Managing staff is complex, but getting it right in the first place is crucial. Ensuring employees start their role on the correct employment agreement is one of the most straightforward ways to ensure they are receiving minimum requirements and being utilised most effectively in the business.
Figuring out what kind of support and employee you need is crucial. Different types of employees need different employment agreements.
Key things to remember
- In New Zealand, every employee must have a written employment agreement.
- Employers must have staff on the right type of employment agreement from the start. The employment agreement helps you manage an employee's work, hours, terms and conditions.
- Think carefully about what work needs to be done, how often, and how long. Depending on these factors, you can pick a permanent, fixed-term, or casual employee.
- The agreement should be updated based on any changes or if the relationship changes- for example, a fixed-term employee accepts a permanent position, then the employment agreement needs to be updated.
Types of agreements
You can agree an individual employment agreement with the employee, or if they're a union member they'll be covered by any relevant collective agreement. There are also employment agreements based on the type of employee you choose to hire- permanent, fixed-term, casual.
Collective employment agreement
A collective employment agreement is between an employer and a registered union that covers employees, who are members of the union, within the employer's workplace. If your employee is a member of a union, they will be employed under a collective employment contract, if there is one. The union will negotiate the terms of employment like pay, leave, and other benefits.
Individual employment agreement
Individual employment agreements are negotiated between an employer and an employee and define the terms and conditions of the employment. Things like 4 weeks' annual holidays do not need to be in the employment agreement, but the employer must still provide them by law.
Permanent employment agreement
Permanent employees work full-time or part-time and have an ongoing employment which does not have an end date. The employment relationship will only end when you or the employee terminate it, either by dismissal or resignation. A person can have permanent full-time employment or permanent part-time employment. Every permanent employee must have an employment agreement.
Fixed-term employment agreement
Fixed-term employees are employees who work with you for a specific period of time (e.g. seasonal work) or are employees who are hired for a big project. Fixed-term employees are also hired to replace employees that might be away, e.g. parental leave. There must be a genuine reason based on reasonable grounds for fixed-term employment. Fixed-term employees have temporary employment which ends on a specific date.
Fixed-term employment agreement must say how will the employment end and the reason for ending the employment that way. Fixed-term employees have the same employment rights and responsibilities as permanent employees for the time they're employed.
Casual employment agreement
Casual employees work when it suits them and can turn down work. They do not have a regular pattern of work and do not expect ongoing employment. Casual employees are great when you need an extra set of hands. They can work at short notice, e.g. to cover staff sick days. You do not have offer consistent work and can end the employment without a formal dismissal process.
Casual employees must have an employment agreement that describes the arrangement. It should list out the specifics:
- the amount of work will vary
- there is no guarantee of work on a specific day
- each time the employee accepts an offer of work it's considered a new period of employment
- terms of agreement apply to each new period of employment
- the way the employee will be notified of available work
- that the employee does not have to accept work
The list above is not an exhaustive description of agreements and employees. There are many other types of working relationships-independent contractors, apprentices, trainees, and interns. Peninsula works with business owners and employers in New Zealand, ensuring they get the basics of employment relations right. Our services are tailored for all types of businesses and provide the essential information you need to create accurate employment agreements. Call our advice line on 0800215031 to learn how we can help you.