New Zealand Employment Contracts

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New Zealand Contracts

If a foreign company is looking to hire resident employees as part of their expansion into New Zealand, they must comply with recruitment regulations such as tax, social security contributions and local employment laws, as well collaborate with or adhere to any collective bargaining, trade unions or work council agreements.

In New Zealand, employment relationships must be concluded in written employment contracts. There are three types of employment contracts – the individual contract, the fixed-term contract, and the collective agreement contract.

National legislation is the main source of employment law in New Zealand, which governs employment conditions, benefits, and health and safety regulations, and protects the basic rights of both the employers and employees. The conditions of labor legislation that are performed may vary according to the industry and sector – so it is best to confirm with the Ministry of Business, Innovation and Employment on what regulation applies.

Labor law in New Zealand is based on both employer and employee protection. To be fully aware of what you can and cannot apply to your employment practices in New Zealand, it is important for the employer to know the existing labor laws and employee entitlements, as well as collaborate with the appropriate local employment organizations.

Employment Contracts in New Zealand

In New Zealand, an employment contract, or employment agreement, must be concluded in writing. The agreement could either be a collective agreement (which is between employees, employers, and unions), or an individual contract (which is between an employee and employer), which can be indefinite or fixed term. Here are the conditions of each agreement:

  1. An individual contract – an individual contract is the best type for employees that are not involved a trade union or collective agreement, or where one is not involved and must be treated as an individual. This type of employment agreement must include:

    – personal information (names, contact numbers, etc.) of both the employer and the employee
    – a description of the employee’s work to be performed
    – the place of work and the agreed hours of work
    – the wage rate or salary, and the payment process
    – information/guidance on how to resolve workplace relationship problems, such as advice that personal grievances must be raised within 90 days
    – statement of public holiday payments (if needed), which must be at least normal working rates and a half (150%) for work done on those days
    – protection in cases of restructuring

  2. Fixed-term employment contract – Fixed term agreements are practiced but are only allowed if there is a genuine reason. They must be based on justifiable grounds for having a fixed employment term and the employer must inform you of this reason before employing you, as well as how and when your employment will end.

    The conditions to be included in the fixed-term employment agreement are to be the same as the individual agreement, and the rights of fixed-term employees are the same as permanent employees, but the agreement type must include:

    – an explanation of why the role is only for a fixed term
    – a specification of when the agreement ends

  3. Collective agreements – A collective employment agreement covers two or more employees and are negotiated by the employer and a trade/workers’ union on the employees’ behalf. This type of agreement may involve more than one employer as well as more than one union.

    For an employee to be covered by a collective agreement, their job must be included or within the scope of the agreement, and they must be a member of the union that negotiated it. A new employee being covered by a collective agreement will have the minimum terms and conditions set out in their employment agreement/contract. As an individual, they can negotiate additional terms.

    The following terms must be included in the collective agreement:

    – the type(s) of work or group of employees that the agreement covers
    – the wage/salary rates that are payable to the employees being covered by the agreement
    – a clause which states that employees should be paid at least time and a half during work done on public holidays
    – services for resolving any employment relationship issues or problems
    – a clause explaining how the agreement may be amended
    – a clause stating the end of the validity of the agreement, or the event that will bring about the agreement’s end
    -a clause known as the ‘prospection of restructures’, which applies for most industries – it must state how the employer must protect the employees in the case of business restructuring

Minimum employment rights must be complied with, even if they are not included in the employment agreement or if the contract states conditions that are less than the minimum entitlement. Any changes to the employment contract must be agreed to by both parties, and the employer cannot make any changes without the employee’s consent.

Employers are obliged to keep a copy of the employment agreement or the current signed document containing the terms and conditions of employment. The employer must also keep a copy of an intended agreement, even if the employee has not signed it. Employees are entitled to a copy of their employment agreement upon request. Failure to guarantee the employment agreement is in writing will result in government fines of NZ$1,000 for each employee.

There is also a 30-day period for new employees concerning employment agreements. For the first 30 days of employment, new employees are to be employed under the terms that are consistent with the with the applicable employment agreement if one is in place. Both parties may also agree on additional terms that are more favorable than those in the collective agreement. After the 30-day period has expired, the employee and employer must come re-negotiate and agree on different terms and conditions on the individual employment agreement. However, if the employee has joined the trade union that has helped negotiate the terms of the collective agreement, the reconvening does not need to take place.