FAQs
Employment Contract:
An employment contract, also called an employment agreement, is a document that outlines the rights, obligations, and responsibilities of employers and employees. For example, this contract typically includes information about wages, benefits, working hours and job duties.
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Type of Employment Contracts:
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Full-time: Full-time employees typically work 30 hours or more per week and receive benefits that other employees do not.
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Part-time: A part-time worker usually works less than 30 hours a week and is guaranteed a minimum of working hours.
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Casual: Casual workers are not guaranteed minimum hours, but work as needed.
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Fixed Term: You may or may not specify an end date for the employee's position. A contract automatically expires on a fixed end date. Neither party is required to terminate the employment relationship.
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Why should you have an Employment Agreement?
New Zealand law requires employers to maintain written employment contracts for all employees. Without a written agreement, employers may face fines.
Contracts entered into protect the interests of both the involved parties viz. the employees and the employers.
The terms and conditions set out in the contract help mitigate the risks for employers when hiring new employees. For example, contracts often contain terms (such as prohibited conduct) that allow an employer to terminate an employee without notice. For example, if an employee behaves violently or steals from the company, the employer may have the right to terminate the employee immediately.
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Employment contracts also set out employee rights, such as remuneration, working hours, benefits and vacations. If an employer does not provide adequate compensation or working hours, employees can take legal action against them. In this case, the employee can use the employment contract as evidence of consent in court.
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What should be included in the employment contract?​
The information required to draw up an employment contract typically includes:
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Parties Details: Provide employee and employer names and contact information. Please also include your work address.
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Job Description: Describe your job title, primary duties, and responsibilities. If there is a trial or probation period, please state the period.
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Compensation: Describes how employees are paid (for example, hourly rates, salaries, commissions, or a combination of pay types), overtime, and pay periods. Include whether the employer has enrolled their employees in KiwiSaver, how much each party contributes, and how contributions are taxed.
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Working Hours and Holidays: Include regular working hours and annual leave entitlements for employees, such as vacation, sick leave, bereavement, and domestic violence leave.
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Post-employment restrictions: Prevent employees from sharing confidential information or hiring current employees or employment contracts. These restrictions are usually in effect even after the employee leaves the company.
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Notice Period: Enter the period during which the employer or employee must terminate the employment contract.
Optional clauses include:
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Trial or probationary period, if applicable (not applicable unless expressly stated):
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If your employment contract includes a Trial period, this contract must be signed and completed before the first day of employment. Otherwise, the trial period will be void. Employers are obligated to keep copies of all signed contracts and all intended (draft, proposed) contracts, including those drafted during negotiations with new employees. Employees are entitled to receive a copy of the contract upon request.
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Regulations on breaks and meal breaksClauses on Annual Leave, Bereavement Leave, Sick Leave
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To be clear, employment contracts do not have to include policies and procedures, company manuals, etc., but it is very important that employees are aware of these and that the company can prove it in the event of a dispute.
Employees must have read and understood them. For this reason, they are often included in the initial hiring documents or onboarding process. Employment contracts can be drawn up for people who are not yet eligible to work in New Zealand (e.g. to help them obtain the necessary visas).
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Finally, when negotiating a new employment contract or amending an existing one, it is important that employers act in good faith to ensure that unfair negotiations do not occur. Employers should be especially careful of unfair bargaining when dealing with workers whose understanding of the contract is limited because of age, language barrier, disability, illness or emotional distress.
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