2022 and beyond
The relationship between employer and employee continues to evolve, driven by shifting societal expectations and a labour market experiencing profound skills shortages.
The type of relationship between the “employer” and the “individual” is currently categorised by differentiating between employment and self-employment through the legal concepts of a “contract of service” and a “contract for services”, with “control” being one of the distinguishing features of employment. Employment contracts, particularly for senior executives, are still described as “service agreements”.
However, in many workplaces, this notion of control is shifting. This is being driven by the increased leverage many employees are experiencing in a tight labour market and changing societal attitudes and expectations driven by a more assertive younger workforce which resists hierarchical, authoritarian working environments. However, some predict that the increased leverage employees are experiencing may well be short-lived and that the deteriorating economic climate will reverse this trend.
Employment relationships founded on detailed contractual obligations may in future no longer represent the best way forward for some organisations and could reflect poorly on employers' values and brands.
Legislative intervention is a possibility. In the UK, case law has established that the employment contract contains an implied duty of mutual trust and confidence. This obliges both employer and employee not to conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. However, New Zealand is a jurisdiction that has embraced wider principles of mutuality.
Regardless of future legislative developments, increasing numbers of employers are likely to introduce simpler contracts in the nearer term to reflect a relationship built on mutual principles and commitments of both parties which are better aligned to employers’ brands and values. These could articulate what the employer can expect from the employee but also what the employee can expect from employer – a position far removed from a relationship based on service.
Under the statutory mutual duty of good faith, introduced in New Zealand over 20 years ago, both employer and employee must at all times:
- act honestly, openly, and without hidden motives
- raise issues in a fair and timely way
- work constructively and positively together
- give each other relevant information ahead of when it is needed and as soon as possible, all information given should be carefully considered
- be fully honest with each other
- raise concerns or issues as soon as possible and respond to these quickly
- keep an open mind, listen to each other and be prepared to change opinion about a particular situation or behaviour
- treat each other with respect