Employment Agreements

An employment agreement defines the rights and obligations of an employee and their employer.

New Zealand has a long history of ensuring employment relations are closely regulated, and the law sets detailed requirements of what must be included in employment agreements to safeguard the interests of employers and employees.

Who has an employment agreement?

All employees must have a written employment agreement with their employer. Also, the law requires the employer to give a copy of the agreement to a prospective employee a reasonable time before they commence work for them to seek advice before signing the agreement.

What are the types of agreements?

A collective agreement is negotiated between the employer and the relevant registered union for the workplace.  Within ten days of a new employee commencing their new job, the employer must provide them with a form to complete to indicate their intention to join the union. All employees have the right to join the union, and if they do so, they must be on the collective agreement.

An individual employment agreement is negotiated between the employer and a new employee. It should be signed by both the employer and the employee. It is important to note that the employee may still be bound by the agreement even if they don’t sign it unless they can prove they did not agree with all or part of the agreement, or that a part of the agreement is unlawful.

What must an employment agreement contain?

Employment law requires an individual employment agreement to certain information, including:

  • The names of the employer and employee.
  • The work to be performed.
  • The place of work.
  • An agreed number of hours that must be worked.
  • The wage or salary.
  • The process to be followed to resolve employment relationship problems.
  • A statement that they will be paid at least time-and-a-half for working on a public holiday.
  • Any other information specific to the nature of the work to ensure the employee knows what is expected of them.

Some entitlements do not need to be included in the contract because they are required by law.  For example, all employees in New Zealand are entitled to four weeks’ annual leave.

What is the 30-day rule for new employees?

If there is a collective agreement in place, employees must be employed, for the first 30 days, under terms consistent with the collective agreement. At the end of the 30 days, the terms and conditions will continue to apply unless the employee and employer have chosen to sign an individual employment agreement instead.

Can my employment agreement be set for a fixed term with a specified end date?

Yes, fixed-term employment agreements are legal, so long as there is a genuine reason, based on reasonable grounds, for the employer to no longer need the employee’s services beyond the specified date. For example, a fixed term agreement may be used to employ someone to cover the period of absence of a permanent employee who is on leave or to complete a distinct project of work.

Fixed term agreements are unlawful if they are used to contrive a probationary period to determine the employee’s suitability for the job. They are also unlawful if they are used to restrict the rights of an employee, for example,  to end their employment before a workplace holiday closure, and then re-employ them after the closure.

Can an employee agreement include a probationary period?

Yes, a probationary period can be included. But, importantly, this does not allow the employer to dismiss the employee for poor performance during that period unless the employer has conducted systematic performance reviews during the period, and the employee has not responded to the concerns raised in the reviews.

If you have any questions about employee agreements, contact us at Wakefields. We are employment law specialists and regularly advise employees and employers. We can review existing agreements to ensure they comply with the law, and draft new agreements or alterations if required. We can also explain, in plain English, what the contractual terms mean. Our fees are based on our competitive fee structure and the time we spend advising our clients.

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