Employment Law

When fixed term agreements go wrong…

…and dont terminate as planned, an employer may end up with a permanent employee.   But that’s not a complete answer.

When employers don’t renew fixed term agreements, they usually have a reason. This might be the same reason they had at the beginning or a different one (which is technically not legal).  Everyone on a fixed term agreement knows that if they perform well, chance are the contract is extended.  So what happens if the fixed term agreement is invalid and the employee permanent? What is the employer supposed to do, create a position?

In Thompson v Taranga Environment Centre Charitable Trust the Authority held that the employer had to treat the employee as being made redundant, i.e. pay notice, redundancy pay and some compensation. Despite finding that the employee was in fact permanent, the Authority did not order reinstatement.

So the good news is that even if the employer gets it wrong and the employee is in fact permanent,  the reinstatement claim will fail if the position is in fact no longer required.

Details:

http://www.minterellison.co.nz/publications/Employment_Update_December_2011.pdf#page=2

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