Employment contracts

Permanent and full-time mean the same thing, right? Actually that's wrong... and in some instances there can be costly consequences for not getting this right. 

Do you know what employment contract you're on, or for that matter, what contract you're offering to staff? There are a number of different contract types that exist, and each are set up differently and provide different entitlements under employment law.

Using the wrong contract type can mean that a company is in breach of a variety of Employment Acts, and may need to pay a penalty or fine and/or compensate an employee. There have been recent cases where businesses have been paying circa $20,000 for these mistakes.

Check out the different types of contracts below:

Permanent

  • There is no end date
  • Most common type of employment
  • Is not the same as 'full time'
  • A permanent role can either be full time OR part time

Full time

  • While there isn't a legislative definition for 'full time' it's considered to be between 35 - 40 hours per week

Part time

  • Again, there isn't a legislative definition for 'part time' but it's considered to be less than 30 - 35 hours per week

Overall, there are two types of permanent employment:

1) Permanent, Full Time

2) Permanent, Part Time

Fixed Term

  • There is an end date
  • The contract must state a how employment will end, when employment will end, and have a genuine reason for the role being fixed term
  • Can be confused for casual or part time, which can have costly consequences

Casual

  • Short term basis (i.e. a few days / weeks at a time)
  • Generally the employee works different hours / days each week
  • Can be confused for fixed term or part time, which can have costly consequences
  • Generally this should not be a long term contract option

Contractor

  • Not an employee, and is not covered under the Employment Acts
  • Hired using a 'contract for services' usually for a project or specialist skills
  • Can be confused for fixed term or casual, which can have costly consequences

Getting employment contracts right is extremely important to protect your business and the employee. The key is to get the right contract type for the situation, business and employee. They offer different entitlements under employment law, and can also change during the working relationship.

If you would like advice on the type of contracts you are offering staff, or assistance with creating a contract, please get in touch with HR associate on karyn@hrassociate.co.nz or 0211814849.