Fixed Term Employment Agreements: Understanding the Basics in New Zealand
In New Zealand, employers have two main types of employment agreements to choose from: permanent and fixed term. While permanent employment is open-ended and has no fixed end date, fixed term employment has a specific start and end date, usually tied to a project or a particular duration. In this article, we will take a closer look at fixed term employment agreements in New Zealand and what employees and employers need to consider when using them.
Why Use Fixed Term Employment Agreements?
Fixed-term employment agreements can be useful for a range of situations, including:
– Covering a temporary need: If an employer has a temporary need for staff, such as to cover maternity leave or a busy season, a fixed-term employment agreement can be a useful way to provide staff without committing to permanent employment.
– Project work: If an employer has a specific project that requires a team with a defined set of skills and a clear timeline, a fixed-term employment agreement can be a good fit.
– Trial periods: In some cases, an employer may use a fixed-term employment agreement as a trial period to assess a new employee`s suitability for a permanent role.
What to Include in a Fixed Term Employment Agreement
Like any employment agreement, a fixed-term employment agreement should include all the necessary terms and conditions of the employment relationship. Specifically, it should cover:
– Start and end dates: The agreement should clearly define the period of employment, including the start and end dates. If the employee`s work is dependent on a specific project or event, you should be clear about what happens if that project is delayed or cancelled.
– Hours of work and pay: The agreement should specify the employee`s expected hours of work and outline their pay, including any overtime or penalty rates where applicable.
– Duties and responsibilities: The agreement should outline the employee`s duties and responsibilities, and be as specific as possible. This can help to avoid misunderstandings or disputes later on.
– Termination: The agreement should outline the circumstances under which either party can terminate the employment early, including what notice is required. It should also cover what happens at the end of the employment period, such as any entitlements to redundancy pay or other benefits.
Fixed Term Employment Agreements and the Law
In New Zealand, fixed-term employment agreements are subject to the same legal requirements as permanent employment agreements. This means that employers must meet the minimum employment standards set out in the Employment Relations Act 2000, including:
– Minimum wages: Employers must pay their employees at least the minimum wage set by the government.
– Holidays and leave: Employees are entitled to public holidays, annual leave, sick leave, and bereavement leave, as set out in the Holidays Act 2003.
– Health and safety: Employers have a duty to provide a safe working environment for their employees and to take steps to prevent harm.
Employers should also be aware that they cannot use fixed-term employment agreements to avoid their obligations under the law. For example, if an employer consistently hires employees on short-term fixed-term agreements to avoid giving them permanent employee status and entitlements, they may be breaching the law.
Fixed-term employment agreements can be a useful tool for employers who have temporary staffing needs or specific projects to complete. However, employers must ensure that they comply with New Zealand`s legal requirements and provide their employees with all the entitlements they are entitled to. If you are considering using fixed-term employment agreements in your business, it is a good idea to seek professional advice to ensure you are meeting your obligations and protecting your interests.