Employment Contracts in New Zealand

Do I need to have a written agreement?

Yes. As a minimum, your agreement must contain the following, in writing:

  • Names of the employee and employer
  • A description of the work to be performed
  • The location of where the work is to be performed
  • The hours of work
  • The salary/wages to be paid
  • An employee protection provision (see our article for more information)
  • A plain language explanation of the services available for the resolution of employment problems. This must also include a reference to the 90 day period for raising a personal grievance
  • A description of the employee's entitlements to leave under the Holidays Act 2003.

You are entitled to take the agreement away and get advice. You are entitled to a reasonable amount of time to seek this advice. We strongly recommend that you take this opportunity to have the agreement checked.

Can my employer change the terms of my employment agreement?

No. Your employer can not force you to change your signed agreement. An employer can not vary your agreement without your mutual consent. We recommend that you contact us to determine your rights on variations. Also if you do not have a written agreement and your agreement is verbal then you have still have rights. For example your employer can not change your pay, start time, finish time, position and days of work without your consent. However this can be more complicated for both employer and employee so it is best that you call us first.

What is a fixed term agreement?

Sometimes employers and employees agree that employment will be for a set period of time (e.g. for six months) or until a certain event occurs (e.g. until a particular project ends) or until work is completed (e.g. until the fruit is picked).
Employers and employees can agree to fixed-term employment where:

  • There is a genuine reason for doing so (such as seasonal work, project work, temping work, or where the fixed-term employee is filling in for a permanent employee on leave); and
  • The employer advises the employee of those reasons and how or when the employment will end and does so prior to employing the employee.

In other words, the employer must make these things clear to the employee at the outset. The employer must also set out in writing, in the employment agreement, the reasons for the fixed term and how the employment will end.

Failure to record the fixed term arrangement in writing means that the employer will be unable to enforce the fixed term if the employee chooses to contest it.

An employer may not employ someone on a fixed-term agreement where the job is really a permanent one and the fixed term is actually a sham. If the fixed nature is not genuine or is to determine the suitability of an employee, then this would be an unjustified dismissal.



Annual Holidays

When should annual holiday pay be paid?

Employees are entitled to receive their pay for annual holidays before the holiday commences, unless the employer and employee agree that the normal pay cycle will continue undisturbed by the time off work.

This provision is designed to ensure that employees have money available to them to pay for the travel and accommodation expenses involved in a holiday, which often are required either at the commencement of a holiday or earlier.

If an agreement to pay the employee any annual holiday pay in their normal pay cycle is reached, it is advisable to record it either as part of the employment agreement or in writing on a case-by-case basis.

What should my Employment agreements say about holidays.

The annual holiday provisions in the Holidays Act 2003 are deemed to be part of any employment agreement that is silent on the subject of leave.

Many employment agreements contain provisions that vary the provisions of the Holidays Act 2003. Such variations are often to the benefit of the employee – for example, by providing additional annual holidays, establishing a higher rate for annual holiday pay, or providing consultative arrangements about closedown's.

The Act does not prevent the employer providing the employee with enhanced entitlements. However, it is important that the employer and employee review such arrangements to ensure they are consistent with this Act.

In the past, the concept of "overall advantage" was sometimes used to establish whether variations in employment agreements were legal. This concept no longer applies. The Holidays Act 2003 makes clear that each component of holiday arrangements must be at least as favourable to the employees as the entitlements specified in the Act.

This means, for example, that an employer cannot provide an employee with an extra week of annual holidays in exchange for the employee giving up their public holiday entitlements.

Can my employer force me to take annual holidays?

Annual holidays must be taken at a mutually agreed time.  Only where agreement cannot be reached can an employer require you to take leave, and you must be given at least 14 days' notice.

Can my employer pay my holiday pay in my wages?

No. The Holidays Act allows "pay-as-you-go" holiday pay arrangements in two circumstances only.

These are:

  • Employees on genuine fixed-term agreements of less than 12 months - this reflects the fact that these employees are not expected to reach the date on which they would normally qualify for annual holidays; and
  • Employees with a work pattern that is intermittent or irregular (genuine casual work) – this reflects the fact that the employee's employment pattern may mean it is not meaningful or practicable to attempt to provide them with three weeks' paid annual holidays.

Fixed term employees are simple to understand. This is discussed in the home page, click on questions on contracts. Casual contract are more difficult. The Holidays Act 2003 contains no reference to "casual work". Instead, the Act refers to intermittent or irregular employment.

Here are some examples of intermittent or irregular work for the purposes of the Holidays Act:

  • A retired employee who is called back in emergencies to cover for sickness.
  • Specialist tradesperson who is employed only when a particular process (such as repairing a broken machine) is required.

The holiday pay for casuals must be defined in the agreement or payslip's. It this does not happen it will be seen as if these payments did not occur and you maybe entitled to 3 weeks leave.

When does annual leave go to 4 weeks and if I am currently receiving 4 weeks will it go to 5 weeks annual leave.

The majority of the Holidays Act came into force on 1 April 2004. However, from 1 April 2007 all employees will become eligible for four weeks annual holidays on the date they next become entitled to annual holidays.

This is a minimum entitlement and will not mean that all employees who currently have four or more weeks annual holidays will qualify for an extra week. Whether the employee will receive an additional week above the minimum requirement is a matter for negotiation between the employer and employee.

An employee who finishes with their employer after 1 April 2007 but before their next entitlement date, will be entitled to the following:

  • Payment for any annual holidays that they may have previously accrued at the greater of average or ordinary earnings; and
  • Payment at 8% of gross earnings for the period between the last time they became entitled to annual holidays and their termination date

This information is not a substitute for legal advice and we recommend that you visit or call before acting on material you have read.