As a business owner in New Zealand, you’re required by law to have written employment agreements. These contracts help define your relationship with your employees, your expectations for them, and your obligations to them, as well as outlining procedures to follow if something should go wrong in the employer-employee relationship.
Having a sound, clear employment contract in place streamlines your relationship with your employees, making it more likely everyone is able to work toward growth for your company. Take a look at the basics you should know about employment contracts.
Types of Employment Contracts
If your company has a unionised work force, you’ll need to negotiate collective employment contracts with the union. Otherwise, you should plan to negotiate individual employment contracts with each employee.
Any employee who is a union member covered by the collective agreement should be listed on the collective agreement. Signing your offer of employment indicates the employee’s willingness to abide by the terms of that agreement. Sometimes you can also add individual terms to a specific employee’s agreement to augment the union contract.
With employees who aren’t union members, you can negotiate individual contracts. Using a template for all your employees is fine, and you can negotiate specific terms individually with each employee. Employees don’t all have to agree to the same terms and conditions, even if they have the same job title. You can also change terms in an individual employee’s contract after they’ve been on the job for a while.
Your employment contracts should be put down in writing, and they should contain all legal minimums. Make sure nothing in any employment contract is illegal or inconsistent with prevailing laws.
Creating Employment Contracts
When creating an employment contract for your business, make sure you include all the relevant and mandatory terms and definitions you need. These make it clear what the employee’s role is and the terms under which they’re working. Items you should include are:
- The employee’s name
- The job title and description, with a list of duties and responsibilities
- The rate of pay, whether you’re paying an hourly wage or a weekly or monthly salary
- The terms of any bonuses or overtime pay, including pay for working on public holidays
- The location(s) at which the employee will work, especially if your business has multiple locations or if the employee is required to travel for work
- The disposition of the employee’s job if you sell the company or restructure it for any reason
- The term of the agreement, if it’s a fixed term agreement; this explanation must include the reason for the fixed term and why it ends when it does
- Any minimum number of hours required by casual workers
- Specifics regarding the possibility of shift cancellation, if relevant, including how much notice you must provide in the event of a shift cancellation and all payment involved
- Specifics regarding meal breaks, rest breaks and annual leave, especially if you’re offering more than the minimal legal requirements
- A clear procedure for handling any employee grievances
In addition, you can add any (legal) terms and conditions that are relevant to your business. These might include establishing a trial period, any drug testing requirements, confidentiality and non-disclosure agreements, and workplace requirements regarding use of company vehicles or wearing of uniforms.
What You Should Do With Employment Contracts
You should keep copies of the employment contracts for each of your employees, including casual employees. Make sure you provide each employee with a copy of their
own contract as well. In some cases, you must also provide a copy to the Employment Relations Authority to avoid being penalised by a Labour Inspector.
If you change the terms of any employment contract, make sure that the employee signs the new agreement, and sign it yourself, or have an authorised representative of your company do so. Keep and distribute copies of this new contract appropriately as well.
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