Your employment agreement

Introduction

What is an employment agreement?

Your employment agreement sets out the terms and conditions that govern your relationship with your employer.

It can be either:

  • an individual agreement – that is, between one employee and one employer, or
  • a collective agreement – that is, between two or more employees, and one or more employers, and one or more unions.

(See “Collective employment agreements” and “Individual employment agreements” in this chapter.)

Does my agreement have to be in writing?

Employment Relations Act 2000, ss 54, 64, 65, 235B

Yes. Every employee must have a written employment agreement. Your boss must keep a signed copy of the agreement and must give you a copy, whether you ask for one or not. If your boss breaches these rules, a labour inspector can give them an infringement notice (like a speeding ticket) requiring them to pay a $1,000 fine. Alternatively, you (or a labour inspector) can ask the Employment Relations Authority to order your boss to pay a financial penalty. From April 2016 the maximum penalties increased significantly for this and other breaches of workers’ minimum rights: see the chapter “Employment conditions and protections”, under “Introduction”.

What are my rights if I don’t have a written agreement?

You have legal rights as an employee even if you don’t have a written employment agreement, because a verbal agreement between you and your employer is still legally binding.

The terms and conditions of your employment relationship will include:

  • the terms and conditions you’ve agreed to verbally
  • the normal practices in your workplace
  • the protections for employees in the Employment Relations Act
  • the minimum conditions guaranteed by Acts like the Holidays Act and the Wages Protection Act (see the chapter “Employment conditions and protections”)
  • the protections provided by Acts such as the Health and Safety at Work Act 2015, and
  • the basic obligations that the courts see as implied in all employment relationships (see “How your rights and obligations as an employee are determined / Basic obligations implied into all employment agreements” in this chapter).

Starting work and negotiating an agreement

Choosing between a collective or individual agreement when you start work

Employment Relations Act 2000, ss 56(1), 62

If there’s a collective agreement in your workplace when you start work and you already belong to the relevant union, then you’ll be covered by this agreement automatically. If you’re not a union member you can decide to join the union and you’ll then be covered by the collective agreement.

If there’s no collective agreement, or if there’s a collective agreement but you’re not a union member, then you’ll be on an individual employment agreement. The terms of your individual agreement will be whatever is negotiated between you and your employer.

If I’m under a collective agreement, can I still negotiate terms as an individual?

Employment Relations Act 2000, s 61

Yes. You as an individual can negotiate your own additional terms while still being part of the collective agreement, as long as the additional terms aren’t inconsistent with the collective agreement. Not being inconsistent generally means that the additional terms must deal with issues not covered by the collective agreement, or must be better than minimum terms in the collective agreement.

Negotiating an individual employment agreement

Employment Relations Act 2000, ss 4, 60, 63A

If you and your employer are negotiating a new individual agreement or negotiating any specific new terms, you must deal with each other in good faith. This duty of good faith includes not misleading or deceiving each other.

Employers also have some other specific obligations when negotiating individual agreements, and this applies both to existing employees negotiating new agreements (or changes to an agreement) and to prospective employees. In these situations the employer must:

  • give you a copy of the proposed agreement
  • tell you that you have the right to seek independent advice about the agreement, and give you a reasonable opportunity to get it, and
  • consider any issues you raise, and respond to them.

What can I do if the negotiation process hasn’t been fair?

Employment Relations Act 2000, ss 68, 69

If you think your employer has taken unfair advantage of you in negotiating an individual agreement, you may be able to take action against them in the Employment Relations Authority.

You’ll need to show that what happened amounted to “unfair bargaining”, which means either:

  • that you couldn’t adequately understand the agreement or its implications because of your age or because of an illness, a mental or educational disability, a disability that affects communication, or emotional distress, or
  • that you relied on your employer’s skill, care or advice, or
  • that you were pressured into entering into the agreement by “oppressive means, undue influence, or duress”, or
  • that your employer didn’t give you the information they’re required to when negotiating individual agreements (for example, a copy of the agreement), or didn’t give you the opportunity to get legal advice as they’re required to (for those requirements see above “Negotiating an individual employment agreement”).

You’ll also need to show that your employer was aware of the relevant situation, or should have been aware of it.

The Employment Relations Authority can make whatever orders it thinks is appropriate, including ordering your employer to pay you compensation and, in some cases, amending or cancelling your agreement.

Do I have to tell employers about my criminal convictions?

Criminal Records Clean Slate Act 2004

If you’re applying for a job and you’re asked if you have a criminal record, you don’t have to tell the employer about any convictions for minor offences that are seven or more years’ old.

There are some other conditions you must meet to qualify for the right to withhold your criminal record in these situations. For example, you must never have been sentenced to prison, you must never have been disqualified indefinitely from driving, and you must have paid any fines or reparation in full.

(For more details about qualifying under this “Clean Slate” scheme, see the chapter “The criminal courts”.)

Can my boss stop me working for other employers?

Employment Relations Act 2000, s 67H

Your employment agreement can’t stop you also working for other employers unless there are genuine reasons for this, based on reasonable grounds, and these reasons are set out in the agreement. Genuine reasons can involve protecting your boss’s business knowledge or commercial reputation, or preventing an unmanageable conflict of interest. (These new rules apply to any new agreement made on or after 1 April 2016. For existing agreements, however, there’s a time lag, which is the same as for the new laws addressing “zero hour” contracts: see the chapter “Employment conditions and protections”, under “Hours of work”.)

Collective employment agreements

What is a collective employment agreement?

Employment Relations Act 2000, ss 31-59

Collective agreements cover two or more employees and are negotiated by the employer and a union on the employees’ behalf (see “Unions” in this chapter). A collective agreement can include more than one employer and more than one union.

When will I be covered by a collective agreement?

Employment Relations Act 2000, s 56

For you to be covered by a collective agreement your job must come within the scope of the agreement and you must be a member of the union that negotiated it.

If you’re a new employee and you’re covered by a collective agreement, your minimum terms and conditions of employment will be those set out in the agreement. As an individual you’ll also be able to negotiate additional terms.

What must be in a collective employment agreement?

Employment Relations Act 2000, ss 52-54, 69OJ; Holidays Act 2003, s 52

A collective employment agreement must be in writing and must be signed by each union and employer that is a party to it.

The agreement can contain whatever terms the parties to the agreement have agreed on. However, it must include the following terms:

  • Coverage – a clause stating what work or which employees the agreement covers
  • Services for resolving problems – a plain-language explanation of the services available for resolving employment relationship problems
  • Rates for public holidays – a clause requiring employees to be paid at least time and a half if they work public holidays
  • Amendments – a clause setting out how the agreement can be changed
  • Expiry – the date on which the agreement comes to an end, or an event that will bring the agreement to an end. (A collective agreement comes to an end on the expiry date stated in the agreement, or when the event specified in the agreement happens, or three years after the agreement begins, whichever of those dates comes first. But if the union or the employer initiates bargaining before the agreement expires, it continues in force for up to 12 months or until it’s replaced within the 12-month period with a new collective agreement.)
  • Protection in restructurings – for most industries, a clause stating how the employer will protect the employees if the business is restructured. That requirement applies to all industries other than those, such as cleaning and catering services, where workers have special legal protections because they’re particularly vulnerable to restructuring (see “Vulnerable workers: Additional protections in certain industries” in this chapter).

A collective employment agreement can’t include any terms that are contrary to the law or inconsistent with the Employment Relations Act.

Note: The law provides you with some minimum rights and conditions of work in key areas such as holidays and pay, and these are part of your employment relationship even if they’re not written into your agreement (see the chapter “Employment conditions and protections”). Employers and unions can’t agree to do away with any of these entitlements – they can, however, agree to better terms.

How employers and unions negotiate collective employment agreements

Employment Relations Act 2000, ss 4, 31- 34

Employers and unions must deal with each other in good faith when negotiating collective agreements – this includes not misleading or deceiving each other.

During negotiations employers and unions are also required, as part of the duty of good faith, to:

  • do their best to agree on an effective bargaining process
  • meet together, and discuss, consider and respond to each other’s proposals
  • respect the role of each other’s representative (if there is one) and bargain only through the representative
  • provide the other side with the information necessary to support their claims or responses.

    Note: The duty of good faith doesn’t require the union and employer to conclude an agreement, or to reach agreement on any particular issue dealt with in collective bargaining. Employers also have the right to opt out of collective bargaining that also involves other employers. However, an employer will breach the duty of good faith if they refuse on principle to enter into any collective agreement.

Employment Relations Act 2000, ss 33, 44A-44C

A Code of Good Faith in Collective Bargaining has been developed to guide employers and unions on bargaining in good faith.

Employment Relations Act 2000, s 35; www.dol.govt.nz/er/starting/unions/code.asp

Individual employment agreements

What is an individual employment agreement?

Employment Relations Act 2000, ss 60 – 69

An individual employment agreement covers one employee and one employer.

They can be used when:

  • there’s no collective agreement that covers your job, or
  • there is a collective agreement but you’re not a member of the relevant union and don’t want to join the union.

What must be in an individual employment agreement?

Employment Relations Act 2000, ss 65, 67C, 69OJ

An individual employment agreement must be in writing and can contain whatever terms you and your employer have agreed on.

However, an individual agreement must include the following terms:

  • Names – the names of you and your employer
  • Work – a description of the work you’ll be doing
  • Place – where your workplace will be
  • Hours – an indication of the arrangements for the times that you’ll work. If you and your boss have agreed on set hours, these must be stated in your written agreement. For more details, including about “zero-hour” contracts and availability clauses, see the chapter “Employment conditions and protections”, under “Hours of work”.
  • Pay – the wages or salary that you’ll be paid
  • Services for resolving problems – a plain-language explanation of the services available for resolving employment relationship problems
  • Rates for public holidays – a requirement that you must be paid at least time and a half if you work public holidays
  • Protection in restructurings – for most industries, a clause stating how you’ll be protected if your employer’s business is restructured. That requirement applies to all industries other than those, such as cleaning and catering services, where workers have special legal protections because they’re particularly vulnerable to restructuring (see “Vulnerable workers: Additional protections in certain industries” in this chapter).

An individual agreement can’t include any terms that are contrary to the law or inconsistent with the Employment Relations Act.

If your employer breaches any of those requirements for your individual agreement, you (or a labour inspector) can ask the Employment Relations Authority to order your employer to pay a monetary penalty.

Note: The law provides you with some minimum rights and conditions of work in key areas such as holidays and pay, and these are part of your employment relationship even if they’re not written into your agreement (see the chapter “Employment conditions and protections”). Employers and unions can’t agree to do away with any of these entitlements – they can, however, agree to better terms.

Fixed-term agreements

Employment Relations Act 2000, s 66

In certain cases you and your employer can agree to have a fixed-term employment agreement – that is, one that will end on a specific expiry date or when a specific event occurs or when a specific project is completed. A fixed-term agreement is allowed only if:

  • there’s a genuine reason, based on reasonable grounds, for having a fixed term (for example if you’re filling in for a permanent employee who’s on leave), and
  • the employer tells you the reason before employing you and tells you how and when your employment will end.

    Note: It won’t be a “genuine reason” if your employer uses a fixed-term agreement to exclude or limit your rights under the Employment Relations Act or the Holidays Act, or to find out whether you’re suitable for a permanent job.

Casual employment arrangements

Your rights as a casual employee

An employee and an employer can agree to a casual employment relationship, where the work is intermittent and irregular.

If you’re a casual employee, your employer doesn’t have to offer you any work and you don’t have to accept any offer. If you work for the employer on one occasion, you have no guarantee of being rehired later on.

Being a casual employee may affect your employment in other specific areas. For example, casual employees can agree to receive their annual holiday pay on a “pay as you go” basis (see “Holidays / Annual holidays (Annual leave) / When will I be paid my annual holiday pay?” in the chapter “Employment conditions and protections”).

Note: For laws about “zero-hour” contracts and availability clauses, see the chapter “Employment conditions and protections”, under “Hours of work”.

Identifying whether you’re a casual or permanent employee

If there’s doubt about whether you’re a casual or permanent employee, the key factors in deciding this will be how regular and how continuous the work is. This can be assessed by looking at both of the following:

  • Your employment agreement – Does it include terms that are inconsistent with casual employment? For example, it may require you to take work when it’s offered, or stop you from working for other employers, or require you to tell your employer when you’re not available for work.
  • The conduct of the two sides – Has this created a legitimate expectation that more work will be offered, or that it will be accepted if it’s offered? For example, if you’ve been working a regular 30-hour week for six months, you might have a legitimate expectation of further work.

Whether you’re a casual employee or permanent employee will depend on the real nature of your employment relationship, not simply on the words (such as “casual” or “permanent”) that you and your employer have used to describe it.

Note: If as a casual employee you’ve been offered and have accepted work (for example, you’ve been rostered on for particular days), then an employment relationship now exists. This means your employer will need a legitimate reason if they no longer want you to work those days and will also have to follow a correct process, as with any other employee.

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