What to put in employment agreements

As an employer, it’s your responsibility to supply a comprehensive employee agreement for every new employee before they start working for you.

This article explains the different types of employment agreements, what you need to include when writing you own agreements, and how the Ministry of Business Innovation and Employment – Labour can offer help and assistance to employers.

On this page:

• What is an employment agreement?
• Types of employment agreements
• What should I put in an employment agreement?
• Getting help

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What is an employment agreement?

An employment agreement is a compulsory written document between employees and employers that sets out working conditions, employment rights and specific work details.

An employment agreement is part of the legal framework that covers the relationship between employers and employees.

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Types of employment agreements

Employment agreements take the form of either an individual or collective agreement. These can also be called individual or collective contracts.

Most small to medium-sized businesses use individual agreements, which are between the employer and the individual. Some larger businesses, or smaller businesses within certain industries, use collective agreements to cover workers who are members of a union.

A collective agreement can look like an individual agreement but the terms of the collective agreement are decided by both the employer and the union representing its members. A collective agreement can become the standard agreement for all employees within an organisation, including new members who have yet to join a union.

If there is a union presence in your workplace, employees on individual contracts could decide to pursue a collective agreement arrangement or a union representative could raise this with you. You have certain legal obligations to allow your employees access to unions and to allow employees and union representatives the ability to collectively bargain the terms and conditions of employment.

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What should I put in an employment agreement?

There are certain legal requirements known as mandatory clauses that you need to include in an employment agreement. There are also minimum entitlements which apply regardless of whether, or not they are included in your employment agreement (annual holiday pay for example). Other optional clauses can be included as long as they are not contrary to any law. You can use the clauses below as a basis for your own employment agreement, or you could consult the Ministry of Business Innovation and Employment – Labour’s free online Employment Agreement Builder.

Mandatory clauses

For an individual employment agreement to meet the minimum requirements, it must contain at least the clauses listed below.

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.

These clauses will help you form the basic structure of the employment agreement, but the Employment Agreement Builder provides you with extra clauses that may be relevant to the position and the industry you work in.

Describing the duties

Make sure you describe the core duties as set out in the job description and if applicable, mention all the tasks the employee will be required to complete. For example, if you are hiring an apprentice vehicle mechanic, you might want to list the other tasks that are required from time to time, such as running errands, filing paperwork or managing customer accounts. This makes it clear to employees that the requirements of the role can be varied, which could prevent problems arising in the future.

Trials and fixed-term contracts

You’ll also need to remember to include clauses for employees on trial periods and fixed-term contracts. For employees on trial periods (up to a legal maximum of 90 days), you should include the trial period in their employment agreement so the employee is fully aware of, and agrees to, the trial process.

Find out more with Trials and probations.

For employees on fixed-term contracts, you’ll need to include why the position is for a fixed term only and give an end date or end event. For example, “The position is fixed term to cover painting three apartment buildings. The contract will cease in three months or earlier on completion of the work.” If you don’t give a valid reason or a clear finish date, your employee could be deemed a permanent employee by the Employment Relations Authority (ERA).

Read more about Fixed-term agreements.

Optional clauses

Here are a few other clauses you could add as part of your employment agreement.

1. Other entitlements or benefits

• Superannuation
• Medical insurance
• Gym memberships
• Mobile phones
• Study entitlements

2. Health and safety

• Work place hazards
• Drug testing
• Medical examination
• Counselling assistance

3. Security

• Password or Internet security
• Rules around Internet browsing and company email
• Adherence to company policy

4. Termination of employment

• Termination for misconduct
• Suspension
• Termination on medical grounds
• The amount of resignation notice required

5. Workplace harassment/racial vilification/discrimination policies

• Implications of breaching guidelines

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Getting help

The Ministry of Business Innovation and Employment – Labour’s INFOZONE: Business Essentials portal contains information and resources to help businesses with the hiring process, from advertising and interviewing candidates through to writing a job description and employment agreement.

If you can’t find what you are looking for online, you can call the Ministry of Business Innovation and Employment – Labour Contact Centre on 0800 20 90 20 during business hours. Business hours are 8.30am–5.00pm Monday to Friday, excluding public holidays.