NZ Company Employment Agreements: What New Directors Must Know in 2026

The Employment Agreement Is Not Optional

Under the Employment Relations Act 2000, every employee in New Zealand must have a written employment agreement before starting work. There is no grace period for new companies. From the first day you pay wages, you are legally required to have a signed individual employment agreement (IEA) or collective agreement in place. Failure to provide one is a breach of the Act and can result in penalties of up to NZ$20,000 for an employer.

What Every NZ Employment Agreement Must Include

The Employment Relations Act specifies minimum content requirements for all employment agreements:

• Names of the parties: the employer (company) and employee full names.
• Description of the work: a clear job description or role title and duties.
• Place of work: the address where the employee will primarily work.
• Agreed hours or an indication of the arrangements relating to the hours to be worked: this is where fixed-term, part-time, or casual arrangements are specified.
• Wage or salary: the agreed rate, payment frequency, and method.
• A plain-language explanation of the services available for resolving employment relationship problems: typically a reference to Employment New Zealand and the Employment Relations Authority.

The 90-Day Trial Period

Companies with fewer than 20 employees at the time of hiring can use a 90-day trial period. This must be included in the employment agreement before the employee starts work. It cannot be added after the employment relationship begins. During the trial, the employer can dismiss the employee without the employee being able to bring a personal grievance claim for unjustified dismissal, provided the dismissal occurs within the 90-day period and proper process is followed. For a first hire, this clause is strongly recommended.

Minimum Employment Standards in 2026

All NZ employment agreements must meet or exceed these 2026 minimums:

• Minimum wage: NZ$23.15 per hour (adult rate, effective April 2026)
• Annual leave: 4 weeks per year after 12 months of employment
• Public holidays: 11 recognised public holidays, with time-and-a-half plus an alternative holiday for working on a public holiday
• Sick leave: 10 days per year after 6 months of employment
• Bereavement leave: 3 days for immediate family; 1 day for others
• KiwiSaver: employer must contribute 3% of gross earnings for enrolled employees

Common Mistakes New Companies Make

Using a template without tailoring it: generic templates downloaded from the internet may not reflect the actual role, hours, or pay structure. Inaccurate agreements create disputes.

Not getting it signed before the start date: an agreement signed after the employee starts work is unenforceable as a trial-period agreement and may have other limitations.

Not providing a copy to the employee: employers must provide a signed copy of the agreement to the employee. Keep your own signed copy on file.

Confusing contractors with employees: if someone works regular hours for your company, takes direction from you, and cannot send a substitute, they are likely an employee regardless of what the contract says. Misclassifying employees as contractors is a serious risk.

Where to Get Help

New companies hiring for the first time should consider using an employment lawyer or HR consultant to prepare compliant agreements. The cost of a well-drafted agreement (NZ$300-$800 for a standard IEA) is far less than the cost of an employment dispute. Employment New Zealand (employment.govt.nz) also provides free template agreements and guidance. FreshFirms connects NZ employment law firms and HR consultants with newly registered companies hiring their first employees. Start a free 7-day trial at freshfirms.nz to see which new companies in your region have just registered.