Due diligence questions for employment recruiters and brokers

Before you place a candidate (prospective worker) into a business or organisation – and during their assignment – you should consider the steps below as part of your due diligence process.

• Establish if the employer’s business already undergoes checks for compliance with employment standards.
• Establish if the employer has been in breach of regulatory requirements relevant to employment-related worker terms and conditions or is currently under investigation.
• Establish if the employer is proactive in ensuring that employees receive all their wage and legal entitlements.
• Establish continued fair treatment of worker after placement.

Checking for employment standards assurance

If an employer already undertakes checks or audits for compliance with employment standards, this may provide assurance that they are compliant. Some industry associations require members to undergo audits that include how they treat their workers. Any deficiencies found during these reviews should have been addressed promptly, with the focus on ensuring that any shortcoming in entitlements was remedied.  

One way to do this is to ask if the business undertakes a third-party or internal audit that checks for fair treatment of workers, including compliance with employment standards? If yes, they should provide the following details:

• name of the audit/certification/programme
• frequency of the audit
• when the audit was last conducted
• whether there were any issues identified and actions taken
• whether the employer has a membership with an industry body or association.

If the employer is part of a business or industry association or body, it should be named.

Checking for past relevant regulatory breaches

If the employer has breached employment standards, find out what they did to resolve the issue. Think carefully about the risks of placing a client into a business that is being investigated. 

You can ask the following questions.

• Is the employer currently on a 'stand-down list' below, which affects their ability to recruit migrant labour as a result of having received a penalty for breaching employment standards or immigration law?

• Has the employer ever been found to have breached employment standards by the Labour Inspectorate, Employment Relations Authority (ERA) or Employment Court? If you are unsure, you can check their databases below.

• Is the employer currently party to legal proceedings claiming non-compliance with employment standards? This information may not be publicly available and should be requested from the employer directly. They are not obliged to answer — however, if they do not, you may find this is useful information to decide whether you want to engage with this employer.

• Has the employer or business ever employed migrant workers who are not allowed to work by Immigration New Zealand? If yes, details should be provided.

Employers on stand-down

Immigration stand-down list - Immigration New Zealand(external link)

Determinations database – Employment Relations Authority(external link)

Judgements Database – Employment Court(external link)(external link)

Ensuring candidates receive their entitlements

To establish whether the employer is proactively ensuring that employees receive all their wage and other legal entitlements, you can ask the following questions.

1. Do their employees have written employment agreements, individual employment agreements, or collective agreements?

The employer must be able to answer ‘yes’ under the law. Check if the employment agreement complies with the minimum details that an employment agreement must contain.

Creating an employment agreement

2. Do they keep accurate and up-to-date records of wages, time, leave and holidays?

The employer must be able to answer 'yes' under the law. Find out more about the requirement below.

Record-keeping

3. Do they pay their employees the minimum wage or above for every hour worked?

The employer must be able to answer 'yes' under the law. Find out more about the requirement below.

Minimum wage

4. Do they provide their employees with regular payslips? Payslips are not mandatory, but employees can ask for one at any time and the employer must provide them with information about their pay and leave.

An employer demonstrates good practice if they can answer 'yes'.

5. Are employees provided with information about their employment rights?

An employer demonstrates good practice if they can answer 'yes'.

For employers who cannot demonstrate compliance with at least questions 1 to 3 above, there are information and resources available to help them comply.

Our Employment Agreement Builder can help employers write up a compliant employment agreement.

Employment Agreement Builder – business.govt.nz(external link)

Our ‘Minimum employment rights and responsibilities’ booklet can help employers understand employment legislation.

Minimum rights of employees – other language translations

Our employment learning modules are available for employers and their employees.  

Employment NZ – e-learning(external link)

Ensuring fair treatment of candidates after placement

Once a candidate you have placed has started in their role, you should check they are being treated fairly. Ask the employee the following questions.

• Were they given a copy of your written employment agreement, and can they access it?
• Were they given a regular payslip?
• Do they feel they know their employment rights? Have they been told where to find more information about them?
• Do they get paid at least the minimum wage for all the hours they work? Did they get paid while they were being trained for their job?
• Have any of their conditions changed or got worse since they started the job?
• Do they know how to approach their employer if they have concerns about their job?
• If boarding and meals are part of their pay, is the cost reasonable? Is their accommodation of a legal standard? For example, service tenancies must include working smoke alarms or detectors within 3 metres of each bedroom door. They must also have ceiling and under-floor insulation and an insulation statement. For more information, see: 

Service tenancy - Tenancy Services(external link)

• Has their employer asked them to pay back any of their wages, or made a deduction from them that they did not agree to in writing?
• Do they have to pay for their own safety equipment or anything they need to do their job? For more information, see:

Deductions

• Are there written policies, or a code of conduct, to deal with bullying, sexual harassment or discrimination?

Continue to monitor for compliance with timely checks

• The first check should be completed within the first month of employment.
• The second check should be completed after the first 6 months of employment.
• Following checks should be made every 12 months (annually), starting 18 months from when the employment started.

If any of the responses to these questions above raise concerns, these should be discussed with the employer and a resolution sought.

Where possible, the employer should also be required to immediately inform you if the following occurs:

• their business is investigated by the Labour Inspectorate or Immigration New Zealand
• there are changes to the working arrangements with any employees that you have placed.