When does employment commence?

 By Russell Drake


Employers are often confused as to when an employment relationship commences and therefore what rights and obligations they have with respect to Employees prior to the agreed commencement date.

Simply put, an employment relationship is formed when an offer has been provided and accepted, even if this has been undertaken verbally. This can be well in advance of an Employment Agreement being provided or signed by both parties. From his point on the individual becomes a ‘person intending to work’ and has all rights pursuant to the provisions of The Employment Relations Act 2000, with the Employer then becoming subject to all obligations of the Act, including the ‘Good Faith’ provisions.

If the Employer therefore elects not to proceed with the offer of employment, by formalising this through an IEA, and retracts the offer or undertakes any other action to prevent the intending Employee from commencing work, the Employer may be open to a successful personal grievance claim, including unjustified dismissal or disadvantage.

In The Salad Bowl Limited v Howe-Thornley the verbal offer of employment was withdrawn without justification and although Howe-Thornley never formally commenced work she was awarded compensation totalling $6215 for the Employer’s breach of procedural requirements.

Therefore, any offer of employment should be stated subject to specific conditions being fulfilled, including provisions that would enable the employment to be legally terminated after the commencement date if the conditions have not been satisfied (i.e. medical or criminal checks). Many Employers do not provide formal offer letters relying solely on the presentation of the IEA to the intending Employee. However the basic IEA offer document may not protect you sufficiently if you get into a situation where an offer needs to be withdraw, or information comes to your attention on or about the commencement date that would have impacted on your hiring decision.

The ability to retract an offer of employment prior to the proposed commencement date should therefore be a critical component to any stated offer, as is also the date on which any offer of employment can be withdrawn if not accepted (as evidenced by the signing and returning of the IEA). Where Employer’s fail to ensure that the offer documentation is robust they increase their risks of potential liability and significantly restrict their options if the intending Employee turns out to have undisclosed ‘skeletons in the cupboard’.

A small investment in ensuring your offer documentation and process are strong and enforceable may therefore provide Peace of Mind if needing to be relied upon.

Contact us if you would like to know more about offer documentation.





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