Nothing redundant in reading fine print

Last updated 05:00 28/01/2014

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OPINION: The New Year can act as a catalyst for change. It's a time when many employees start to imagine a better life and look for new opportunities.

Recruitment agencies may not kick into life until February, but right now applications are being completed and plans formed.

Fast forward through a few weeks of interviews, second interviews, and correspondence - finally, an offer is made. But what should be included in an employment agreement? What does it all mean, and is there room for negotiation?

While employees whose work is covered by a collective agreement have little or no real opportunity to change the terms an employer is required by law to offer (at least for the first 30 days of employment), individual agreements are different.

Negotiating a new employment agreement can be a minefield, and ultimately, an offer can be withdrawn altogether if a potential employer is finding it all too hard to agree on terms. But an individual employment agreement is a lawful and binding contract, and like any other important legal document, it's vital to read the fine print, take advice and think hard about what it might mean for you.

And it's not just about how much you get paid, or how many holidays and sick leave days you are entitled to.

At a time when organisational and structural change has become part and parcel of everyday working life, one of the key provisions that requires a careful look is the agreement's redundancy clause. Look particularly closely at whether redundancy compensation is payable (there's no legal obligation on an employer to do so otherwise), how much notice would be given, and if it is, whether it might not be paid out in particular circumstances.

Every employment agreement is required by law to contain a clause detailing what an employer will or must do, and what your entitlements are, in situations where the work you were employed for is contracted out, or that part of the business sold or transferred to another company. You're looking here for as much clarity and certainty as possible, as well as working out what might happen to any compensation in the event you're offered a role with the "new" employer.

As business becomes increasingly competitive, and suitable candidate pools shrink, employers are increasingly turning to restraints-of-trade and other non-compete provisions to safeguard clients, staff and information. Taking advice should be mandatory if your offer includes clauses of this kind, as they can come back to bite you in the event you change jobs later on.

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The scope of any clause that essentially prevents you competing with a former employer must be well aligned with the business interest that employer is wanting to protect. The scope and duration of the clause needs to be reasonable in all the particular circumstances; the courts will not allow a clause which casts the net too wide and prevents an employee from plying their trade over a large geographic area or for an unreasonably long period of time. There are no hard and fast rules but intuition is useful here - if it sounds unfair, it probably is.

On the subject of geography, all employment agreements must specify the location from where the employee is expected to work. This might be a single set location or several different locations.

While this clause might sound boring and innocent, there can be important consequences. Working from or between several different locations might require the employee to meet the associated travel costs (or even to have a vehicle). Equally, depending on what the location clause says, decisions to relocate offices or locations might leave the unwary employee with an hour's extra commute per day and with no choice other than to put up with it, or resign.

Your agreement must contain a statement of the hours of work that will be expected of you. Hopefully, as a result of a thorough pre-employment process, you will already be well aware of whether your employment is fulltime, part time or casual in nature. But when are those hours going to be worked? Will you also be required to work overtime or participate in an on-call roster? And will you be paid extra for your trouble?

Remuneration is, of course, a biggie, and employers are now increasingly adopting what is known as a "total remuneration" approach to paying their employees. This means that your remuneration is agreed as a total figure, and is inclusive of base salary, employer contributions (including any tax liabilities) to KiwiSaver, and any other bonuses or elective benefits that might be taken up. Base salary will be adjusted up or down as other benefits (which can include car parks, vehicle allowances, clothing allowances and additional leave) are taken up or relinquished, with your overall total remuneration package value remaining unchanged.

The upshot of this arrangement is that the cost of the employer contribution to Kiwisaver or other benefits is offset against and comes out of your pay - which is also then reduced by the amount of your own KiwiSaver contribution.

Hold the pen: why should you, as an employee, have to cough up twice for KiwiSaver? The fact is that it's a legitimate practice, if it is written clearly into an employment agreement. So, this is something you should pay particular attention to in an agreement, and seek to negotiate if you are not satisfied and have some bargaining leverage.

Although being handed a long employment agreement to sign might seem overwhelming, especially if you've not moved around in the job market very often, it is crucial that you understand what you are signing up to. Once it's signed, the agreement is binding and, except in very narrow circumstances, you're stuck with it.

Susan Hornsby-Geluk, Partner, Dundas Street Employment Lawyers, www.dundasstreet.co.nz

- © Fairfax NZ News

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