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Take care when preparing employment contracts
  • This case demonstrates that parties need to take care when preparing employment contracts, as they will be bound by what the contract says.

  • When interpreting contracts, the Courts are generally not interested in what the contract was meant to say.

The Christchurch Casino has been made to pay for a mistake it made in preparing an employment contract. The contract provided for a salary of $34,500 per year, but failed to record that the employee would be paid a pro-rated amount to reflect her part-time hours. The Employment Tribunal ordered the Casino to pay the employee $34,500 per year even though she was a part-timer.

The Casino employed Margaret-Ann Winter as a full-time dealer.

In 1997, Ms Winter requested to reduce her hours of work. The Casino agreed, and gave her a new employment contract for a part-time dealer working four eight-hour shifts per week. Ms Winter signed and returned a copy of the contract.

In early 1998, Ms Winter requested that her hours of work be further reduced to three eight-hour shifts per week. The Casino agreed and gave her another employment contract reflecting this change, which she signed and returned.

Despite signing the new contract, the Casino did not reduce Ms Winter's hours and she continued working four eight-hour shifts per week.

In August 1999, the Casino promoted Ms Winter to the position of inspector. It gave her a new remuneration schedule for her contract. The new schedule contained an error in that it stated that Ms Winter would be paid $34,500 per year. Ms Winter pointed out the error and she was given a corrected schedule stating that her salary would be $34,500 per year.

The Casino paid Ms Winter $34,500 per year pro-rated to reflect her part-time hours. Ms Winter did not realize that her salary was being paid pro-rata, and believed that the amount she received each week would, over the course of a year, total $34,500. This situation continued for many months.

Ms Winter eventually discovered that her salary was being paid on a pro-rated basis, and brought a claim against the Casino for arrears of wages being the difference between what she had been paid and $34,500 per year.

The Casino defended the claim contending that the $34,500 per year salary was for full-time inspector, and that this amount had to be pro-rated to reflect Ms Winter's part-time hours. It also argued that the reference to $34,500 in her remuneration schedule was an error.

The Tribunal rejected the Casino's arguments. "The Tribunal's obligation is to ascertain the intention of the parties as they are expressed by the words used in the contract. If I am able to ascertain a clear contractual intention from the words used then I am required to give effect to it. It is not up to the Tribunal to give words something other than their clear clean meaning, or to infer that the parties really meant something different from what they have stated in the contract," the Tribunal said.

The Tribunal also rejected the Casino's argument regarding the alleged error. "The terms of the contract are clear and required the Casino to make payment to Ms Winter at the rate of $34,500 per year. To find in those circumstances there has been an error in terms of clause 3.3 would be to undermine completely the principles of contractual interpretation to which I have previously referred by giving effect to the Casino's plea that it should not be bound to the clear terms to which it had previously agreed," it said.

The Tribunal ordered the Casino to pay Ms Winter arrears of wages totaling $4,350.35 plus interest.

  • This case demonstrates that parties need to take care when preparing employment contracts, as they will be bound by what the contract says.

  • When interpreting contracts, the Courts are generally not interested in what the contract was meant to say.


More on Employment Agreements

  Employee trial periods   Can change pay frequency if properly managed
  More on secret video cameras   Appeal Court decision on harsh and oppressive contracts
  When is an employment relationship formed?   Employment contracts must be negotiated - they cannot just be presented
  Employer can still be bound by oral agreements   Discrimination for being on collective employment contract
  Common problems with employment agreements   Cannot limit remedies for personal grievances
  Take care when preparing employment agreements   Cannot dismiss without reason even if written in agreement
  Importance of disclosing correct employer   Can a collective employment contract negotiated with union members be applied to non union members?
  Disputes resolution procedure must be included in staff agreement   Employee must disclose information at interview only if asked
  Renegotiation of employment contract on sale of business   Cannot require all employees to apply for new positions
  Expired contracts continue with same terms and conditions   What an offer of employment might look like
  Alphabetical Index   Case Law Back to top
This article originally written by Alan Cressey the copyright of which is owned by The Evening Post
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Updated: 31st March 2010
Published: 19th February 2002
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