NZ Employment Agreements for New Companies: What the ERA Requires
Hiring your first employee in New Zealand? The ERA requires a written employment agreement before work starts. Here is what it must include.
Employment Agreements Are Mandatory in New Zealand
Under the Employment Relations Act 2000 (ERA), every employer must have a written employment agreement with each employee before work starts. Failing to provide one exposes the employer to penalties, personal grievance claims, and backdated entitlements.
What Must Be in Every Agreement
- Names of the employer and employee
- Description of the work to be performed
- Where the work is performed
- Agreed hours, or the arrangement for determining hours
- The wage or salary payable
- A plain-language explanation of dispute resolution services
Well-drafted agreements also cover notice periods, leave entitlements, restraint of trade, and intellectual property ownership.
Types of Agreements
Permanent vs Fixed-Term
Permanent agreements have no end date. Fixed-term agreements require a genuine reason under the ERA. Using a fixed-term agreement to avoid permanent obligations is unlawful.
Full-Time vs Part-Time
Part-time agreements must specify agreed hours or the arrangement for determining them each week.
Good Faith
The ERA requires good faith from both parties throughout the employment relationship: active, constructive, and responsive communication, including disclosing information relevant to the other party's interests.
Common Mistakes New Employers Make
- Using an unmodified generic template
- Not having the agreement signed before the employee starts work
- Using fixed-term agreements for effectively permanent roles
- Forgetting to provide the employee a signed copy
- Not updating agreements when the role or pay changes significantly
Where to Get Help
Employment New Zealand (employment.govt.nz) provides a free agreement builder for straightforward roles. For roles with complex terms such as commission, restraint of trade, or IP ownership, specialist legal advice is recommended. If you need an employment lawyer in your region, FreshFirms Connect can match you with a local commercial solicitor who works with new businesses.
After Hiring: Key Obligations
- Register as an employer with IRD and set up PAYE
- Enrol eligible employees in KiwiSaver within seven days
- ACC employer levies
- Annual leave, sick leave, and bereavement leave under the Holidays Act 2003