July 7, 2023
In New Zealand, every employee must have a written employment agreement. They contain the fundamental terms and conditions of the employment relationship. A copy should be provided to the employee and you, as employer should also keep a copy.
So, what are these fundamental terms and conditions that the employment agreement should cover - what needs to be in them and how you can protect yourself and your staff?
First, the agreement must be in writing. Why? Well, it provides an employer with the opportunity to clearly communicate their expectations to an employee. It also sets out the job description (an integral part of the agreement) which provides the first step in effective performance management.
The need for a written employment agreement applies to all staff, from permanent full-time through to casual. Independent contractors such as agricultural contractors are not covered by this Act although we still recommend that you have written agreements with them also.
So, what must a written individual employment agreement contain? The following are essential terms that must be included:
All employees are entitled to the minimum wage – regardless of whether you employ them full-time, part-time or casual. It is important that you know the current minimum wage rates at all times to ensure you are paying at or above the minimum for actual hours worked. The minimum wage is set annually and must be paid for each hour worked, for example, if you own a farm, wages cannot be averaged over a season.
If you and the employee agree to a ‘trial’ period, this has to be included in the employment agreement.
All employees are entitled to at least four (4) weeks of paid annual leave (after working for you for a year). Please note that you cannot ‘contract out’ of these rights. You can provide more leave for employees than this but you cannot provide less!
In many circumstances, you, as the employer, may also be providing accommodation for your staff. Remember that if you are paying the employee the minimum wage then the most that can be deducted for rent is up to 15% for board and 5% for lodging.
Some organisations, such as Federated Farmers, provide a variety of employment agreements which can be bought online. These are updated regularly and contain all the essential terms you need in the contract. However, these are standardised agreements and you may require something more bespoke. If so, then we can help you draft an agreement that meets your specific industry/job needs.
It is really important that you, as employer, keep accurate records of hours worked, wages payable (and paid), and leave taken for each employee. You are legally required to keep these records for six years, so make sure you have a really good recordkeeping system in place.
We all spend time thinking about the start of a job but often we give little consideration to what happens when the employment relationship ends. There are a number of reasons for employment to end, which should also be considered when preparing an employment agreement, including:
For you, as the employer, there may be other issues that are relevant or essential to you and your employees that are not covered in a standard agreement. We have specialised knowledge and expertise in all aspects of employment law and can work with you to ensure your employment agreements meet all your needs and all legal requirements. Let us know how we can help you.