Employment agreements – a must for everyone

From 01 July, all employers were required to keep a signed copy of every employee’s employment agreements and current terms and conditions of employment. This requirement, enforceable through a penalty action taken by a labour inspector, is the last of a number of amendments to the Employment Relations Act 2000 and the Holidays Act 2003, most of which came into effect 01 April.

The July 01 amendment applies to all employment relations, including employees hired on a verbal agreement, no matter when the staff member was employed.

For example, if an employee started work in 1992 on a verbal agreement, the employer must ensure the agreement was committed to writing and signed or they may be subject to a penalty action by a labour inspector. If there is a problem getting an agreement signed, the intended agreement or current terms and conditions of employment should be retained on file.

Employment relationships

Good employment relationships begin with a strong recruitment process and clear expectations about the role, working conditions and employment rights. A clearly written employment agreement can help reduce the risk of misunderstanding and is the foundation for a good employment relationship. 

Employment agreements

When hiring a new employee, employers must retain a copy of the ‘intended agreement’ even if the employee has not signed it or agreed to the terms and conditions specified.

The intended agreement cannot be treated as the final employment agreement if the employee has not signed it or has not agreed to the terms and conditions specified in it. Often the terms and conditions of these agreements change over time.

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. A full list of these provisions can be found on the Department of Labour’s website.

It is the employer’s responsibility to maintain and keep an up to date copy of each employee’s employment agreement that reflects the current terms and conditions of the employment relationship. Employers must provide a copy of the agreement if an employee requests it. It is also the first port of call to clarifying any misunderstanding or problems. 

Compliance

Recent changes to the Employment Relations Act 2000 give labour inspectors the ability to seek a penalty against an employer who is in breach of provisions of the Act relating to employment agreements. This includes the requirement for all employers to retain a copy of the intended and current employment agreement or terms and conditions of employment, whether signed or unsigned and to provide a copy to employees on request. Employers will be given seven working days notice of to fix the breach. Where the breach is not remedied the inspector can take a penalty action against the employer in the Employment Relations Authority.

Labour Inspectors can also look at individual employment agreements to see if they meet the minimum legal requirements.

The Department of Labour’s has developed an employment agreement builder, to help you create your own employment agreement. Please note it is best practice to ensure that an employee indicates their agreement by signing their employment agreement before they start work.

For further information visit the Department of Labour’s website at www.dol.govt.nz or phone the contact centre, 0800 20 90 20.