4 employment myths that require debunking


In New Zealand, commercial law and employment law is complex and can be a misunderstood area for both employees and employers alike. There are many myths that circulate among employees and employers from all sectors that often don’t reflect the truth.

To help you avoid any unnecessary misunderstandings and consequential legal action, here are three debunked employment law myths.

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1. First, second and third warnings requirement

For many employees and employers alike, the idea that someone must be given three warnings before they are dismissed is seen as a given. However, there is no legal requirement under New Zealand legislation to give a series of warnings before an employee is dismissed.

While a series of warnings may be used to manage poor performance, the sanction taken by the employer will depend on the context and the extent of the breach. However, internal agreements and policies may require managers to offer a series of warnings before dismissal. If these are breached, the employer could face legal issues relating to wrongful dismissal.

One way to avoid potential dismissals is to have an experienced legal expert look at your policies and employment contracts and offer insightful advice through a diligent review process.

2. A written contract is all that matters

Like any well-written commercial contract, a verbal agreement between an employee and employer can be legally binding. All verbal agreements, such as one between a worker and an employee, can lead to significant disputes because of the lack of evidence to back up what each party said and what was agreed on.

However, it is important that employers remember they have an obligation to provide a written employment contract containing a number of key features. This will include but is not limited to:

  • Working hours
  • Duties, responsibilities and obligations
  • Remuneration specifics
  • Contingency provisions

If an employer fails to meet this requirement, they can be liable for penalties.

Employee law is complex.Employee law is complex.

3. A bad reference is against the law

While many people may have hoped this one to be true, this is again a myth. Under New Zealand law, an employer must give an accurate, up-to-date and truthful reference. Employers are also restricted from giving misleading comments.

On the other hand, employers should still refrain from giving untrue negative and damaging statements or claims about past or current employees during a reference review.

If an employer fails to meet the requirements, the may be liable for any losses or damages that occurred due to their statements.

4. An employer can make deductions to cover business loss

Employees are typically restricted from making deductions from an employee’s wage or salary. Yet, there are certain circumstances where this is legal. It is not uncommon for an employee agreement or contract to contain terms that outline when an employee has agreed to have deductions made from their salary.

An employment agreement can state, for instance, that money can be deducted if the worker does not hand in notice within the required time limit. However, even then an employee can withdraw consent by offering advanced written notice.

If necessary, an employer can use the New Zealand court system to get a legally binding order for a deduction to be made. Additionally, if an employee is provisioned with board or lodging, the employer can deduct the costs if the amount is fixed.

Unfortunately, many of these myths are not known by employees and employers alike and can lead to legal issues in relation to liability.

If you would like to learn more about some of the other employment law myths that circulate in New Zealand, talk to the experts at Wynyard Wood Lawyers today.