The offer of employment to employees

So you've advertised a position, read through numerous CV's, created a short list of candidates, decided on the person you want, told them they have got the job, start on Monday, right?  Wrong.

To offer employment to the successful candidate, the Employment Relations Act 2000 requires that you:

• provide a written employment agreement;
• inform the prospective employee that he/she may take independent advice;
• give the employee a reasonable opportunity to seek advice; and
• consider any issues raised by the employee and respond to those issues.

It is no longer lawful to provide employment agreements after employment has commenced or provide a 'take it or leave it' offer of employment.
The Employment Relations Act sets out a number of minimum requirements that must be included within any employment agreement.  These include:

• the names of the employee and employer concerned;
• a description of the work to be performed;
• the location of the work;
• the hours of work;
• the wages or salary;
• an explanation of the services available for the resolution of employment relationship problems; and
• an employee protection provision relating to the possible transfer of employees if the business is sold.

The Holidays Act 2003 has two additional requirements that must be recorded in an employment agreement.  These are provisions:

• that time and a half (or more) will be paid for any work carried out on a statutory holiday; and
• setting out where employees can get more information regarding their holiday entitlements.

These are the absolute basic statutory requirements which must be included in any employment agreement.

There are additional requirements that must be recorded in writing in certain circumstances.  If the employment agreement is to include a probationary period, then that must be set out in writing.  If the employment agreement is to be for a fixed term then this will only be lawful if it is for genuine reasons based on reasonable grounds, the employment agreement sets out the way in which employment will end and the reason for it ending in that way.
If the agreement is to be a collective agreement, which can only be negotiated with a registered union, it must also contain:

• a coverage clause;
• a variation clause, and
• a date, or identifiable event, on which the agreement will expire.

Okay, so you've got the basics.  You've sorted out that the offer of employment needs to include the whole employment agreement, you need to tell the employee that he/she can take independent advice and provide an opportunity for that to occur, and you need to negotiate over any issues raised by the employee.  You also know the basics that will need to go into an employment agreement - what next?  Is there any special magic to how you write it up?  What else should you include in an employment agreement?  Is there any particular form or layout that is better than the other?

An employment agreement is just a written contract with some statutory requirements.  There is no particular magic to drafting clauses as long as you remember to keep the clauses clear and consistent.  You are highly unlikely to end up in a dispute about a clause if its meaning is clear.  However, you must ensure, when compiling an employment agreement or adding to an employment agreement, that the clauses are consistent with each other.  It is more common than human resource professionals and unions would like to admit that new clauses inserted into employment agreements, including collective employment agreements, are inconsistent with provisions that already exist elsewhere within the agreement.

A prime example of this is the recent requirement to include an employee protection provision to deal with the sale of a business.  Many employers, and in some cases unions where there have been collectives, have simply provided an employee protection provision as an addendum or inserted a provision as a variation.

If the agreement already contains a redundancy provision then it is likely that these existing provisions will conflict with an employee protection provision as they are both likely to deal with redundancy on the sale of the business.  These possible conflicts can apply to all sorts of situations with an employment agreement. 
How complicated does an employment agreement need to be?  An employment agreement can be a very simple letter that just records the minimum requirements.  It can also be a comprehensive document setting out in detail the obligations of the parties and how the relationship is intended to work. 

In simple terms, the less that is recorded within an employment agreement the more the parties' obligations are open to dispute.  If an employment agreement is more comprehensive then it is less likely the parties' obligations will be disputed - as long as they are clear.  It is a lot easier to take action to hold an employee accountable for his/her conduct or performance when the obligations and accountabilities are clear.

Is there such a thing as a standard employment agreement?  No, certainly not in the sense that some third party can simply provide an off-the-shelf document that is going to work for your business.  Even within your business, if you are thinking of rolling out an identical document internally, it is a good idea to proceed with caution.

What every employer should do is focus on the business and what it hopes to achieve now and in the future.  Employers usually enter into supplier contracts and purchase plant, machinery and equipment on that basis.  However, when it comes to employment, all too often there is a focus only on now, and "any old employment agreement will do". 

It is possible, and advisable, to have a number of standard clauses which can be grouped together in a form where they can be general terms of employment that apply to all employees.  It is becoming increasingly common to separate out the clauses that are likely to be specific to individual employees from those that will apply generally to all employees.  There is also a trend towards having specific terms and general terms in separate documents which, together, make up each employee's employment agreement. 

This makes providing an offer of employment easier and also administering employment issues easier.  The only place you then need to look for the clauses that solely apply to a specific employee is within that employee's specific terms.  This is a far more straightforward task than searching through comprehensive, but almost identical, employment agreements to find the aspects that may have changed for any particular individual. 
Examples of clauses that may be grouped together under general terms are clauses that record provisions such as:

• holidays;
• parental leave;
• confidential information and employment property;
• conflicts of interest;
• general obligations of employee and employer;
• termination provisions (but think carefully about notice);
• hours of work (but, as with notice, be careful);
• redundancy and employee protection provisions, and
• provisions for resolution of employment relationship problems. 

The list of matters that you may wish to include in general terms is endless.  Again, the focus should be what are the clauses that are going to be common in your business.
What you need to separate out for employee's specific terms include:

• salary;
• commission and other remuneration, even if it is just the amount and the general terms record how and when payments are made; and
• the employee's actual position;

There are other clauses that you may consider appropriate for a specific individual or particular position including:

• different future or flexible hours of work;
• a restraint of trade;
• an extended notice period for termination;
• additional annual leave; or
• any specific undertakings you wish the employee to give regarding information requested and provided during recruitment. 

It is important to think about the specific aspects that are to relate to that specific employee and that employee's position in your business.
Ultimately, it is about carefully considering the terms and conditions of employment that are going to fit with your business.  There are a number of places that you can go to source clauses for employment agreements.  These include the Department of Labour website, employer associations, employer advocacy and human resource businesses and law firms. 

However, a word of caution, always carefully read the clauses you are offered and think about what they say and how they will work in the context of your business.  You know your business better than anyone else, and your employment agreement should assist your business, not hinder it.  Ensure clarity, consistency, and above all, an agreement that works for your business.