Every employee must have a written employment agreement, either as an individual agreement or a collective agreement. Failure to ensure written agreements are in place can result in fines being imposed on the employer by the Labour Inspector.
A collective agreement is one where the employee is part of a union that has negotiated standard conditions of employment for all its members, and an individual agreement is between a single employee and the employer. A collective agreement does not need to be signed by the parties. In this Guide we focus on individual agreements.
Employment agreements contain the working conditions and work expectations, so that there is clarity in the event of any misunderstanding or dispute.
Minimum employment rights such as leave entitlements etc are contained in legislation and do not have to be in employment agreements, but generally they are anyway. No employment agreement can provide for less rights than are contained in the employment law, even if the employee signs it.
Employment Agreements must contain the following minimum information:
- The names of the employer and employee
- The work to be done (a job title or job description)
- The expected hours of work and main place of work, including any overtime, public holiday or weekend expectations
- The wage rate or salary payable, and any changes that could apply based on when the employee works
- How and when the employee will be paid
- A clause on how to resolve employment problems
- An employment protection provision
- Any other conditions agreed upon
- If they are fixed term, the reasons why and when it will end.
Clauses that are optional include:
- A trial or probation period if they apply (If not mentioned specifically, they do not apply)
- Provisions around rest breaks and meal breaks
- Clauses in relation to Annual Holidays, Bereavement leave and Sick leave
If the employment agreement has a trial period, this agreement must be signed and in place before the first day of employment, or the trial period is invalid. The employer is required to keep a copy of all signed agreements and also must keep copies of any intended (draft, proposed) agreements as well, for example those drafted during any negotiations with an incoming employee. An employee is entitled to a copy of their agreement on request.
For clarity, employment agreements do not need to contain policies and procedures, company handbooks etc, although it is very important that the employee is aware of these and that the company, in a dispute, can prove that the employee has read and understood them. For this reason, they are often included in initial employment documentation or induction processes.
An employment contract can be prepared for someone who is not yet entitled to work in New Zealand (for example to help them obtain the necessary visa), but they must be legally able to work on or before their first day of employment.
Finally, it is important when negotiating a new employment agreement or a change to an existing agreement that the employer acts in good faith and ensures unfair bargaining does not occur. Employers need to be particularly mindful of unfair bargaining where they are dealing with employees who have reduced ability to understand the agreement due to their age, language barrier, disability, illness or emotional distress.