Employment agreements must be written. An employment agreement between the employee and the employer is known as an individual employment agreement (“IEA”). An agreement between an employer and union is known as a collective employment agreement (“CEA”), which must cover two or more union members.
A trial period is only permitted if the employer has 19 or fewer employees (whether full time, part time, casual or otherwise) and is not mandatory.
If a trial period is included in the employment agreement, employers may dismiss a new employee during a trial period. The trial period can be up to 90 days. The trial period must be agreed in writing in the employment agreement before the employment relationship begins. Notice must be given within the trial period, even if the new employee is not actually dismissed until after the trial period ends. If the above conditions are met the employee will have no entitlement to bring a personal grievance against the employer for unjustified dismissal (they may however raise a personal grievance on other grounds during the trial period).
An employer who is prohibited from using a trial period may include probationary period provisions (which may include a shorter period of notice). However, unlike a trial period, when exercising a right to terminate pursuant to a probationary period provision, employers must follow a fair process and have a fair reason for dismissal (i.e. employers must comply with all usual requirements of a fair dismissal that would apply whether or not a probationary period was in place).
Hours Of Work
There is no statutory maximum on the number of hours that may be worked per week.
There is no statutory entitlement to overtime.
There is a prohibition on “zero hour” contracts that require a person to be available at all times to work without specifying minimum guaranteed hours and reasonable compensation for being available.
Any provision in an IEA or CEA that provides an employer with the ability to require an employee to work hours in addition to their ordinary contracted hours constitutes an “availability provision” under section 67D of the Employment Relations Act 2000. Accordingly, the employment agreement and the provision must comply with section 67D. This includes providing the employee with reasonable compensation for their availability as a separate component from their remuneration for time worked.
Rest breaks and meal breaks must be at least the period specified by the Employment Relations Act 2000. Generally, this provides that an employee who works eight hours a day is entitled to at least:
-Two 10-minute paid rest breaks; and
-A 30-minute unpaid meal break.
These breaks must be provided at the regular intervals provided for by the Employment Relations Act 2000 (being halfway through each period of work and the next break or end of employment), unless otherwise agreed between the employer and the employee.
Employers must keep accurate records of employees’ time worked and their remuneration paid and must keep those for at least 7 years after the employment has ended.
Special Rules For Part-time Work
Minimum employment rights and entitlements (including minimum wages, paid annual holidays and sick and bereavement leave) apply equally to part time employees.
The minimum wage rates are reviewed every year. As at 1 April 2021:
-The adult minimum wage is $20.00 an hour (before tax). There is no overtime rate – hours worked in excess must be paid at the minimum rate.
-The Starting-Out and training minimum wages are $16.00 an hour (before tax), being 80% of the adult minimum wage. No overtime rates apply.
Remuneration paid as a salary must not equate to a level below the minimum wage rate, taking into account the number of hours worked by the employee in any particular pay period.
The Starting-Out wage is focussed on 16 and 17-year olds starting out in the workforce, 18 and 19 year olds who have been on a benefit for six months or more, and 16 to 19 year olds in training in a recognised industry training course.
The training minimum wage applies to employees aged 20 years or over who are doing recognised industry training to become qualified.
Employees are entitled to a minimum annual paid holiday of 4 weeks per year provided that the employee has completed 12 months’ continuous employment. These entitlements accrue (do not expire and cannot be contractually forfeited if not used during the year in which they accrue) and are payable on termination to the extent they are not taken.
If an employer and an employee cannot agree on when accrued annual leave is to be taken, the employer can specify when the employee must take annual leave, by giving the employee not less than 14 working days’ notice.
Each year, 11 public holidays are observed in New Zealand each year, with an additional public holiday scheduled to begin in the year 2022, taking the total number of public holidays to 12 per year. Additional obligations/payments are payable if an employee is required to work on a public holiday.
If a fixed term Employment Agreement is for a period of less than one year, the employee’s entitlement to annual holidays is usually provided for by adding 8% of the employee’s gross earnings as annual holiday pay to their pay (also known as pay-as-you-go leave). This amount must be shown separately on the wage record.
Casual employees are still entitled to annual holidays. This is usually provided for by adding the 8% to their pay, on the pay-as-you-go basis.
There is no statutory entitlement to long service leave.
Age discrimination is prohibited. There is no minimum or maximum working age. However, young people aged less than 16 years cannot work after 10pm, before 6am or during school hours.
There are additional restrictions, under health and safety regulations, on the work that people under 15 years of age may do.
While minors have capacity to sign employment agreements, only people aged 16 or over may be party to a settlement agreement.
Employers of employees under 20 years of age must keep records of the employees’ age, address, and the date they commenced employment along with their time and wage records.
After 6 months’ continuous employment, an employee is entitled to 5 days sick leave per annum (which may accrue up to 20 days).
Discrimination on the grounds of disability is prohibited. There is no separate disability leave entitlement. The Human Rights Act 1993 permits different treatment based on disability only where it is not reasonable to expect the employer to provide special services or facilities necessary to enable the employee to perform the duties of the position satisfactorily, or it is not reasonable due to risk of harm to that employee or others. These exceptions do not apply if the employer could, without unreasonable disruption, take reasonable measures to reduce the risk to a normal level.
Location Of Work/Mobility
The place of work must be recorded in the employment agreement.
Superannuation is not compulsory in New Zealand. However, new employees will be automatically enrolled into KiwiSaver, a voluntary, work-based savings initiative setup between an employee and an employer to help with long term retirement savings.
The current rate of compulsory employer contributions to KiwiSaver schemes (if an employee is making contributions) is 3% of an employee’s salary and wages.
Compulsory employer contributions must be on top of an employee’s regular pay. However, a salary package can be negotiated whereby compulsory employer contributions can be offset against the employee's gross pay, under a “total remuneration approach”. Some employers consider this is fairer to employees, as it means that employees who have elected not to join KiwiSaver are not paid less than KiwiSaver employees.
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
Minimum statutory entitlements to parental leave and job retention apply.
Employers have a statutory obligation to provide appropriate facilities and breaks to an employee who wishes to breastfeed.
After 6 months employment, paid (by the government) primary carer leave is up to 26 weeks, partner’s leave is up to 14 days.
After 12 months employment, paid (by the government) primary carer leave is up to 26 weeks, partner’s leave is up to 14 days unpaid and unpaid extended leave is up to 52 weeks.
In addition to any parental leave taken, female employees who are pregnant may take up to 10 days unpaid special leave for pregnancy-related reasons.
Employment agreements must include:
-Names of the employer and the employee;
-A description of the work to be performed;
-An indication of the place of work;
-The agreed hours;
-The wage rate or sale payable, and how it will be paid;
-A plain language explanation of how to help resolve employment relationship problems, including advice that personal grievances must be raised within 90 days;
-A statement that the employee will get (at least) time-and-a-half payment for working on a public holiday;
-An employment protection provision to apply if the employer’s business is sold or transferred, or if the employee’s work is contracted out;
-If to be applied to a particular employee, the applicable trial period, probationary period or availability provisions;
-The nature of the employment, for example if the employment is casual or fixed term;
-In the case of fixed term employment, must include the reasons for the employment being a fixed term;
-If casual or fixed term employees are to be paid annual holidays on a pay-as-you-go basis (see Annual Holidays section below), the employment agreement must contain an agreement to this.
Parties cannot contract out of minimum statutory rights but are free to agree on enhanced entitlements or other contractual terms.
The use of fixed term agreements is regulated. An employer must have a genuine reason for using a fixed term and the employment agreement must record when or how the employment will end and the reasons for it ending in that way. Failure to do so entitles the employee to challenge the validity of the fixed term and claim remedies, which may include permanent employment. Limiting or excluding statutory rights or establishing suitability for permanent employment is not a genuine reason.
Other types of agreement include permanent, casual or part-time employment.
For the first 30 days of employment, the individual Employment Agreement of a new employee who is not a union member but whose work is covered by a collective agreement (affected employees) must be on the same terms and conditions as the collective agreement. Additional terms and conditions may be negotiated in an individual employment agreement, so long as they are no less favourable than the collective agreement. This means that employers are unable to offer something different from (or less favourable than) the collective agreement when one would cover the employee's work if they joined the relevant union. It is a requirement for employers to issue affected employees with a prescribed "Active Choice Form" within 10 days of that employee commencing work.
In the absence of an express term, a duty of confidentiality will be implied during employment to protect confidential information of the employer. Post-employment, an implied term of confidentiality will only protect highly confidential information such as trade secrets.
Subject to any agreement to the contrary, where an employee makes, in the course of his or her employment, a literary, dramatic, musical or artistic work, the employer will be the owner of the work.
If the employee is the first owner of the copyright of the work, the employee may have moral rights to be identified as the author of the work and for the work not to be subjected to derogatory treatment.
The guidelines for completing a credit check provide that a pre-employment credit check may only be completed if the individual will be taking a position involving significant financial risk.
A criminal record check can be obtained by applying to the New Zealand Ministry of Justice. The Criminal Records (Clean Slate) Act 2004 allows individuals to legally conceal less serious convictions from their records provided they have been conviction free for at least 7 years.
It is an offence for an employer to employ a person who is not legally entitled to work in New Zealand. Non-nationals intending to work in New Zealand need a visa entitling them to work for, at least initially, a specific period. This may be subject to conditions, including as to minimum hours / minimum pay.
There are no specific rules about hiring specified categories of employees.
Duties to employees under the Employment Relations Act 2000 extend to “any person of any age employed by an employer to do any work for hire or reward under a contract of service”. However, an employer’s obligations occasionally extend further than this. Under health and safety legislation an employer owes duties to contractors and subcontractors in addition to employees.
A triangular employment arrangement typically arises where an employee is employed by one company or organisation, such as a hire or recruitment company, but works under the control or direction of a third party (Triangular Employees). New legislation allows Triangular Employees to join a controlling party (who is not their formal employer) to a personal grievance claim (and if upheld, that controlling third party may also be responsible for lost wages and/or compensation).