Is a written employment agreement legally required in NZ?
Yes. Under section 65 of the Employment Relations Act 2000, every employee in New Zealand must have a written employment agreement. This applies regardless of the type of employment, full-time, part-time, fixed-term or casual. There are no exceptions.
The agreement must be provided to the employee before they start work, and the employer must keep a signed copy. If a written agreement is not provided, the employer is in breach of the ERA and may face penalties from the Labour Inspectorate as well as significantly reduced legal standing in any subsequent employment dispute.
Key point. A verbal agreement is not enough. Even if everything is agreed in conversation, the ERA requires it in writing, signed, before work starts.
What must an NZ employment agreement include?
The ERA specifies a number of mandatory provisions that every employment agreement must contain. These include the names of the employer and employee, a description of the work to be performed, an indication of where the work is to be performed, the agreed hours or an indication of the arrangements relating to hours, and the wage or salary payable.
Beyond these, the agreement must include provisions relating to the resolution of employment relationship problems, specifically, it must tell employees about their rights under the ERA and how to access mediation services. This clause is commonly overlooked in template contracts but is a legal requirement.
Additional clauses covering leave entitlements, notice periods, performance management and trial periods are not always mandated but are strongly recommended. A contract that only meets the minimum requirements provides very limited protection for your business in practice.
How do 90-day trial periods work in New Zealand?
A 90-day trial period under section 67A of the ERA allows employers to dismiss a new employee during the trial without the employee being able to bring a personal grievance claim for unjustified dismissal. However, the rules are strict and a trial period is only valid if it meets all ERA requirements.
To be enforceable, the trial period must be agreed in writing before the employee begins work. It cannot be added after employment starts. The employer must be employing the person for the first time, the trial period must be no longer than 90 days, and the agreement must include a clear written clause specifying the trial.
Even during a trial period, the employer must act in good faith and cannot dismiss an employee for reasons unrelated to their performance or conduct. Trial period dismissals are still subject to scrutiny and have been successfully challenged at the Employment Relations Authority where the process was not followed correctly. As of 2024, trial periods are available to all NZ employers regardless of business size.
Watch out. A trial period clause that is poorly worded or signed after the employee has started is unenforceable and offers no protection. This is one of the most common contract mistakes we see.
What's the difference between casual and permanent employment?
A casual employee has no guaranteed hours and works only when called upon. Casual employees are entitled to the same minimum employment rights as permanent employees, including minimum wage, public holiday pay and annual leave, but their agreements need to reflect the nature of the arrangement.
A permanent employee (full-time or part-time) has guaranteed hours and ongoing employment. Their agreement defines set hours, a regular salary or wage and ongoing entitlements. Permanent employees have stronger protections around termination and are entitled to the full range of leave provisions under the Holidays Act 2003.
One of the most common mistakes NZ employers make is treating a de facto permanent employee as casual, using a casual agreement to avoid providing guaranteed hours or leave entitlements. The ERA looks at the real nature of the arrangement, and courts have held that employees working regular predictable hours may be entitled to permanent employment rights regardless of what the agreement says.
What leave entitlements must NZ employers provide?
New Zealand's Holidays Act 2003 sets the minimum leave entitlements all employers must provide. After 12 months of continuous employment, employees are entitled to four weeks of paid annual leave. Sick leave of 10 days per year accrues after six months of employment. Employees are also entitled to paid bereavement leave of three days for the death of an immediate family member.
Employees are entitled to public holiday pay for the 11 New Zealand public holidays if those days would otherwise have been a working day for them. Public holidays worked attract time and a half pay and an alternative holiday.
Parental leave entitlements under the Parental Leave and Employment Protection Act 1987 provide for paid parental leave from the government and job protection rights for eligible employees. Leave entitlements must be clearly reflected in the employment agreement.
How should termination of employment work in NZ?
Termination of employment in New Zealand is governed by the ERA's good faith and unjustified dismissal provisions. An employer who terminates an employee without following a fair process or without a justified reason faces a personal grievance claim and potential compensation awards at the Employment Relations Authority.
The employment agreement must specify the notice period required by both the employer and employee. The agreement should also address what happens when employment is terminated for serious misconduct, where summary dismissal may be available.
Even with a solid employment agreement, the process followed during termination matters enormously. The ERA's good faith obligations require employers to raise concerns with employees, give them an opportunity to respond and genuinely consider their response before making a decision. A well-drafted employment agreement creates clear expectations from the outset and significantly strengthens your position if termination issues arise.