Have you hired them, or haven’t you?

A candidate for a pharmacy position claimed to have been constructively dismissed in an unusual case that recently went before the Employment Relations Authority (ERA). The respondent, the pharmacy director, argued that he had never offered her employment, despite her having spent some time on the premises.

The ERA member, Eleanor Robinson, appeared to reach her determination relatively easily, but the case did highlight the interesting question of when an employment relationship is created. “On the face of it, when a job actually starts should be an uncomplicated issue. However, the more formal questions as to when an employment relationship actually commences is not always straightforward,” Simon Menzies, partner at Harkness Henry, wrote in the Waikato Times.

Robinson ultimately decided that there was no employment relationship in this case, referring to section six of the Employment Relations Act 2000, which defines an ‘employee’. According to the legislation, the judge must determine the ‘real nature of the relationship’ between the alleged ‘employer’ and ‘employee’. In doing so, they are to consider ‘all relevant matters’ including those relating to the parties’ intentions.

In this case, there was no employment relationship because the parties had not discussed or agreed upon the terms and conditions of employment, the applicant knew that the time she spent at the pharmacy was part of a pre-employment interview test, and the respondent said that he would not offer her employment.

However, Menzies observed that there have been cases in which an employment relationship has come into existence without the employee having attended work. “It may be that an unconditional offer of employment followed by an unequivocal acceptance, will be sufficient to create a legal relationship of employment even though the job has not started and some terms remain to be discussed or agreed,” he wrote. Similarly, Robinson suggested that an offer, acceptance of that offer, and communication of that offer were fundamental to such decisions.

The amount of discussion that occurs between the parties regarding the terms and conditions of employment is important. Robinson returned to the fact that there had been no such discussion in this case at numerous points.

“However, it is not necessary for a written employment agreement to be signed for an employment relationship to be created, unless the parties themselves have made it clear that no binding commitment will come into effect until an agreement is signed,” Menzies wrote. While the Employment Relations Act 2000 requires written agreement on key terms of an employment relationship, such a relationship may come into existence before this is created.

Key HR Takeaway:

• Section six of the Employment Relations Act 2000 defines an ‘employee’.
• An employment relationship may come into existence before an employee has attended work.
• A job offer, acceptance of that offer, and communication of that acceptance, are essential components to an employment relationship.
• The amount of discussion between the two parties regarding the terms and conditions of employment are also highly significant to the creation of an employment relationship.
• An employment relationship may come into existence before a written employment agreement is signed, unless the parties have agreed that this is essential.