Employment –Make the agreement fit the facts

Employers who prepare employment agreements frequently make the mistake of using a document that bears little resemblance to the reality of the workplace.

Fixed term agreements are used inappropriately.  Employees are referred to as independent contractors and not employees.  Permanent employees are incorrectly referred to as casual employees. In many cases, employers will use a precedent on the assumption that if it works for somebody else, it will work for them.  This can be dangerous.

When it comes to the crunch, the Employment Relations Authority will look at the reality of the situation — not just the document that purports to describe it.

Such a situation recently occurred in the case of Jinkinson v Oceana Gold (Employment Court, Christchurch, CC9/09, 13 August, 2009, Judge Couch.

An employee, described in the employment agreement as a casual employee, was dismissed on the ground of redundancy.  She brought a personal grievance claim — maintaining that she was unjustifiably dismissed and that, in reality, she was a permanent employee.

She argued that the redundancy was not genuine and that she was unfairly selected.

This is what the employment agreement said about her employment:

You are employed on a casual basis to support our permanent workforce at peak times, to provide cover when required, or to undertake work that is only required irregularly. You are employed hour by hour to work as and when required. There is no guarantee any hours of work will be offered to you, unless an offer of a specific engagement for hours within a particular period of days has been given by us in writing. These terms of employment apply to each hour’s engagement.

And this is what the employment Court found:

1. There was a regular pattern of work — averaging 45 hours per week.
2. Bonuses were paid.
3. Her performance was reviewed annually.
4. As a result of a performance review, she was promoted.
5. She was required to apply for annual leave.
6. She was provided with alternative work when normal work was unavailable.
7. She received notice and compensation when made redundant.
8. She worked to a roster.  This was enough, in itself, to establish her as a permanent employee.

The very fact that an employer is considering redundancy in the context of a casual employee should , of itself, set the alarm bells ringing.  A casual employment relationship exists only during periods of work or engagement.  In between times, there is no relationship and neither party has any expectation of the other.  Periods of engagement are usually brief.

As is always the case, there is a dividing line which is often difficult to identify.  The following factors are taken into account:

1. The number of hours worked each week.
2. Whether work is allocated in advance by a roster.
3. Whether there is a regular pattern of work.
4. Whether there is a mutual expectation of continuity of employment.
5. Whether the employer requires notice before an employee is absent or on leave.
6. Whether the employee works to consistent starting and finishing times.

The Employment Court found that the employment agreement was fundamentally inconsistent with the reality of her employment and that she was a permanent employee.  The case has been adjourned for a further statement of claim and an enquiry as to whether she was unfairly singled out for redundancy.

Lessons to be learned:

1. Ensure that your employment agreement accurately reflects the reality of the workplace situation.
2. There are clear dangers in adopting a “one suit fits all” form of agreement .  Each agreement must be tailor-made or, at least, vetted to make sure that it is appropriate to each individual situation.
3. If necessary, get professional advice on the appropriate terminology.
4. Review the agreement from time to time in order to ensure that it still applies.  An employment relationship that genuinely starts off as a casual relationship may well evolve into a permanent relationship.  If that happens, a new agreement should be negotiated.