Bond Clause in Employment Contract Nz

Are you an employee in New Zealand who is looking to negotiate the terms of your employment contract? If so, you may have come across the term “bond clause.” In this article, we`ll explain what a bond clause is, and what it means for you as an employee.

Firstly, what is a bond clause? Simply put, a bond clause is a provision in an employment contract that requires you, the employee, to pay a sum of money to your employer if you leave the company before a specified period of time has elapsed. This period of time is usually referred to as the “bond period.”

Why would an employer include a bond clause in the employment contract? There are several reasons why an employer may choose to include a bond clause. Firstly, it may be to protect themselves from the cost of training you, if they have invested a significant amount of time and resources in your development. Secondly, it may be to discourage you from leaving the company too soon, as this can cause disruption and affect the productivity of the team. Lastly, it may be to give the employer added reassurance that you are committed to staying with the company for a reasonable length of time.

So, what does this mean for you as an employee? If you sign an employment contract that includes a bond clause, you need to be aware of your obligations as well as the potential consequences of leaving the company before the bond period is up. If you do choose to leave early, you will be required to pay the sum of money specified in the bond clause. This can be a significant amount, so it`s important to take this into account when considering your options.

It`s also worth noting that bond clauses are not always enforceable. The Employment Relations Act 2000 sets out certain rules and restrictions on the use of bond clauses in employment contracts. For example, the sum of money specified in the bond clause must be reasonable in relation to the costs incurred by the employer, and the bond period must not be longer than the time it would take for the employer to recoup their costs.

In conclusion, if you are negotiating the terms of your employment contract in New Zealand, it`s important to be aware of the potential impact of a bond clause. While it may be included for valid reasons, you should carefully consider the implications before signing on the dotted line. If you have any concerns or questions about bond clauses in your employment contract, it`s advisable to seek professional legal advice.

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