New Zealand - FTC Limit

New Zealand - FTC Limit

Renewal rules of a Fixed-Term Contract (FTC) in New Zealand:

  • Renewals are permitted, and there is no statutory limit on the number of renewals.
  • However, each renewal must be supported by genuine reasons for continuing under an FTC. Without a valid justification, the employee may challenge the arrangement and request permanent employment.
  • This could expose us to risks such as reinstatement and potential claims for damages.

To mitigate these risks:

  • The renewal agreement should clearly outline the justification for using an FTC and specify the duration of the renewal.
  • It’s also important to honour the 30-day notice period when terminating the renewed contract.

When renewing the contract the client should be aware of the risks, especially if considering multiple renewals—in which case, an open ended contract may be advisable.

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