A written employment agreement (also referred to as an employment contract) is mandatory for all employees, but it is not required for contractors or volunteers. Types of employment agreement
A written employment agreement is legally required and serves as a strong foundation for an employment relationship. It ensures clarity between you and your employee regarding:
- Job responsibilities and duties
- Procedures for addressing issues if performance is unsatisfactory
- Agreed-upon benefits and obligations
The written employment agreement is where you can specify all expectations clearly. Both you and your employee can refer to it in case of any disagreements regarding job performance.
If a collective agreement applies to your workplace, the new employee must receive at least the same terms as outlined in the collective agreement — or better terms — for the initial 30 days of employment.
After this period, if the employee opts not to join the union, the employer and employee can mutually agree to amend the terms or sign a new individual agreement.
Individual
An individual employment agreement is a contract that specifically applies to the relationship between an employer and an individual staff member. The terms and conditions outlined in the agreement are tailored solely to that employee.
Collective
Collective employment agreements address similar aspects as individual agreements, but they are negotiated between an employer and a union representing a group of employees. All members of the union receive the same agreement, typically including a pay scale for various job roles or different levels within those roles.
What you need to know
For all types of employment agreements, it is necessary to:
- Document the agreement in writing and include at least the mandatory clauses.
- Maintain a copy and provide a copy to the employee; both parties must sign these copies.
- Inform your prospective employees that they have the option to seek independent advice before signing the agreement.
- Allow them a reasonable period to obtain that advice.
- Address and respond to any concerns they may raise.
Case study: Nipping problems in the bud
Jon, a science teacher, receives a permanent job offer at an area school near Cromwell. He informs the acting principal that he would like to review the collective agreement before finalizing his acceptance of the offer. The principal agrees to this request.
Jon seeks assistance from his union, the Post Primary Teachers’ Association, to review both the collective agreement and the letter of offer. They quickly identified that the agreement provided is outdated, as a newer collective agreement is now in effect. Jon explains to the principal why he cannot sign the current letter of offer and highlights the salary increases outlined in the updated agreement.
Recognizing the oversight, the principal apologizes and provides Jon with the correct and updated collective agreement. Jon proceeds to sign the letter of offer, and both he and the principal are pleased that the union’s assistance helped identify the mistake early, preventing potential issues in the future.
Other rules for collective agreements
Employers must grant their employees the following rights:
- Access to join unions.
- The ability to collectively bargain terms and conditions of employment, either individually or through union representatives.
If a collective agreement is established within your business, you are obligated to:
- Inform new employees about the collective agreement and provide them with a copy.
- Inform them of their option to join the union and provide contact information.
- Confirm to the employees that if they join or are part of the union, they will be bound by the terms of the collective agreement.
- Notify the union if the employee decides to enter into an individual contract (only with the consent of the employee).
Employment agreements – Employment New Zealand
Collective agreements – Employment New Zealand
Creating an employment agreement
In an employment agreement, there are mandatory clauses that must be included, as well as optional clauses that can be added if they are relevant or beneficial to your business and the specific role.
Mandatory clauses
An employment agreement must include:
- Names of the employer and the employee.
- Position or job title, and a description of the work to be performed.
- Workplace location.
- Agreed hours of work, or an indication of working time arrangements if hours are not specified.
- Payment details.
- Provision for payment of at least time and a half for work on public holidays.
- Requirement for the employee to work on public holidays, if applicable.
- Procedures in case of company restructuring or sale.
- Steps to resolve employment issues, including the requirement that personal grievances must be lodged within 90 days.
Employers can no longer offer zero-hours contracts due to recent changes in employment law. Read about Hours of work on the Employment New Zealand website.
If shifts might be cancelled or shortened, your employment agreements must now clearly state this. Include information about the notice period for such changes and the compensation provided.
You are not required to include legal entitlements such as four weeks’ annual leave or rest and meal breaks in your employment agreement unless you are providing more than the minimum required by law. But including them makes it clear for your employee.
Rules on rest and meal breaks — Employment New Zealand
Fixed-term agreements
The employment agreement for fixed-term positions must include a clause specifying the duration of the term, the reason for the fixed term, and a detailed explanation of why the fixed term ends on a specific date or event. Failure to include these details could potentially invalidate the fixed-term arrangement, leading the employee to be considered permanent.
Explore guidelines for hiring fixed-term employees, including essential elements for their employer agreements.
Casual workers
If you’re hiring someone casually, the hours of work clause should state they are employed on an “as needed” basis and can accept work when offered, but are not obligated to do so. You can also specify a minimum number of hours per work session, but this is optional.
Optional clauses
These outline extra terms, conditions, or perks pertinent to your business or the individual you’re hiring, such as:
- Trial periods
- Overtime compensation or compensatory time off
- Use of company vehicles or parking arrangements
- Uniform or dress code requirements
- Confidentiality agreements
- Study leave provisions
- Drug testing policies
Select these clauses thoughtfully, as some are only applicable to specific industries or employee categories.
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