Is your employee being on a work visa a genuine reason for a fixed term agreement?

Most employers are aware now that they need a “genuine reason based on reasonable grounds” to hire an employee on a fixed term agreement. What is less known is that an employee being on a work visa does not meet this test. A client asked me about this recently and this was my answer:

Your prospective employee holding a work visa is not a genuine reason to hire him on a fixed term employment agreement (it can also cause issues for the employee with Immigration NZ see Immigration NZ’s view on it here:  https://www.immigration.govt.nz/documents/visa-paks/2016-jun-17-fixed-term-employment-agreements). This is because the expiry of a work visa is a circumstance of the employee, not of the job itself. Best practice is to make sure that your employment agreement contains a clause to the effect that the employment is conditional upon the employee holding and retaining the appropriate visa. Generally, the employee will resign when their visa is coming to an end anyway, but if they refused, you can rely on this clause to terminate their employment (after following the standard fair process).

I do often see fixed term agreements used for the reason that the employee is on a work visa. Often these are not challenged of course because once the visa has expired, the employee has no right to work in New Zealand anyway so they're happy to leave the employment. The only time it's likely to be challenged is when the employee gets a longer visa and wants to stay employed and the employer tries to rely on the fixed term nature of the agreement to end the employment. In that situation the employer is likely to be found to have themselves a permanent employee. So, best to do things correctly in the first place.