In New Zealand, the employment landscape offers a variety of employment agreement options to cater to different work arrangements. These options are crucial for both employers and employees to understand, as they ensure a clear and legally compliant working relationship.

Permanent Employment Agreements (Full-time or Part-time)

The most common type of employment agreement is the permanent employment agreement, which offers ongoing employment with no predetermined end date. These agreements can be full-time or part-time, providing greater job security for the employee. However, termination usually requires following specific procedures outlined in the agreement and employment legislation, such as the Employment Relations Act 2000 (ERA).

Fixed-Term Employment Agreements (Full-time or Part-time)

Fixed-term employment agreements specify a defined end date for the employment relationship. These agreements are suitable for temporary needs like seasonal work, project-based roles, or maternity/parental leave replacements. There must be a genuine and justifiable reason for the fixed-term nature of the agreement, and the employee must be informed of this reason.

Casual Employment Agreements

Casual employment agreements cater to irregular or short-term work with no set hours or guaranteed work. Casual employees typically don't receive benefits or paid leave entitlements associated with permanent or fixed-term roles. It's important to distinguish casual employees from part-time workers, as employment rights differ.

Collective Agreements

Collective agreements are negotiated between a group of employees (represented by a union) and their employer. These agreements outline specific terms and conditions of employment, including wages, working hours, leave entitlements, and dispute resolution procedures. Collective agreements generally offer more comprehensive benefits and protections compared to individual employment agreements.

Understanding the different types of employment agreements available allows employers in New Zealand to choose the most appropriate option for their specific needs while ensuring they comply with relevant employment legislation. Employees can also benefit from this knowledge by understanding their rights and entitlements under their specific agreement.

An employment agreement in New Zealand is a crucial document that sets the foundation for a fair and productive working relationship. It should include certain essential clauses to ensure clarity and compliance with employment legislation, primarily the Employment Relations Act 2000 (ERA).

Parties to the Agreement

This section should clearly identify the employer and the employee, including their full names and contact information.

Job Title and Description

This clause should outline the employee's job title, key responsibilities, and any specific qualifications or experience required for the role. A clear description helps manage expectations and avoids ambiguity regarding job duties.

Wages and Remuneration

This section should detail the employee's wages or salary, including the amount, frequency of payment, and any overtime pay calculations. It's crucial to ensure compliance with minimum wage requirements.

Working Hours and Leave

This clause should define the standard working hours per week, daily working hours, and any potential variations in the schedule (e.g., shift work). Additionally, it should specify leave entitlements, including annual leave, sick leave, and bereavement leave, adhering to minimum requirements outlined in the ERA.

Termination Clause

This clause should outline the grounds and procedures for termination of the employment contract for both employer and employee. It should reference the relevant provisions from the ERA specific to the type of employment agreement and minimum notice periods required for termination.

Dispute Resolution

This clause should outline the process for resolving any disagreements arising during the employment relationship. The agreement may specify internal grievance procedures or mediation mechanisms before resorting to formal dispute resolution through the Employment Relations Authority.

Intellectual Property

This clause may be necessary for positions requiring the creation or use of intellectual property. It should outline ownership rights and the employee's obligations regarding any intellectual property developed during their employment.

While these are essential clauses, the specific content of an employment agreement can vary depending on the nature of the work, industry standards, and any collective agreements that may be in place. Consulting with a professional familiar with New Zealand employment law is recommended to ensure the agreement adheres to legal requirements and best practices.

Probationary periods are a common feature in New Zealand employment agreements, providing a structured timeframe for both employers and employees to assess suitability for a role.

Duration

There's no legal maximum for probationary periods. However, a reasonable and agreed-upon timeframe is essential. The standard range typically falls between 3 and 6 months.

Key Requirements

The probation period clause must be explicitly included and signed within the employment agreement before work commences. Probationary employees retain all the minimum rights and entitlements as permanent staff, including pay, leave, and notice periods.

Purpose and Benefits

For employers, probationary periods allow them to assess an employee's skills, work ethic, and suitability for the role before making a permanent commitment. For employees, it's a chance to evaluate if the job aligns with their expectations and if the company culture is a good fit.

Probation vs. Trial Period

New Zealand law differentiates between probationary periods and trial periods. A probation period is applicable for new hires or existing employees transitioning to a new role within the same company. There's no set maximum duration, but it should be reasonable. A trial period is only for businesses with 19 or fewer employees and has a strict 90-day maximum. During this time, dismissal doesn't qualify as a personal grievance for the employee. Trial periods require stricter adherence to legal guidelines compared to probationary periods.

Employment agreements in New Zealand may include clauses to protect an employer's confidential information and limit competition from former employees.

H3 Confidentiality Clauses

Confidentiality clauses aim to safeguard an employer's sensitive information, such as trade secrets, client lists, or marketing strategies. These clauses typically outline:

• The definition of confidential information
• Employee obligations regarding information access, use, and disclosure
• Restrictions on post-employment use of confidential information

Even without a specific confidentiality clause, an employee has a common law duty to not misuse their employer's confidential information.

H3 Non-Compete Clauses (Restraint of Trade)

Non-compete clauses, also known as restraint of trade clauses, restrict a former employee's ability to work for a competitor or start a competing business for a certain period and within a specific geographic area.

Unlike confidentiality clauses, these clauses are subject to stricter legal scrutiny. New Zealand courts will only uphold a non-compete clause if it's deemed reasonable. Factors considered for reasonableness include:

• Employee's level and access to sensitive information: Clauses are more likely to be upheld for senior employees with access to critical secrets.
• Duration of the restriction: Courts generally favor shorter durations (e.g., 3-6 months) to balance employer protection with employee's right to work.
• Geographic scope: Restrictions should be limited to a reasonable area where the employer operates.

H3 Key Points to Remember:

• Non-compete clauses cannot prevent an employee from using their general skills and knowledge gained during employment.
• Breaching a valid non-compete clause could result in legal action from the former employer, such as an injunction or damages claim.