In every employment relationship, there must be an essential document that sets out the terms and conditions of the working arrangement – the employment agreement. An employment agreement governs the relationship between an employer and employee and should be tailored to fit the specific needs of each working relationship and workplace.
A well-written employment agreement is like a good foundation for a house: if it’s strong, everything else can be built on top of it, but if the foundation fails to meet appropriate standards, the house may look exceptional from the outside, but a minor problem could bring the house crashing down.
The same goes for starting off an employment relationship with an employment agreement. Employees and employers are both vulnerable without a clear, enforceable agreement. Employers may have trouble enforcing their policies, and employees may not know their rights and obligations. A well-written agreement helps to minimise misunderstandings and conflicts by setting out the fundamental terms and conditions.
Getting advice and assistance from an employment lawyer can therefore be really helpful when drafting up an employment agreement.
There are two main types of employment agreements: Individual Employment Agreements and Collective Employment Agreements. Let’s take a look at the key differences between the two.
Individual employment agreements and collective employment agreements have some key differences. Individual employment agreements bind only the employer and individual employee. Both parties are able to negotiate the specific terms and conditions. Employees who are union members, however, can be covered by a collective employment agreement that binds them, their employer, and their union.
A well-drafted Individual Employment Agreement should provide certainty and clarity for both the employer and the employee. There should be a clear description of the employee’s rights and responsibilities, as well as the employer’s expectations. The agreement should also cover important terms and conditions like working hours, duties, salary, leave entitlements, and confidentiality obligations. If you are an employer, you must make sure your employment agreements fit your business needs and provide you with the protection you require. And as an employee, you should make sure that you understand the agreement before signing it. If you don’t, you could get stuck in a binding contract that you don’t understand.
A Collective Employment Agreement lays out the terms and conditions of employment for a group of employees. An agreement is negotiated between the employer and the union, and, once ratified, it’s binding. The contract usually covers areas like wages, working hours, holidays, health and safety, etc. The parties must follow the duty of good faith when bargaining for the terms and conditions of collective agreements, which requires the parties to finish bargaining unless they have genuine reasons based on reasonable grounds not to do so.
The bottom line is: no matter what type of employment you have, it’s important to have a written agreement that outlines your terms and conditions of employment. If you don’t have a written agreement, you and your employees won’t have the clarity and certainty you need for a good working relationship.
If you need advice on employment agreements or help to draft one up, Edwards Sluiters Employment Lawyers has a team of experienced helpful NZ employment lawyers and both individual and collective employment agreement templates ready to customise to your business. If you want to dive deeper into both of these types of employment agreements and learn about the mandatory provisions of these agreements, read Edwards Sluiters Employment Lawyers’s ‘The Ultimate Guide To Employment Law’ blog post.
