If you have ever bought or sold a house, you know the importance of vendor warranties.

They give comfort to the buyer that the seller has disclosed any important issues related to the house. If it later turns out they have not, the buyer can bring a claim on the basis of those warranties.

Similarly, when you are negotiating the terms of an individual employment agreement, you have a one-off opportunity to get employees to make warranties about who they are and what they can do.

However, we don’t call them warranties – instead, they are usually termed “acknowledgements”.

This is the time to get the employee to warrant, or acknowledge, matters over which they will not seek to raise issues later or which may have affected whether you would hire them in the first place.

So what acknowledgements should you include in your employment agreements with new staff?

Here are four suggestions.

Entitled to work in New Zealand

Employers must only employ people who are entitled to work in New Zealand. You should get employees to warrant that they are so entitled.

While this may not get you off the hook entirely if you hire someone who is not lawfully permitted to work (if you have any doubts, you should seek proof of their entitlement), it does at least raise the issue for discussion and is a prudent warranty to request.

Here is a suggested wording for this acknowledgement:

“By signing this agreement, the Employee acknowledges that the Employee is legally entitled to work in New Zealand.”

No misrepresentation

These days, it is possible to order degrees from the internet. So you want to be sure that all the information the employee has supplied about themselves, including their qualifications for their role, is true and correct.

Again, it may not be foolproof in itself, but it may cause the employee to pause before proceeding with an application based on false merits.

Here is a suggested wording for this acknowledgement:

“By signing this agreement, the Employee acknowledges that the Employee has not misled or supplied false information to the Employer in any respect, including in relation to the Employee’s qualifications, experience or ability to perform any duties under this agreement.”

No failure to disclose

What if the employee fails to tell you something in the hiring interview that might have made you reconsider employing them if you had known it?

If you don’t have an acknowledgement that they have fully disclosed the most important information about themselves, they will say they did not mislead you because you never asked them the right questions.

It is hard to come up with a list of questions that will cover every important issue that you might find relevant. Therefore, it is better to cover it with an acknowledgement.

Here is a suggested wording for this acknowledgement:

“By signing this agreement, the Employee acknowledges that the Employee has not deliberately failed to disclose any matter that could have materially influenced the Employer’s decision on whether to employ the Employee.”

Negotiation was fair

There are a number of things that employers must do when offering employment to ensure that the negotiation has been conducted fairly and freely.

These include:

• providing a written copy of the terms of employment for the employee to consider;
• advising the employee of their opportunity to get independent advice; and
• giving the employee a reasonable time to get that advice if they want it.

The purpose of these provisions is to ensure that the employee is not pushed into agreeing to terms of employment that they may later regret. Their legal advisor may suggest that they negotiate one or more terms.

While an acknowledgement that you have done these things is not in itself evidence that you have done what is required (you would still actually need to do these things, regardless), it is prudent to obtain the acknowledgment. Moreover, it may draw the employee’s thinking to these matters if they were not aware of them already.

Here is a suggested wording for this acknowledgement:

“By signing this agreement, the Employee acknowledges that the Employee was provided with a copy of this agreement and has read, understood and agreed to its terms and that the Employee has been advised of the entitlement to obtain independent advice about this agreement, and has had a reasonable opportunity to do so, before signing.”

CONCLUSION

You don’t normally get an opportunity to know a person very well before you offer them employment.

So by including the above acknowledgements, you get greater comfort that the things the applicant has told you about themselves is true.

Because if they have not, then you can point to these acknowledgements to undermine any arguments that you should have known better.