It is that time of the year where we are supposed to make a resolution for the oncoming year. As business people, it is a good opportunity to reflect on where our businesses are at and what we can do to improve commercial outcomes. As the new year marches on, many will be gearing up for a busy 2014. How you organise labour will be a key issue.
I must confess to being always surprised when clients come to see me regarding an issue with an employee to discover no signed written employment agreement was put in place. Naturally, we are all very busy at the moment, so I am not criticising fellow employers, but I will endeavour to highlight in this article some of the lost opportunities.
Since 2000, all employees must be on a signed written employment agreement. Failing to do so could attract a fine up to $20,000 per employee, if you are trading as a company, or $10,000 if a sole trader or partnership.
But, putting aside the risk of a fine, as an employer you miss out on some clear benefits and advantages.
First, in order for an employee to be held to the maximum period of 90 days for raising a personal grievance, there must be a written explanation concerning the resolution of employment relationship problems. No written agreement, means no time limit on raising a PG.
Secondly, his Honour Chief Judge Colgan, in the case of Smith v. Stokes Valley Pharmacy(2009) Ltd made clear that in order for a 90 day trial period to be valid, it was necessary that there be written provisions that complied with the requirements of the Employment Relations Act 2000. No written employment agreement, no 90 day trial period.
Thirdly, without a written agreement, you will lose the protections of a robust written confidentiality clause. Remember more and more our biggest asset is knowledge based. Although, the Courts are carefully scrutinising what the parties have agreed in terms of confidentiality, an inference could be made that the absence of a express written confidentiality means an employer does not treat confidentiality as essential.
Fourthly, in order for a fixed term agreement to be valid, the agreement must, amongst other things, be in writing. With the rebuild of our city requiring project based hiring, the ability to hire on a fixed term can be essential.
Fifthly, as you will all be aware, the fact you hire a worker as a contractor is not conclusive that the worker is not by law an employee. The Courts will apply a number of tests to ascertain the true legal nature of the relationship and may in the end determine that a worker is an employee despite signing a contractor agreement. The existence of a signed written agreement is still a factor that is looked at and can be persuasive in certain circumstances. Ensuring a worker signs a contractor agreement is the first in minimising the risk the worker later claims they are an employee.
Finally, having a signed written agreement will allow you to ensure all that is agreed between you and your employees is documented and should eliminate any disputes. Any changes should also be documented.
So, a good resolution for 2014 is to make sure all workers are or will be party to written agreements which reflect their terms of employment, if employed, or hirage, if independently contracted.