We have seen a lot of employers falling into some common pitfalls when interacting with their employees. These are our Top 10 Tips for employers for avoiding the most common employment relations issues.

1. Do a thorough pre-employment check Make sure to screen all potential employees before hiring them. Things such as criminal history, medical-and drug-testing, and good referee checks can help avoid employment problems down the road.

2. Finalise and sign employment agreements before an employee starts work The employment agreement is the most important document of the employment relationship, so make sure it is finalised and signed before the employee starts work. A 90 Day Trial Period will only be enforceable if the agreement is signed before the employee starts work.

3. Choose the correct employment agreement Whether you use a permanent, fixed-term, or casual agreement will depend on the circumstances, and each carries its own benefits and risks. Do not be tempted to use a fixed-term agreement to establish whether an employee is suitable for permanent employment.

4. Have policy documents on display and easily accessible Employee practices are often governed by company policies as well as by the terms of their employment agreement or job description. Whether they relate to health and safety, company vehicles, IT, or telecommunications, employees can only be bound by rules they are informed of, so have all policy documents accessible and encourage employees to read them.

5. Keep proper records of every employee This includes records of the employee’s annual and sick leave entitlements, wage/salary records, job descriptions, and a copy of their employment agreement. Make sure you have a file for each employee, and that all their records are filed in it.

6. Always consult with employees before adjusting their hours, roles, or terms Employers cannot unilaterally change the terms on which an employee works. Consulting with employees on these matters is vital, and you may find that they have ideas you had not considered.

7. Keep up-to-date with developments The law is changing all the time; make sure to keep up-to-date with the latest changes to employment law, even where it seems irrelevant to your specific business. It may be that the law has wider application than you expected, or that it becomes relevant further down the track.

8. Act promptly and follow correct disciplinary and redundancy procedures Where you suspect an employee of misconduct or poor performance, act promptly and always follow clear and fair procedures. Never ambush employees with allegations or performance review meetings. Give employees full and timely notice of any disciplinary meetings, and allow them time to prepare and respond.

9. Do not be afraid to go to mediation Most employment problems can be resolved by either informal negotiation or in mediation. Mediation is a voluntary and highly flexible method of resolving disputes, and often leads to mutually satisfactory outcomes.

10. When in doubt, come to us Whenever you have concerns about an employee or the terms of your employment agreements, talk to your lawyer before taking any steps. We can help to determine the best approach to take, resolve disputes as quickly as possible, and assist in improving your employment agreements.

Parry Field has been assisting employers in New Zealand since 1948. Based in Christchurch we have the experience and resources to help you.

Is your Trust at risk?

 Do you have a trust that was set up years ago and think it is still protecting your assets?  In the recent case of Clayton v Clayton the traditional view of trusts and their ability to be challenged was turned on its head.  It may pay to check the wording used that grants powers in your own trust because if it is too wide then that could result in the ownership of the trust property itself being called into question.  Recent estimates have suggested up to 100,000 trusts could be at risk of challenge in New Zealand. 

 The key issue which was the subject of the case was the power that Mr Clayton had over the future of the trust.  Effectively he could control who received the trust’s assets because he was the only trustee and held all the significant powers.  After 17 years of marriage Mr Clayton and Mrs Clayton separated and she effectively argued that the powers Mr Clayton had in the Trust meant that the Trust assets were “property” for the purpose of the Property Relationships Act.  This meant that those assets would be split 50/50.  This was very important because the business Mr Clayton ran had grown significantly during their 17 years of marriage and the Trust property was significant.

 That situation may seem extreme – most trusts will have more than one trustee or at least a sharing or separation of powers – but it does highlight the ability of the court to call into question how trust property will be treated.  Would the situation be so different if the original Settlor of the Trust retains the power to appoint and remove trustees whenever they want and thereby exercises control over who the trustees decide should benefit from the Trust assets?  We don’t yet know but it seems likely that this point will be tested soon enough in the courts. 

 The implication for those who have a trust is clear.  Pull out that old trust document and have a look at the powers.  If one person has a great deal of control then it might be worth discussing with your lawyer to see if the wording should be tightened up to make it less likely for the courts to call it into question.  At the same time it is also worth considering if the Trust needs other changes or confirm that it is still as you originally intended.  Also, have you prepared a Memorandum of Wishes for your Trust which will provide guidance about how its assets are to be distributed?  Finally, this may also be a timely reminder to check other documents that are kept somewhere in a cupboard or drawer, like your will. 

 The old saying goes, “you cannot have your cake and eat it too” and this, surprisingly, might now be a point that is relevant to Trust law.  Perhaps the case of Clayton will result in a much needed dusting off of Trust and other documents and a refreshing of them to reflect current situations.  We are already seeing many of our clients express a desire to know more about what the implications of Clayton will be and we are happy to discuss your specific situation in detail. 

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Rolleston, 7614, New Zealand

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Christchurch, 8440, New Zealand

Hokitika

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FAX: +64 3 755 8073

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Hokitika 7810, New Zealand

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PO Box 44,
Hokitika 7842, New Zealand

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