Are employment agreements all just about paperwork? No, definitely not; they define the rights of both parties to the employment relationship and can be used to minimise your risk as an employer. Employers have been required to provide an employment agreement for new employees since October 2nd 2000, and can be charged with significant penalties for failing to do so. Since the law in this area is about to change, it is an ideal time for employers to review their practices on providing agreements. From April 1 the maximum penalty for failing to provide an agreement has increased from $10,000 to $20,000. Also, while most employers already keep a copy on file, from July 1 it will also be a requirement to keep a copy of the employee’s employment agreement on file. Regardless of the penalties for not providing an employment agreement, there are good reasons for an employer to provide one. Engaging an employee is a significant transaction which creates a large, ongoing financial commitment. An employer’s position can be greatly enhanced by having the right clauses within their agreement. The following are examples of how an employer can improve his or her position with an employment agreement: • From April 1 the 90-day trial period can be used for new employees by an employer in any size business. For an employer to rely upon the 90-day trial period they must have a complying clause on this subject within the employment agreement. • There is often a need for employers to make deductions from payments owing to the employee. Common examples are when the employee has unpaid accounts with the company or has left employment without providing the required notice. Deductions from monies owing to an employee can only be made if the employer has written consent, and such consent can be obtained through the signed employment agreement. • Employers should consider protecting their intellectual property and client interests both during and after an employee leaves employment. Employers can only best do this by having appropriate clauses about restraint of trade, non-solicitation, confidentiality and intellectual property within their employment agreement. • When a business is going through a downturn the employer may wish to consider reducing employee hours to avoid redundancies. Having an agreed clause can allow an employer to reduce hours without having to restructure the workplace. • When employees moonlight at another workplace this may result in poor performance, or create health and safety risks from fatigue. It can be difficult to restrict such secondary employment, unless the employer has a provision which requires the employee to obtain the employer’s consent before undertaking secondary employment. Having an appropriately drafted employment agreement can also give an employer a great deal of flexibility in managing the workplace. As a start, the position description should specify the key duties, but also give the employer flexibility to ask the employee to perform a broad range of duties as required. Also the primary place of work needs to be specified within the agreement, but employers may wish to allow for transferring the employee to other worksites if the need arises. When providing an employment agreement, employers are required to follow a process which includes the following steps: • Provide the employee with a copy of the agreement. • Suggest that the employee may obtain independent advice. • Give the employee a reasonable period of time to obtain that advice. • Consider and respond to any issues raised by the employee. What is considered to be a reasonable period of time for the employee to obtain advice can vary depending on the circumstances, but typically this is around three or four days. Employers should provide a copy of the proposed agreement before the candidate commences employment and ensure that this prospective employee signs the agreement before they start. Otherwise employers can have difficulties getting an employment agreement signed once an employee has already commenced.  Bearing in mind all the good reasons for providing an employment agreement it may be a good time for employers to dust off their old agreements and give them a revamp, or start from scratch if agreements have never been provided.  Employers should consider engaging professional expert advice to tailor an agreement which best suits their needs. A poorly drafted agreement can tie an employer to unwanted contractual obligations, while a well–crafted one can place an employer in an advantageous position. Brandon Brown is a solicitor at EMA Legal, Employers’ & Manufacturers’ Association (Northern) Inc. [email protected]