What to put in employment agreements

Good employment relationships begin with a good recruitment process that ensures everyone has clear expectations about the role, working conditions and employment rights.

A clearly written employment agreement can help reduce the risk of misunderstandings.

Every employee must have a written employment agreement. This can be either an individual agreement or a collective agreement. Collective employment agreements are negotiated in good faith between an employer and a registered union on behalf of their members. Employers must not unduly influence employees to join or not join a union.

From 1 July 2011, employers are required to retain a signed copy of the employment agreement or the current signed terms and conditions of employment.  The employer must retain the “intended agreement” even if the employee has not signed it. Employees are entitled to a copy on request.

There are some provisions that must be included in employment agreements by law, and there are also a number of minimum conditions that must be met regardless of whether they are included in agreements. Employment law also provides a framework for negotiating additional entitlements.

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Types of employment agreements

The Employment Relations Act 2000 sets out most of the rules for forming an employment relationship, through an employment agreement. The rules differ depending on whether there is a relevant collective agreement or not.

There will be a relevant collective agreement when:

• an employer and a union have negotiated a collective agreement under the Employment Relations Act 2000, and
• the agreement covers the work to be performed by that employer’s new employee

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When there is no relevant collective agreement

If there is no relevant collective agreement, the employer and the employee negotiate an individual employment agreement which sets out the employee’s terms and conditions of employment. This agreement must not have anything in it that is less than what is required by legislation, or is inconsistent with the law.

The agreement must be in writing and contain at least the required terms and conditions of employment. The prospective employee has a right to seek independent advice.

An employer must, when offering a person a job:

• give the person a copy of the intended individual employment agreement
• advise the person that he or she is entitled to seek independent advice about the intended agreement
• give the person a reasonable opportunity to get that advice
• consider any issues that the employee raises and respond to them.

The individual employment agreement must include:

• the names of the employer and the employee (to make clear who are the parties to the agreement)
• a description of the work to be performed (to make clear what the employee is expected to do)
• an indication of the place and hours of work
• the wage rate or salary payable
• a plain explanation of services available to help resolve employment relationship problems
• a provision confirming the right to at least time-and-a-half payment for working on a public holiday
• for most employees, an employment protection provision that will apply even if the employer’s business is sold or transferred, or if the employee’s work is contracted out

• a reference to the fact that personal grievances must be lodged within 90 days of any incidents occurring
• any other matters agreed upon, such as trial periods or probationary arrangements.

When there is a relevant collective agreement and the new employee is a member of the union that negotiated it

When there is a collective agreement negotiated by the employee’s union covering their work, the employee’s minimum terms and conditions of employment must be those set out in the collective agreement. The employer and the employee may agree to other terms that are additional to, or better than, the collective agreement, so long as those other terms can comfortably sit alongside those in the collective agreement.

When there is a relevant collective agreement and the new employee is not a union member

When the employee is not a union member but there is a collective agreement covering their work, the employer and the employee can have an individual employment agreement based on the collective agreement.

For the first 30 days, the employee’s individual employment agreement consists of the terms and conditions of employment in the collective agreement. The employer and the employee may also agree to other terms that are additional to, or better than, the collective agreement so long as those other terms can comfortably sit alongside those in the collective agreement.

After the initial 30-day period, the employee’s terms and conditions of employment can be varied by agreement (either upwards or downwards).

This gives the employee time to decide whether they want to join the union and the collective agreement or whether they would prefer to stay on an individual agreement. If, during the 30 days or later, the employee joins the union, they immediately join the collective agreement. If they don’t join the union, they stay on an individual agreement.

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