What is the Point of Employment Contracts?

What is the Point of Employment Contracts?

You’ve likely heard the phrase ‘Good fences make good neighbours’. Well here at Borrie we believe that good employment contracts make for good employment relationships. So, What is the Point of Employment Contracts? Let’s find out!

It’s important to note that in New Zealand employment contracts are a legal requirement, and failure to ensure a written employment agreement may result in a $1000 fine, per employee without one. You can find this and more on the NZ Governments Employment website.

Even still, the most important reason for an employment contract is that it ensures that both employee and employer are on the same page with what is expected of both parties. This agreement clearly spells out their rights and responsibilities at work, and can protect either party should there be a breach of contract.

These agreements clearly spell out employee entitlements such as –

  • Hours and location of work and pay rate
  • Leave Entitlements, including but not limited to Annual Leave, Sick Leave, Bereavement etc
  • Rest and meal breaks
  • Overtime and/or commission
  • Use of company vehicles and/or mobile phones

Each agreement should be tailored to the employee, ensuring that all needs and reasonable expectations are met. This gives employees a sense of job security and feeling valued.

By the same token, these agreements clearly spell out the employers reasonable expectations and requirements for their employees. The agreement will have responsibilities/requirements such as –

  • Hours and location of work
  • Duties to be carried out
  • Confidentiality clauses
  • Conflict of interest(s)
  • When deductions are needed to be taken from pay
  • Health and Safety requirements etc

Agreements will also have dispute resolution remedies should any issues arise. Most disputes between employers and employees arise from ambiguity over expectations, rather than malicious intent. A well written agreement can help minimise this ambiguity and prevent most disputes before they arise.

There are a number of Mandatory clauses that must be included in these agreements.

There have been recent changes to the employment legislation, the latest being the update to Sick Leave, Domestic Violence and Bereavement Leave. Contracts should be updated every few years or when important changes are made. Please contact us if you would like help and advice on your employment agreements. We also draft employment contracts for you!

Our ‘What is the point of Employment Contracts?’ not enough?

The better you understand your business and your financials, the easier it will be to make more money and ultimately achieve your goals.   We have developed comprehensive resources to enable business owners to fully understand and interpret their numbers.  Need more help? Join our free webinars on financial awareness coaching or talk to us about personalised financial awareness coaching.  Contact Samantha for a call, zoom or meet on 06 871 0793.



Related Links:

Are you earning enough?

Five Ways to Improve Cashflow

7 Ways to Save on Accounting Fees


Feeling out of the loop? Click here to subscribe to the IRD to stay up to date.