Come on New Zealander\u2019s, let\u2019s get the basics right, please.<\/p>\n
Whenever I meet clients, whether it\u2019s an employer or an employee, my starting question is always the same \u2013 \u201cwhat does the contract say?\u201d <\/strong><\/em><\/p>\n Yet, no matter how many times I tell employers to get all their paperwork in order, it never ceases to amaze me how many businesses employ staff without providing the most basic of employment contracts. To me, the need to issue an employment contract is rule 101, but as confirmed in last weeks\u2019 Employment Relations Authority decisions, it seems that many of us do not take this legal requirement seriously.<\/p>\n In Flannagan v PMR Holdings Ltd<\/strong><\/em>, an employer\u2019s repeated attempts at trying to improve an employee\u2019s performance by issuing one warning after another, fell on deaf ears and had little sway with the Authority. Even though Mr F was a nightmare employee (continually late for the morning shift, messy, untidy, moody, smoked in the premises and generally unhygienic), and the warnings may well have been justified, the employer failed to convince the Authority that it acted fairly when it said, \u2018enough was enough\u2019 and dismissed him.<\/p>\n Under normal circumstances, a dismissal after repeated warnings would seem the logical next step. So, why did Mr F\u2019s claim for unjustified dismissal succeed?<\/p>\n Well, in short \u2013 he had no contract of employment and this was a fundamental breach of a statutory obligation. Despite trying to convince the Authority that Mr F \u201cwas simply a housekeeper working for his keep\u201d and no contract was required, the Authority did not agree. It looked at the factual matrix surrounding the relationship and determined that a \u201cmutuality of obligation\u201d<\/strong> was evident. There was an understanding that:<\/p>\n The Authority determined that Mr F was an employee and for that reason was legally required to receive a contract setting out the salient terms of his employment. The employer\u2019s failure to provide this basic document proved it\u2019s costly undoing. Not only was it required to pay Mr F all statutory leave entitlements that he has accrued over the years of employment, but was also fined a hefty sum for non-compliance with the law.<\/p>\n The Authority took the same stance two days later in Hannah v QCL<\/strong><\/em>, when it penalised another employer in similar circumstances. In this case, Mrs H was considered \u201cpart of the family\u201d so the employer didn\u2019t feel a contract was necessary. Again, the Authority considered the factual matrix and ruled that she was indeed an employee (despite being close friends with the sole director). The mutuality of obligation was evident in their relationship too (like the Flannagan<\/em> case):<\/p>\n Notwithstanding the employer\u2019s argument that Mrs H was a \u2018family friend\u2019 who simply volunteered her services to his business, the Authority was not impressed. It was made abundantly clear that even a volunteer still required a contract of employment \u2013 regardless of the nature of a person\u2019s involvement in a business, an employer cannot disregard this fundamental legal requirement.<\/p>\n Interestingly, the Authority also made the comment that any failure to provide a written agreement caused an \u201cinherent inequality in an employment relationship, and the employee will obtain the benefit of any doubt\u201d. For example, the absence of a contract meant that the employer could not disprove Mrs H\u2019s claim that she was to receive $20 per hour (as opposed to the base minimum wage that the employer alleged).<\/p>\n Damages were awarded to Mrs H based on her claim of $20 per hour, which included reimbursement of statutory entitlements dating back to 2009, plus an additional penalty for non-compliance was awarded. Another costly and somewhat avoidable experience for an employer.<\/p>\n So, what is the moral of this story – \u201cyou can have the worst employee in the world, but they still have rights, treat them carefully and follow the rules\u201d<\/em>; this is where the existence of a contract is paramount. Despite this being a legal requirement, it is also an employer\u2019s \u2018get-out-of-jail\u2019 card in the event things go wrong. If you, or your staff do not have contracts of employment, please give us a call without delay as this could prove your undoing in the long-run.<\/p>\n","protected":false},"excerpt":{"rendered":" Come on New Zealander\u2019s, let\u2019s get the basics right, please. Whenever I meet clients, whether it\u2019s an employer or an employee, my starting question is always the same \u2013 \u201cwhat does the contract say?\u201d Yet, no matter how many times I tell employers to get all their paperwork in order, it never ceases to amaze […]<\/p>\n","protected":false},"author":2,"featured_media":1201,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[11,19],"tags":[],"acf":[],"yoast_head":"\n\n
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