In New Zealand, every employee must have a written employment agreement. These agreements outline the fundamental terms and conditions of the employment relationship, ensuring both parties are clear on their roles and responsibilities. Employers should provide a copy to the employee and retain one for their records.

Why Written Employment Agreements Are Crucial

Clear Communication: A written agreement allows employers to clearly communicate expectations to employees, providing a foundation for effective performance management. This clarity is essential for all staff, from permanent full-time employees to casual workers.

Legal Compliance: All staff, regardless of their employment status, must have a written agreement. While independent contractors, such as agricultural contractors, are not covered by the Employment Relations Act, it’s still advisable to have written agreements with them.

Essential Components of a Written Employment Agreement

A comprehensive employment agreement must include:

1. Names of Employer and Employee: Clearly state the parties involved.
2. Job Description: Detail the work the employee will perform.
3. Place of Work: Specify the work location.
4. Hours of Work: Indicate the agreed or standard hours of work.
5. Wages or Salary: Outline the compensation the employee will receive.
6. Holiday Pay: Ensure compliance with the requirement to pay at least time and a half for public holiday work, along with a day off in lieu.
7. Dispute Resolution: Provide a plain English explanation of available services for resolving employment relationship problems, noting that personal grievances must be raised within 90 days.

Additional Conditions and Legal Requirements

Minimum Wage Compliance: All employees must be paid at least the minimum wage, regardless of their employment type. Stay updated on current minimum wage rates to ensure compliance, especially for hourly workers. Wages cannot be averaged over a season; each hour worked must meet the minimum wage.

Trial Periods: If a trial period is agreed upon, it must be included in the employment agreement.

Annual Leave: Employees are entitled to at least four weeks of paid annual leave after one year of employment. This entitlement cannot be waived or reduced.

Accommodation Deductions: If providing accommodation, deductions for rent must not exceed 15% for board and 5% for lodging when paying the minimum wage.

Creating Standardized or Customized Agreements

Organizations like Federated Farmers offer standard employment agreements that are regularly updated to meet legal requirements. However, if your business needs a more customized agreement, professional assistance can help draft one tailored to your specific industry and job roles.

Recordkeeping Requirements

Employers must keep accurate records of hours worked, wages paid, and leave taken for each employee. These records must be maintained for six years. Implement a robust recordkeeping system to ensure compliance.

Managing Employment Endings

Planning for the end of the employment relationship is as important as managing its beginning. Various reasons for termination should be considered in the employment agreement, including:

1. Resignation: Employees must give notice as specified in the agreement. Request written resignation and confirm acceptance in writing.
2. Non-performance or Misconduct: Employment can be terminated for valid reasons such as failure to perform tasks or misconduct.
3. Redundancy: Positions, not people, may become redundant due to business needs, such as financial difficulties or the sale of the business. Redundancy must be justified, and positions cannot be terminated simply because a project ends. Use fixed-term agreements for short-term staffing needs.

Seeking Specialized Advice

There may be unique issues relevant to your business that standard agreements do not cover. Expert legal advice ensures your employment agreements are comprehensive and compliant with all legal requirements. Contact us to discuss how we can assist you in creating robust employment agreements tailored to your needs.