now requires the Employment Court or Employment Relations Authority to consider the following:

  1. Whether, having regard to the resources available to the employer, the employer sufficiently investigated the allegations
  2. Whether the employer raised the concerns that it had with the employee
  3. Whether the employer gave the employee a reasonable opportunity to respond
  4. Whether the employer genuinely considered the employee's explanation (if any) in relation to the allegations.

These matters merely set out some guidance on what a fair and reasonable process will consist of and the Authority or court has the discretion to consider any other factors it considers relevant. If a disciplinary process is set out in a policy document or in an employee's employment agreement then this should be reviewed to ensure that the above basic requirements are adequately covered.

Requirement to retain individual employment agreements:

From 1 July 2011 employers will be required to retain signed copies of all individual employment agreements and/or any other documentation recording the current terms and conditions of employment. If an agreement has been provided to an employee, but he or she has not signed it, then a copy of this must be retained. This will apply to all employment relationships, whether entered into before or after the commencement date.

This amendment comes into force three months after the other amendments to allow an opportunity for employers to ensure that up-to-date and legally compliant employment agreements are in place for all employees. Given that penalties for non-compliance of the Employment Relations Act will be doubled (up to $10,000 for individuals and $20,000 for companies), employers should make the most of this grace period to check that they hold current employment agreements/terms and conditions of employment for all employees. The Employment Relations Act specifies that an unsigned employment agreement is not to be taken as the employee's employment agreement if he or she has not agreed to its terms. Best practice, and the easiest way to show an employee's agreement to the terms, is to ensure that a signed individual employment agreement is returned before the employee commences work.

Summary:

To summarise, a recommended "to do" list that employers may wish to consider to ensure legislative compliance and a smooth transition to the new legislative regime is:

  1. Review and update employment agreement templates
  2. Ensure that signed copies of individual employment agreements are held for all employees
  3. Review any disciplinary policy
  4. Consider introducing policies for dealing with requests for cashing up annual leave and transfer of public holidays
  5. Review bonus and incentive schemes to ensure that payments are correctly classified as discretionary or non-discretionary.

(SOURCE: Rebecca Rendle, Solicitor, Kiely Thompson Caisley, New Zealand Employers Bulletin, Bulletin 3, 1 April 2011, CCH)

If you have any questions please contact National Office on 0800 4 CLUBS or contact one of our preferred employee advocates