NZ Employment Agreement

Under New Zealand law, all employers are required to provide their employees with written employment agreements.

An individual employment agreement is an important document that sets out the “rules” for the employment relationship.

An employment agreement provides clarity for the parties regarding fundamental issues such as how much the employee will be paid, what duties the employee will undertake and what notice period must be provided if either party wants to end the employment.

Many of the actions that an employer may want to take are not permitted unless they are included in a written employment agreement. These include:

- dismissing an employee during a trial period without fear of a personal grievance;
- suspending an employee; and
- requiring a medical certificate for prolonged sick leave.

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Trial Period
• I'm an Employer - is a trial period a good idea?
• As an Employer, are there any tricky things I need to keep in mind about trial periods?
Pay as You Go Holiday Pay Option
• What is "pay as you go" holiday pay?
• Can I pay an employee that works every Saturday "pay as you go" holiday pay?
Annual Leave
• How many weeks of paid annual leave is standard?
• Do part time employees still get four weeks annual leave at the end of 12 months of continuous servi
Sick Leave
• How many days of paid sick leave is standard?
Notice Period
• Is there a standard notice period?
Redundancy Compensation
• What is redundancy compensation?
• Do I have to include redundancy compensation in the Agreement? It is common?

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Trial Period

• I'm an Employer - is a trial period a good idea?

  A trial period gives an Employer a chance to see whether the Employee would be a satisfactory addition to the workplace. If the Employee doesn't perform well during the 90 day trial period, the Employer can dismiss the Employee within the trial period and the Employee can't bring a personal grievance for unjustified dismissal.
  
  The Employer has to give the Employee a real chance during the trial period and inform the Employee of his/her shortcomings and what he/she needs to do to improve. The Employer also needs to give the Employee a chance to respond to the Employer's concerns before deciding that the Employee's employment will end.

  This hint is provided by Cavell Leitch.

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• As an Employer, are there any tricky things I need to keep in mind about trial periods?

  Yes.
  
  The Employer must have a signed employment agreement, containing a trial period clause, with the Employee before the Employee starts work. If the Employee starts work before they sign their agreement, then any trial period clause in the agreement won't be effective.
  
  Also, if the Employer dismisses the Employee during the trial period, the Employer must provide the notice period set out in the trial period clause. In the Law Central Employment Agreement, this is a one week notice period. If the Employer dismisses the Employee during the trial period, for example for serious misconduct, and doesn't give the notice set out in the trial period clause, the Employee can take a personal grievance.

  This hint is provided by Cavell Leitch.

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Pay as You Go Holiday Pay Option

• What is "pay as you go" holiday pay?

  Casual employees can be paid holiday pay with their regular pay (known as "pay as you go" holiday pay), provided that:

  • the Employee's employee is so irregular and intermittent that it would be impractical to require them to take paid holidays; and

  • the holiday pay is paid as a separate identifiable component of the Employee's pay.

  This hint is provided by Cavell Leitch.

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• Can I pay an employee that works every Saturday "pay as you go" holiday pay?

  No, as the employee's employment isn't "irregular or intermittent".

  This hint is provided by Cavell Leitch.

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Annual Leave

• How many weeks of paid annual leave is standard?

  The Holidays Act 2003 requires Employers to provide four weeks paid annual leave at the end of each 12 month period of continuous service. Employers are free to offer more leave than this, but can’t offer less.

  This hint is provided by Cavell Leitch.

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• Do part time employees still get four weeks annual leave at the end of 12 months of continuous servi

  Yes. A part time employee still gets 4 weeks’ paid leave. The payment they receive is based on the greater of:

  • their ordinary weekly pay just before they went on holiday; or

  • their average weekly wage, in the 12 months before they went on holiday.

  This hint is provided by Cavell Leitch.

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Sick Leave

• How many days of paid sick leave is standard?

  The Holidays Act 2003 requires Employers to provide 5 days paid sick leave at the end of each 6 month period of continuous service. Employers are free to offer more sick leave than this, but can't offer less.

  This hint is provided by Cavell Leitch.

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Notice Period

• Is there a standard notice period?

  Generally a notice period will be linked to the size and importance of the role. A senior employee may be required to give 6 weeks to 3 months notice, whereas a junior employee may be required to give 2 -4 weeks.
  
  When setting a notice period, the employer should think about how much time it will take for the employee to hand over their duties and for the employer to replace the employee.

  This hint is provided by Cavell Leitch.

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Redundancy Compensation

• What is redundancy compensation?

  Redundancy compensation is a payment made to an employee who has been made redundant. The compensation recognises that the employee’s job is gone through no fault of the employee.

  This hint is provided by Cavell Leitch.

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• Do I have to include redundancy compensation in the Agreement? It is common?

  No, it is not compulsory to include redundancy compensation in an employment agreement. In many modern employment agreements, there is no redundancy compensation.

  This hint is provided by Cavell Leitch.

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This document has been prepared by Cavell Leitch