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February 2009

Another reason for having an Employment Agreement

It is a requirement under the Employment Relations Act 2000 (“the Act”) that all employees have a written Employment Agreement with their employer. In the event that a personal grievance is filed in the Employment Relations Authority, the Authority has the ability to impose a fine against an employer where there has been a breach of this requirement.

Furthermore, where there is a dispute as to what was agreed between the employee and the employer, and there is no written Employment Agreement, then the employer runs the risk that the Employment Relations Authority will construe the terms of employment against the employer and in favour of the employee.

Ninety day time period for a personal grievance claim

In addition to these two serious consequences for failing to have an Employment Agreement, it would appear that there is now a third reason for an employer to be concerned. In a recent decision in the Auckland Employment Court, an employee brought a personal grievance outside the ninety-day limit. The Act provides that an employee can only raise a personal grievance after the expiry of ninety days if either the employer consents or the employee is granted leave by the Court. It is a requirement of the Act that the Employment Agreement include a plain language explanation of the services available for the resolution of employment relation problems including a reference to the period of ninety days within which a personal grievance must be raised. In this case, the employee argued that she had never received a written Employment Agreement and therefore did not know that she only had ninety days in which to raise a grievance. It was her evidence that she only became aware of the ninety-day limit after she went to see a lawyer. The lawyer immediately raised the grievance even though it was ninety-six days after the termination of her employment and therefore out of time.

The employer gave evidence that she had given an Employment Agreement to the employee but could not produce a signed copy of that agreement. The Court considered all the evidence and found on the balance of probabilities that the Employment Agreement had not been given to the employee and therefore she did not have notice of the personal grievance procedures including the ninety-day time limit for raising a grievance. In making this finding the Court noted that immediately after seeing a lawyer the employee had raised the grievance and for this reason the Court inferred that had the employee known that she should have raised the grievance within ninety days she would have done so.

Extension of time to bring a personal grievance

In essence, the employer’s failure to ensure that a signed Employment Agreement was retained on file had the effect of extending the period of time in which the employee was able to bring her personal grievance.

Conclusions

The decision serves as a warning for all employers of the importance of not only ensuring that all employees have a written Employment Agreement (and the employer retains a signed copy of that agreement) but also that the Employment Agreement complies with the requirements of the legislation. It could be inferred from the above decision, that if the employer had provided an Employment Agreement but had omitted a reference for the period of ninety days for raising a person grievance, then also an extension may have been given to the employee.