{"id":2095,"date":"2020-12-23T12:10:09","date_gmt":"2020-12-23T02:10:09","guid":{"rendered":"https:\/\/nz.legalvision.com.au\/?p=2095"},"modified":"2021-03-02T18:42:00","modified_gmt":"2021-03-02T05:42:00","slug":"fixed-term-agreements","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/employment\/fixed-term-agreements\/","title":{"rendered":"When is it Legal to Use Fixed-Term Agreements in NZ?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">It is legal to use fixed-term agreements as an employer in New Zealand when you have a:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">genuine reason for the role being fixed-term, rather than permanent; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">that reason is based on reasonable grounds.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Because fixed-term agreements provide less stability to employees than long-term permanent employment, the onus is on you to use them in specific cases when there is a proper justification for doing so. This article discusses:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the difference between fixed-term and permanent employees;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the question of when it is legal to use a fixed-term agreement; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">what mistakes employers commonly make.<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What is the Difference Between Fixed-Term and Permanent Employees?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\"><a href=\"https:\/\/legalvision.co.nz\/employment\/difference-between-permanent-fixed-term-casual-employee\/\">Fixed-term and permanent employees<\/a> are essentially alike in all ways. However, the one difference is that a fixed-term employee\u2019s relationship with your business will end:\u00a0<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">on a specified date; or&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">when a specified event occurs.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Other than that, y<\/span>our business should treat them as <span style=\"font-weight: 400\">permanent staff in terms of employment rights and obligations. Whether part-time or full-time, the key difference is that those rights and obligations end with the worker\u2019s employment on a particular date.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">As a general rule in New Zealand, most employment relationships are permanent. <\/span>E<span style=\"font-weight: 400\">mployment law <\/span>supports this<span style=\"font-weight: 400\"> <\/span>rule<span style=\"font-weight: 400\">,<\/span> in that it<span style=\"font-weight: 400\"> encourages long-lasting and stable employment. The implication of this for your business is that there must be a genuine reason based on reasonable grounds to hire an employee on a <a href=\"https:\/\/legalvision.co.nz\/employment\/fixed-term-contract\/\">fixed-term contract<\/a>. Y<\/span>ou must also tell t<span style=\"font-weight: 400\">he employee about this<\/span> <span style=\"font-weight: 400\">reason.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What is a \u201cGenuine Reason\u201d for Fixed-Term Agreements?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">For a fixed-term employment agreement to be legal, your business must have a genuine reason that is specific and measurable.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--info box--icon\">\n<p><span style=\"font-weight: 400\">For instance, common uses of fixed-term agreements include:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400\">covering for an employee who has taken a period of leave, such as parental leave or extended sick leave; or<\/span><\/li>\n<li><span style=\"font-weight: 400\">doing a particular project that requires a specific set of skills.&nbsp;<\/span><\/li>\n<\/ul>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">These situations are time-limited, clear and can easily be explained to a new employee.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">For a reason to be genuine, it must directly give rise to a basis for fixed-term employment in the specific circumstances. You<\/span> will need to<span style=\"font-weight: 400\"> demonstrate a specific reason t<\/span>hat <span style=\"font-weight: 400\">y<\/span>ou only need <span style=\"font-weight: 400\">the employee for a limited period of time, instead<\/span> <span style=\"font-weight: 400\">of permanently. Further, you cannot use a fixed-term contract to achieve illegitimate objectives or circumvent other areas of the law.<\/span><\/p>\n\n\n\n<div class=\"box box--info box--icon\">\n<p><span style=\"font-weight: 400\">As an example, using a fixed-term contract to essentially trial a new staff member before offering them permanent employment will not qualify as a legal justification for a fixed-term agreement.<\/span><\/p>\n<\/div>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" 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It is also easy to misunderstand the requirement of a \u201cgenuine reason.\u201d This means that some situations may seem like genuine or appropriate situations for a fixed-term role when in fact there are strict rules around what a \u201cgenuine reason based on reasonable grounds\u201d can consist of.<\/span><\/p>\n\n\n\n<div class=\"box box--info box--icon\">\n<p><span style=\"font-weight: 400\">For instance, you may work in an industry that is inherently volatile or unpredictable. Alternatively, your customer or client flows may constantly change. In these situations, some employers understandably believe that a fixed-term employment agreement is appropriate because an employee can be let go if the work or industry slows down after a period of time. However, under the law, this is not a genuine reason.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">Another common mistake concerns employees on work visas. Some employers may want to use a fixed-term agreement for a worker who is on a limited work visa, with the agreement ending when the visa expires. However, this is not a legal reason for a fixed-term agreement either. The expiry of a work visa is a feature of the employee\u2019s situation, not of the position itself. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">However, if you are concerned about this as an employer, you can include provisions in an employment agreement to require employment to be conditional on the employee holding the correct visa.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">It is legal to use a fixed-term agreement in New Zealand, but only when the employer has a genuine reason to do so instead of a permanent arrangement. There are rules <\/span>as to<span style=\"font-weight: 400\"> what classifies as a genuine reason based on reasonable grounds. Typically, there are specific situations where fixed-term agreements are common, such as cover for parental leave. You should be careful when you are not sure why the employee is only needed for a fixed period of time, instead of indefinitely into the future. If you have any questions about fixed-term agreements in New Zealand, contact <\/span><a href=\"https:\/\/legalvision.co.nz\/employment-lawyers-lp\"><span style=\"font-weight: 400\">LegalVision\u2019s New Zealand employment lawyers<\/span><\/a><span style=\"font-weight: 400\"> on 0800 005 570 or complete the form on this page.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">FAQs<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1606880228344\"><strong class=\"schema-faq-question\"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong>What is a fixed-term agreement?<\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong> <p class=\"schema-faq-answer\">An employment agreement where the employee is only employed for a limited period of time. The reason for this limit should be clear in the employment agreement and it must represent a genuine justification from the employer.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1606880258379\"><strong class=\"schema-faq-question\"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong>Do fixed-term employees have the same employment rights as other employees?<\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong> <p class=\"schema-faq-answer\">Yes, they do. Fixed-term employees only differ from permanent employees in that their employment (and the rights and obligations associated with it) ends on a particular date.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1606880271477\"><strong class=\"schema-faq-question\"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong>Is it legal to use a fixed-term contract if my business\u2019 future income is unpredictable?<\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong> <p class=\"schema-faq-answer\">No, this is not classified as a genuine reason based on reasonable grounds for a fixed-term employment agreement.<\/p> <\/div> <\/div>\n\n\n\n\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        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grounds.&nbsp; Because fixed-term agreements provide less stability to employees than long-term permanent employment, the onus is on you to use them<a href=\"https:\/\/legalvision.co.nz\/employment\/fixed-term-agreements\/\">Continue reading <span class=\"sr-only\">&#8220;When is it Legal to Use Fixed-Term Agreements in NZ?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13235,"featured_media":926,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[5],"tags":[24,25,54,108,109,369],"class_list":["post-2095","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment","tag-startup","tag-small-business","tag-medium-business","tag-employment-agreements","tag-employment-contract","tag-fixed-term-agreement"],"acf":[],"yoast_head":"<!-- This site is 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Matt previously worked as an employment lawyer in a top-tier firm in New Zealand, and now works at the University of Auckland as a Research Fellow in the Faculty of Law.","sameAs":["anthony.lieu@legalvision.com.au"],"url":"https:\/\/legalvision.co.nz\/author\/mattbartlett\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/employment\/fixed-term-agreements\/#faq-question-1606880228344","name":"What is a fixed-term agreement?","acceptedAnswer":{"@type":"Answer","text":"An employment agreement where the employee is only employed for a limited period of time. The reason for this limit should be clear in the employment agreement and it must represent a genuine justification from the employer.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/employment\/fixed-term-agreements\/#faq-question-1606880258379","name":"Do fixed-term employees have the same employment rights as other employees?","acceptedAnswer":{"@type":"Answer","text":"Yes, they do. Fixed-term employees only differ from permanent employees in that their employment (and the rights and obligations associated with it) ends on a particular date.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/employment\/fixed-term-agreements\/#faq-question-1606880271477","name":"Is it legal to use a fixed-term contract if my business\u2019 future income is unpredictable?","acceptedAnswer":{"@type":"Answer","text":"No, this is not classified as a genuine reason based on reasonable grounds for a fixed-term employment agreement.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/2095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/users\/13235"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/comments?post=2095"}],"version-history":[{"count":7,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/2095\/revisions"}],"predecessor-version":[{"id":203097,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/2095\/revisions\/203097"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media\/926"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media?parent=2095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/categories?post=2095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/tags?post=2095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}