Hire in New Zealand

Contract terms cannot provide for less than the minimum legal entitlements outlined in the legislation and collective employment agreements that may apply. All contracts must be in writing.

Probationary periods must be in the employment agreement and can be for any amount of time. During the probation period, employers must follow a fair process to give feedback, support and training throughout. Employers must also give a chance for the employee to improve. Employees may raise a personal grievance for dismissal if this process is not followed properly.

Employers with less than 20 employees can ask for a 90-day trial period from an employee, which needs to be written in the employment contract with a valid notice period. An employee cannot bring a personal grievance for unjustified dismissal or other legal proceedings about their dismissal as long as the employer has given the right amount of notice period (unless the trial period is deemed invalid by the Employment Relations Authority). Employers do not need to give reasons for dismissal.

A probationary period cannot be applied following a trial period.

The agreed number of work hours must be in the employment agreement. Working hours cannot be more than 40 hours per week (not including overtime) unless the employer and the employee agree otherwise.

The hours agreed to in an employment agreement are generally the only hours that an employee needs to report to work. Many employees in New Zealand will receive payment if their employer asks them to work more than their normal hours.

The arrangement on overtime needs to be agreed to by the employer and the employee, whether this overtime is factored into the employee’s salary, paid at the employee’s normal rate of pay (at least the minimum wage rate or compensated at a higher rate of pay. The terms should be put into the employment agreement so that both parties are clear.

If the specific hours aren’t put into a written agreement, then an accurate and timely written record will need to be kept of exactly what hours the employee has worked.

Bonuses are not required. However, many employers will offer bonuses as an incentive and for retention purposes. Bonuses differ based on industry and seniority.

Employers who want to dismiss an employee must:

1) act in good faith.

2) have a good reason for the dismissal.

3) follow a fair and reasonable process

4) have an open mind when dealing with problems so they ensure outcomes are not predetermined.

If the employer doesn’t follow above, the employee may be able to take a personal grievance claim against the employer. Reasons to dismiss an employee include:

• serious misconduct
• repeated misconduct
• performance issues
• during a trial period
• redundancy
•  incompatibility
• incapacity.

There are general principles of fair process an employer must follow to justify serious misconduct, repeated misconduct and performance issues.

To terminate an employee’s employment, employers must give a written notice of the last employment day or remit a payment in lieu of notice. Serious misconduct warrants dismissal without notice. However, employers must still pay all outstanding entitlements. Disputes by both employers and employees can be referred to the Employment Relations Authority (ERA).

When terminating an employee, a fair and reasonable notice must be given (except in case of serious misconduct). This notice must take into account the length of service, type of job, how long it will take to replace the employee and common practice in the workplace. If there is no notice period in the employment agreement then two to four weeks’ notice is often seen as fair, depending on the role. Employers can specify in employees’ collective employment agreements or employment contracts how much notice employees must give when they resign. Employers and employees can usually give notice in writing.

Just because an employment agreement contains a notice period doesn’t mean the employer can dismiss the employee for any reason as long as they give the appropriate notice. The employer must still have a good reason and must follow a fair process.

An employer and employee can agree the final pay will be made on the employee’s last day of work. Employees should, at the latest, get their final payment on the pay day for their final period of employment. The final pay must include payment for all the hours worked since the last pay until the end of employment, annual holidays, public and alternative holidays owing, as well as any additional lump sum or other payments owed. These can be included in the employment agreement or later negotiated as a component of a leaving package. Any authorized deductions can be taken from the final pay. If the employee provides the required notice, the employer must compensate the employee through the end of their notice period. If an employee gives less than agreed notice, the employer only pays up to the last working day. Employers may also deduct pay in lieu of notice from any amount already owed to the employee.

There is no provision in New Zealand law for the suspension of an employment contract in cases of a plant closure or economic downturn. Unless there is a specific clause in an employment agreement giving a period of notice in a redundancy situation, ‘reasonable notice’ must be given. The length of ‘reasonable notice’ depends on a variety of conditions, such as:

• the reason for the redundancy
• the employee’s length of service
• the employee’s seniority and remuneration package
• custom, practice and industry norms
• the employee’s ability to find alternative employment
• the amount of compensation being paid (if any)

Employers cannot make someone redundant without undergoing the workplace change process first. The process of redundancy and the payment of redundancy compensation (where applicable) must be a last option. It should only occur once all redeployment options have been exhausted. The notice period must not be less than the length of notice prescribed in the employment agreement or workplace policies. If the employee agrees, an employer may give an extended notice period while they continue in their role or in a special project of some sort.

Redundancy compensation

Whether employees receive redundancy payments is dependent on the applicable employment agreements and is a matter of negotiation between the parties. However, any employee whose employment is ending due to redundancy must be provided notice according to the terms of the employment agreement. An employer can require an employee to work through the end of their notice period. A redundancy payment is taxable income.

According to the Fair Work Act, employers must keep time and wages records for six years. These need to be readily accessible to a Labor Inspector, legible and in English.

Employees have total freedom over joining a union. It is illegal for employers to influence that decision. A trade union must have at least 15 members who are employees and must be organized for the purpose of supporting or advancing claims related to a proposed registered agreement. The largest trade union is the New Zealand Council of Trade Union (NZCTU or CTU), with 360,000 workers in this union.

Fixed-term contracts (FTC) are regulated in New Zealand. There are no statutory limitations on the maximum number of successive FTCs. However, according to the ERA, the employer must have genuine reasons (based on reasonable grounds) for resorting to fixed-term employment and must tell the employee when or how his or her employment will end and outline the reasons justifying it.

According to 66 of the Employment Relations Authority (ERA), an employee and an employer may agree that the employment of the employee will end:

(a) at the close of a specified date or period,

(b) on the occurrence of a specified event or

(c) at the conclusion of a specified project.

Sec. 66(3) ERA provides that the following reasons are not genuine reasons:

(a) to exclude or limit the rights of the employee under the ERA

(b) to establish the suitability of the employee for permanent employment

(c) to exclude or limit the rights of an employee under the Holidays Act 2003

Employees sometimes work in a triangular employment situation. This is where someone is employed by one employer but is working under another business or organization that tells them what they should do during their day-to-day work. The latter business or organization is the controlling third party. The arrangement is ‘triangular’ because there are three parties to the arrangement, with each party having separate relationships with one another. The three parties are: the employer, employee, and the third party.

The Employment Relations (Triangular Employment) Amendment Act 2019 came into force on 28 June 2020, addressing a gap in legislation in relation to employees in triangular employment situations (e.g. labor-for-hire). Employees are now able to apply to the ERA to add a ‘controlling third party’ (such as a ‘host’ employer in a labor hire arrangement) to a personal grievance claim. Employers can file an application to add a controlling third party to a personal grievance. The ERA will be able to divide responsibility for providing remedies between the responsible parties, reflecting the degree to which the employer and the controlling third party contribute to the personal grievance.

The employee’s salary can be paid on a weekly, fortnightly or monthly basis. Employers need to pay employees their final payment on the last day of work, unless agreed otherwise in writing.

Pay slips are not compulsory in New Zealand. Pay slips can be electronic or hardcopy, containing details of payments, deductions and superannuation contributions for each pay period.

• Full-time and part-time employees are entitled to four weeks of paid annual holidays after 12 months of continuous employment. Employees who have worked less than one year are not entitled to any annual leave although employers may let them take some leave in advance. Employers can offer more annual leave than the minimum required by the National Employment Standards (NES).
• Employees can ask to cash out up to one week of their annual holidays each year.
• Annual leave accumulates in hours and from the first day of employment, including the probation period. Unused annual leave will roll over from year to year and is paid out upon termination of employment.
• All employees in New Zealand are required to use the GoGlobal leave tracking system. This enables us to determine leave accrued and latest leave balance, timely and accurately, so that employees are updated on their leave entitlements.

• Sick leave allows employees to take time off leave to care for a sick or injured spouse, partner, dependent child or any other dependent individual.
• This type of leave is funded by the employer. Access to sick leave applies after 6 months of continuous employment with the current employer, and an employee is entitled to 10 days of paid leave per year.
• Employers may request proof if an employee is sick for three or more consecutive days but the employer must agree to pay for the doctor’s fee.
• Any leave unused can, by way of the employment contract, be carried forward to the next year with the maximum capped at 20 days or more if the employer so chooses.

• All employees are entitled to three days’ paid compassionate leave (bereavement leave) and can be taken if their partner, parent, child, sibling, grandparent, grandchild or their partner’s parent dies. The entitlement is available after the employee has been working continuously for six months and is entitled every 12 months.
• Employees are also entitled to one day upon the death of a person outside their immediate family (depending on the circumstance).
• Employees can take the leave days in advance if mutually agreed to by the employee and the employer.
• Employers can request evidence such as a funeral notice, death notice or statutory declaration.

• Owing to the Domestic Violence – Victims’ Protection Act, employees have a statutory right to 10 days’ paid family and domestic violence leave each year after working for six continuous months. This applies to violent, threatening or other abusive behavior by a close relative that aims to control an employee and causes harm or fear. It does not matter when the events of domestic violence took place. Employees have the right to this leave, even if events occurred before they began working for their current employer.
• Employees can ask for short-term flexible working arrangements which can be up to two months.

• Parental leave can be taken when an employee gives birth, an employee’s spouse or de facto partner gives birth or when an employee adopts a child under six years of age.
• An employee who has worked for an employer for at least an average of 10 hours a week for 12 months or more just before the expected birth of the child (or the date they will take over the care of the child) is entitled to 26 weeks of government-funded paid parental leave and a further 26 weeks extended leave.
• Employees who have been working 10 hours a week for six months or more by the time of the baby’s expected delivery or adoption day are entitled to 26 weeks unpaid parental leave and 26 weeks of government-funded paid parental leave.
• Working dads and partners (including same-sex partners) are entitled to one week if they have worked at least an average of 10 hours a week for six months and two weeks of unpaid leave if they have worked at least an average of 10 hours a week for 12 months.
• Pregnant employees can also take 10 days of unpaid special leave for obligations like doctor’s appointments and antenatal classes. This can be taken before taking primary carer leave.

• Each employee can enjoy a maximum of 11 public holidays a year.
• Employees enjoy a paid day off on public holidays if it’s an otherwise working day for them. If they work on a public holiday, they are paid time and a half and may enjoy an alternative day off.
• An employee is entitled to a public holiday only if the public holiday falls on a day the employee would otherwise have worked (if the day hadn’t been a public holiday).
• Some public holidays will be ‘Mondayized’ (or ‘Tuesdayized’) if they fall on a Saturday or Sunday (if those days were not days that an employee would otherwise work).

• If an employee must work on a public holiday, an alternative holiday gives them a day off at another time. Sometimes these alternative holidays are called ‘lieu days’ or ‘days off in lieu’ but those terms can also refer to other types of leave. It is recommended to label alternative holidays by their correct name.
• If an employee is ‘on call’ on a public holiday and their activities had to be limited as a result, they are entitled to a full day’s paid alternate holiday regardless of whether the employee had to end up working that day.

• Employees can take leave for voluntary emergency management activities and jury service, including attendance for jury selection and defense force volunteer work.
• Community service leave, such as jury service, is unpaid. There is no limit on the amount of community service leave employees can take but employers can apply for the employee to be excused from such duties due to special commitments at the workplace.
• Employers do not have to pay employees while they do jury service but many choose to ‘top up’ the money the employee gets from the Ministry of Justice so they receive their normal pay.

Under part 6AA of the Employment Relations Act 2000, all employees are entitled to request a variation of their working arrangements at any time. Employers have an obligation to respond to requests as soon as possible and not later than one month after receiving the request. There is a limited, but broad, number of reasons employers can decline a request (e.g. an inability to recruit additional staff or to reorganize work).

“Flexible work” covers a wide range of arrangements outside the traditional working week. It can be tailored to suit each employee’s needs. Common examples include:

• working a different number of hours (e.g., part-time)
• working within different time frames (e.g., starting and finishing early)
• working remotely
• job-sharing
• purchasing additional leave
• taking additional unpaid leave

Other types of leave include garden leave, long service leave, voting leave, jury service, defense forces leave and leave options for workplace stress or following a natural disaster.