Every employee in NZ must have a signed, written employment agreement, whether they are full-time, part-time or casual.
As the fundamental legal document between an employer and an employee, the employment agreement sets out the terms and conditions of employment, establishes entitlements and expectations, and provides a reference if there are any issues down the track.
While they're not hard to get right, there are some common errors that every business wants to avoid:
- Not having an agreement at all - If you don’t have a written employment agreement for every employee, you could be fined.
- Not getting the right type of agreement - If your employee’s agreement doesn’t match the reality of their work, you could face an employment dispute or other costs, including outstanding wages, holiday pay, or PAYE tax. Find out more about employment types at business.govt.nz.
- Not complying with employment legislation - All employment agreements must have a number of basic clauses, including the names of the employer and employee, what the nature of the work is, where it is, the agreed hours, and the salary or wage rate. Not having these clauses could open you up to legal disputes and fines.
- Short-changing workers’ rights - Even if the employment agreement doesn't comply with an employee’s basic rights, such as minimum wage rates, paid annual and public holidays, paid rest and unpaid meal breaks, the minimum rights are still legally binding.
- Not following the provisions - If you fail to adhere to the employment agreement’s provisions or act in good faith, you could face personal grievance claims from employees or fines by the Labour Inspectorate.
Remember, the employment agreement is the basis of the employment relationship, so having a watertight agreement will get you off to a good start and provide an honest foundation to build on.