What information needs to be in an employment contract?

Every employee must have a written employment agreement, if employers don’t comply, they’re opening themself up to risk.
What information needs to be in an employment contract?

Employment agreements (also known as employment contracts) contain the working conditions and work expectations of the employee, so there’s clarity in the event of a misunderstanding or dispute. Every employee must have a written employment agreement, either as an individual agreement or a collective agreement. If employers don’t comply, they’re opening themself up to risk. In this article, we’ll cover the minimum information that should be in an employment contract so you can ensure you’re always protected from the potential pitfalls.

What’s the difference between a collective agreement and an individual agreement?

A collective agreement is one where the employee is part of a union that has negotiated standard conditions of employment for all its members, and an individual agreement is between a single employee and the employer. A collective agreement doesn’t need to be signed by the parties. The information in this article refers to individual agreements.

 Employment Agreements must contain the following minimum information:

  • The names of the employer and employee.
  • The work to be done (a job title or job description).
  • The expected hours of work and main place of work, including any overtime, public holiday or weekend expectations.
  • The wage rate or salary payable, and any changes that could apply based on when the employee works.
  • How and when the employee will be paid.
  • A clause on how to resolve employment problems.
  • An employment protection provision.
  • Any other conditions agreed upon.
  • If they’re fixed term, the reasons why and when it will end.

Minimum employment rights such as leave entitlements etc. are contained in legislation and don’t have to be in a contract of employment , but generally they are anyway. No employment agreement can provide for less rights than contained in employment laws, even if the employee signs it.

If the employment agreement has a trial period, this agreement must be signed and in place before the first day of employment, or the trial period is invalid. The employer is required to keep a copy of all signed agreements and must also keep copies of any intended (draft, proposed) agreements –  for example, agreements drafted during any negotiations with an incoming employee. In addition, an employee is entitled to a copy of their agreement on request.

Employment contracts don’t need to contain policies and procedures, company handbooks etc, although it’s very important that the employee is aware of these and that the company, in a dispute, can prove that the employee has read and understood them. For this reason, they’re often included in initial employment documentation or induction processes.

Clauses that are optional include:

  • A trial or probation period if they apply (If not mentioned specifically, they don’t apply).
  • Provisions around rest breaks and meal breaks.
  • Clauses in relation to Annual Holidays, Bereavement leave and Sick leave.

What if my employee can’t work in New Zealand yet?

An employment contract can be prepared for someone who is not yet entitled to work in New Zealand (for example to help them obtain the necessary visa), but they must be legally able to work on or before their first day of employment.

Be aware of unfair bargaining

It’s important when negotiating a new employment agreement or a change to an existing agreement that the employer acts in good faith and ensures unfair bargaining does not occur. Employers need to be particularly mindful of unfair bargaining where they’re dealing with employees who have reduced ability to understand the agreement due to their age, language barrier, disability, illness or emotional distress.

Protect yourself from HR risks

Without a detailed employee agreement, you’re opening yourself up to risk if a dispute comes up. By including the minimum standards in your agreements you’re protecting yourself from HR risks and fines. With a Citation HR subscription, you get access to industry leading HR software that has hundreds of legally-compliant templates and documents for you to use as a starting point. Plus, if you run into any questions while writing your employee agreements, our team of HR experts is here 24/7 to answer any question you might have via our HR Advice Line. Contact us today to see how we can help your business.

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