Across Canterbury, many businesses are planning to increase their teams to meet the current demand. Most indicators are suggesting increased economic activity during 2013 (and beyond), and businesses have several options on how it can structure its workforce.
First, the business can employ staff. As soon as a person has accepted an offer of employment, even before their start date, they are deemed to be employed. The law is clear; all employees must have their terms of employment contained in a signed written employment agreement. A failure to do so can attract a penalty usually payable to the Crown. A failure to have a written employment agreement also nullifies any attempt at having a 90-day trial period, fixed term agreement or restricting an employee to raising personal grievances within 90 days of a grievance.
An employee can be hired on a permanent full time or part-time basis. This is to be contrasted with employing an employee on a casual basis. Although describing the the nature of employment in the employment agreement is essential, the law is concerned with the real nature of the employment relationship. Thus, an employee described as a casual employee in their employment agreement, might actually be in reality a permanent part-time employee. Casual employment arises where there is no regularity of hours of employment or any guarantee of continued employment. An employer can terminate a casual employment relationship by not offering further employment. But, too often a casual employee ends up working regular and guaranteed shifts after a period of time. In those cases, that employee may have become a permanent employee with the ramification that the employer loses the right to terminate the employment relationship by not offering further work. A number of retail companies successfully employ a mixture of permanent and casual employees. The casual employees are usually contacted to cover for permanent staff on holidays or sick and on big retail days.
An employee can also be employed on a fixed term basis. This means the employer and employee agree that the employment will expire on a certain date. The rules are strict and include that there must be a valid and fair reason for the fixed term, which reason must be stipulated in the employment agreement. A fair and valid reason would be if an employee is hired to work on a specific project with a finite date. A number of project management and engineering companies hire consultants on a fixed term for certain project work.
It is prudent that all employers employ people on a 90-day trial period. The requirements are strict and putting a new employee on a 90-day trial period does not exempt the employer from treating the employee in good faith and acting reasonably.
Secondly, a business can elect to engage contractors instead of employing staff. Although essential, it is not sufficient to have a written contract stipulating that the parties be engaged in an independent contract relationship. Indeed, the Courts have developed a number of tests designed to ascertain the real economic and legal nature of the legal relationship between the parties. The Courts have, from time to time, determined that parties to a written independent contract were actually parties to an employment relationship. However, many building companies and in particular those associated with the rebuild successfully and correctly engage contractors to undertake aspects of a contract. For instance, a building company might engage a plasterer to do the plastering work for a house repair. That plasterer would be self employed and offering his or her services to a number of building companies.
In summary, there are a number of options available to businesses as they plan how to meet demand from the rebuild. Depending on the nature of their business, there is an opportunity to think smart and consider how best to structure their workforce. For some businesses, employing employees on a permanent full or part-time basis with a 90-day trial period will be more than adequate. For others, it may be the case that the workforce will comprise a mix of permanent and casual employees, some employees on fixed term agreements, and contractors engaged to provide specific services.
Please note this article should not be read or relied on as a substitute to specialist legal advice.