Employers
Creating an employment agreement
You must give every employee a written employment agreement, making it clear what is expected from them and what they’re entitled to while working for you.
Creating an employment agreement
Employment agreements, often called ‘contracts’, contain all the details about The requirements in law for how employers must treat, pay and protect their employees. All employees have these rights even if they’re not included in the employment agreement or if the agreement says they get less or worse. A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement.
The employee can agree with you if they want to try to get better terms and conditions in your employment agreement. Both you and your employee will need to act in An underlying principle in employment law which requires employers and employees to deal with each other honestly, openly, and in a fair and timely way. An organisation that supports and advocates for employees in the workplace. Unions bargain for collective agreements and help employees with information and advice about work-related issues.
Collective and individual employment agreements
Even if not listed in the employment agreement, the employee must still be given the minimum employment rights set by the law. These include their right to at least the The lowest amount an employee can be paid per hour. There are 3 types of minimum wage: adult, starting-out and training. There is no minimum wage for employees younger than 16 years old. Paid time away from work for rest and recreation.
Employee rights and responsibilities
As an employer, any employment agreement with your employee must include any terms and conditions agreed upon and must not contain anything:
- contrary to law, or
- inconsistent with the Employment Relations Act 2000.
Give an employment agreement to each employee
Every employee must have a written employment agreement. You can agree an The employment agreement between an employee and an employer. Also see ‘Employment agreement’. The employment agreement between 1 or more unions and 1 or more employers and 2 or more employees. Also see ‘Employment agreement’.
If you do not give an employee a written employment agreement, you can face an infringement fee of $1,000. Additionally, the The tribunal established under the Employment Relations Act to resolve employment relationship problems.
You must also:
- keep a copy of the employment agreement (or the current signed terms and conditions of employment)
- keep an 'intended agreement' even if the employee has not signed it
- give a copy of their agreement to an employee if they ask for it
- ensure the employment agreement covers everything that legally needs to be covered.
Minimum rights (such as the minimum wage and annual holidays) are legal requirements and apply even if they’re not written in the employment agreement. The employment agreement you offer an employee cannot reduce these or trade them off for other things.
What an employment agreement must include
An individual employment agreement must include:
- the names of the
employer and theAn individual or organisation that hires 1 or more employees and contracts them to work in exchange for wages or salary under a ‘contract of service’ (commonly called an ‘employment agreement’).
employee (to make clear who are the parties to the agreement)Any person, whatever their age, who is employed by an employer to do any work for hire or reward under a ‘contract of service’ (commonly called an ‘employment agreement’).
- a description of the work to be performed (to make clear what the employee is expected to do)
- an indication of the place of work
- the agreed hours or an indication of the hours that the employee will work, including any or all of the:
- number of hours
- start and finish times
- days of the week the employee will work
- the wage rate or salary payable (this must be at least the relevant
minimum wage ) and how it will be paid; if you will not be paying the employee in cash, you should write how they will be paid in the employment agreementThe lowest amount an employee can be paid per hour. There are 3 types of minimum wage: adult, starting-out and training. There is no minimum wage for employees younger than 16 years old.
- a clear and plain explanation of how to try and resolve employment relationship problems, including:
- a statement that most
personal grievances must be raised within 90 days, andAn action that an employee can take against a current or former employer when they have an employment issue they cannot resolve.
- a statement that sexual harassment personal grievances must be raised within 12 months
- a statement that most
- a statement that the employee will get (at least)
time-and-a-half payment for working on a public holidayAn employee’s pay for the time they worked multiplied by 1.5.
- for relevant employees, an employment protection provision to apply if your business is sold or transferred, or if the employee’s work is contracted out
- any other matters you and the employee have agreed on, such as trial periods, probationary arrangements, or availability provisions
- if the employee is a
fixed-term employee, this must be recorded in the employment agreement along with a genuine reason why it is a fixed term.Employment that ends on a specified date or when a particular event occurs, for example, covering for parental leave or seasonal work like fruit-picking.
Employment agreement builder
The A tool to help employers create tailored employment agreements for their employees. It covers what they must do by law and explains how to avoid common mistakes.
Employment agreement builder – business.govt.nz(external link)
When you’re a sole trader or even a small family business you may not think too much about terms of employment, but at some stage in your business journey you may need to employ people, and as your team expands employment agreements are important.
With business.govt’s ‘employment agreement builder' tool it’s easy to create one without spending hours and a fair bit of money at a lawyer’s office.
A written employment agreement is a legal requirement, and it’s a great foundation for an employment relationship.
It helps you and your employee be clear on what the employee needs to do, what to do if things aren’t going well, and the benefits and obligations you’ve agreed to.
With the employment agreement builder tool, you can create agreements tailored to your business needs for each person you employ.
It covers topics like pay, leave, sick leave, health and safety, dispute resolution, redundancy, and more.
You can find the tool at eab.business.govt.nz.
The tool helps you build an agreement step by step, providing you with options to choose between, and appropriate wording for each choice.
There are plenty of tips to help you decide what to put in your agreement, and what not to put in.
You get advice on what is mandatory, things you must include by law, what is recommended, and what is optional.
The tool points out common mistakes and how to avoid them.
Plus, it provides links to helpful guides for other documents which go with the agreement, like a job description, or which the agreement may refer to like policies and procedures.
It only takes about 30 minutes to complete a customised agreement using the tool.
You can save it part way through if you want and come back to it later.
When you are finished, the completed agreement will be emailed to you along with a suggested offer letter, a summary of tips and common mistakes tailored to your business, and a to-do list of suggestions for your next steps.
Both the offer letter and agreement can be edited so you can adjust the letter content, change styles, and add logos to match your branding.
Because the tool is so quick to use, you can use it for every new agreement rather than edit existing ones or using templates.
That way you make sure the agreement is right for each individual, is up to date with employment legislation, and you avoid accidentally leaving in detail related to another employee.
Growing your team can really stretch your resources.
The employment agreement tool saves you time and money and gives you peace of mind by making it free and easy to create your own robust employment agreements to provide a solid foundation for your employee relationships.
So don’t let this task get in the way of building your team and your business.
Head to eab.business.govt.nz and get your agreement sorted.
Other things you can include
An employment agreement can contain any other terms and conditions that you and the employee agree to, for example:
- the notice period required for
resignation andWhen an employee tells their employer they will be leaving their job.
termination When an agreement, contract or employment relationship ends.
- timing of rest and meal
breaks Paid or unpaid rest time during a work period. Employees must be given paid rest breaks and unpaid meal breaks. The number and duration depends on the hours worked.
restraint of trade clause Prevents employees from working in similar businesses in a way that may affect their former employer’s business. Restraint of trade clauses should be reasonable otherwise they may not be enforceable.
- a
trial or probationary period provisionA period of up to 90 calendar days that an employer can use to assess an employee’s suitability for the job. Trial periods must be agreed between the employer and employee in the employment agreement before the employee starts work.
- an
annual closedown .The regular closure of a workplace for a holiday period or seasonal break, requiring its employees to take annual holidays or unpaid time off.
Some things (like 4 weeks’ annual holidays) do not need to be in the employment agreement, but you must still provide them by law. If you agree to better terms and conditions than the minimum rights, you should record these in the employment agreement.
You can base an The employment agreement between an employee and an employer. Also see ‘Employment agreement’.
- a current
collective agreement if there is no intent or effect to undermine collective bargaining or the union agreesThe employment agreement between 1 or more unions and 1 or more employers and 2 or more employees. Also see ‘Employment agreement’.
- other individual employment agreements in the workplace.
Employees on individual employment agreements do not have to have the same terms and conditions even if they do the same job in the same workplace. But you need to make sure you are not discriminating on any unlawful grounds.