Employment Agreements – Our Top 3 Considerations

A well drafted employment agreement is important for both parties to an employment relationship – clearly setting out the terms of employment makes addressing any issues or questions that arise later on much easier.

In this article we outline 3 things to have in mind when drafting and signing employment agreements.


1. Clearly define the terms of employment and ensure all key terms are included

Setting out the basic terms of employment is very important – the Employment Relations Act 2000 sets out a number of minimum requirements of what must be included.

These are important, as what is in the agreement may have practical implications later on if any issues arise.

For example, a minimum requirement of employment agreements is to set out a plain language explanation of the services available for resolving an employment relationship problem. This must reference the 90 day time limit for raising a personal grievance (and the 12 month time limit for raising a personal grievance for sexual harassment). If this is not included in the employment agreement, the employee may be able to raise a personal grievance outside of these timeframes (under section 115(c) of the Employment Relations Act 2000).

This is one of the common examples we come across where the content and wording of the employment agreement has a real world, practical impact on an employment situation.


2. Look out for 90-day trial period clauses.

90-day trial periods enable employers to terminate employment of new staff within the first 90 days of employment without the ability of that employee to raise a personal grievance in relation to the termination. More details can be found in our recent article here.

90-day trial periods are very technical – they must be implemented properly in order to be enforceable. We encourage you to seek legal advice if you have any questions about the enforceability of a trial period. Just because a trial period is included, this does not mean it is enforceable if the other requirements have not been met.


3. Terms of employment are not always confined to the terms of the written agreement.

It is important to understand that a written employment agreement is not always the final binding word for employers or employees. While it is a major part, it must be interpreted and applied subject to external information and obligations.

Non-written communication, company policy and statutory obligations can also form terms of employment.  This means that both parties can still be held to certain terms that are not specifically outlined in the written agreement. For example, parties cannot contract out of their statutory obligation to pay the minimum wage or to abide by health and safety standards.


To conclude, written employment agreements, when well drafted, can avoid issues arising for both parties. Well written employment agreements are clear and leave little room for ambiguity. They serve as a foundation for a healthy functioning employee / employer relationship.

If you are unsure about your rights and obligations or need help with an employment agreement, please get in touch with the team here at Watermark Employment Law – we are more than happy to help.