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collective agreement

Collective Agreement

Employment Contracts

22 June 2025 (Last updated 3 Dec 2025)

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In New Zealand, a potential employer must give you either a collective employment agreement or an individual employment agreement.

A collective agreement is a formal employment agreement ratified by union members and signed by the union and employer after collective bargaining. The collective agreement sets the terms and conditions of employment of union members whose work comes within the coverage clause of the agreement. If an employee is a member of a union, they will be employed under a collective employment contract, if there is one. Employees who are covered by a collective agreement can also have additional individual terms. These should be set out in writing and signed by the employer and employee.

Non-union members may bargain collectively with an employer or employers, but their negotiations can't end in a collective agreement, only identical or very similar individual employment agreements.

Things to include in a collective agreement

Collective agreements:

  • cover at least 2 employees, and are between at least 1 employer and at least 1 registered union
  • can cover permanent, full-time, part-time, fixed-term and casual employees, and may cover all or some of the employees in a workplace
  • have a coverage clause saying exactly what type of employees and types of jobs are covered
  • can be joined by extra unions and employers if the collective agreement specifically lets this happen

They may also include:

  • a term or condition of employment that is intended to recognise the benefits of a collective agreement, or the benefits of a relationship created through a collective agreement
  • a subsequent parties clause, allowing other unions and/or employers to join the collective agreement after it has come into force
  • a bargaining fee clause. This means that employees who aren't union members but do work covered by the collective agreement coverage clause can be on an individual employment agreement identical to the collective agreement, if they pay the stated bargaining fee to the union
  • any other clause, provided it's not contrary to law or inconsistent with the Employment Relations Act 2000

Guidelines

Collective agreements must:

  • be in writing
  • be signed by employers and unions that are parties to the agreement
  • have a coverage clause stating the work that the agreement covers
  • include a plain language explanation of how to sort out any employment relationship problems, including a statement that most personal grievances must be raised within 90 days and a statement that sexual harassment personal grievances must be raised within 12 months.
  • include a clause stating how the agreement can be changed
  • include an expiry date or state an event that will mean the agreement expires
  • include a provision that complies with the Holidays Act 2003 requirement for employees to be paid at least time and a half for work on public holidays
  • include a provision stating how employees will be protected if the business is sold, transferred, or contracted out
  • include the rates of wages or salary payable to employees by including:
    • the rates of wages, or salary payable, for certain work or types of work (for example, nurses), or to certain employees or types of employees (for example, a nurse with 3 years' experience) or
    • the minimum rates of wages or salary payable for certain work or types of work, or to certain employees or types of employees or
    • 1 or more methods for calculating the rates, or minimum rates, of wages or salary payable for certain work or types of work, or to certain employees or types of employees
  • include an indication of how the rate of wages or salary payable to an employee may increase during the term of the agreement

Anything other than the above requirements, the parties decide what is in the collective agreement, unless the Employment Relations Authority (ERA) is asked and agrees to fix the terms of the agreement.

The employer and union need to keep a signed copy of the collective agreement and provide a copy to employees when they request it. The employer must also give a copy of the collective agreement to the Ministry of Business, Innovation, and Employment (MBIE).

Individual terms

An individual bound by a collective agreement may also agree with their employer to have additional individual terms and conditions. Any additional terms and conditions:

  • must be agreed by the employer and employee
  • can be agreed before or after the date the employee becomes bound by the collective agreement
  • cannot be inconsistent with the terms and conditions in the collective agreement

If the employer is offering individual terms to the employee, the employer must negotiate in good faith and the employee must be given time and opportunity to seek independent advice in the same way as when an employer is offering an employee an individual employment agreement.

Start date and expiry date

Collective agreements state the date they come into effect. They may state that different aspects of the agreement come into effect on different dates. If there is no date stated, it comes into effect on the date the last party signs it.

A collective agreement expires on the earlier of its stated expiry date or 3 years after it takes effect, with some exceptions. A collective agreement continues until the earlier of 12 months after expiry, or until it is replaced, if the union or the employer starts bargaining before its expiry date.

If the collective agreement that an employee is bound by expires, they will be employed on an individual employment agreement based on the collective agreement and any individual terms.

What happens when an employee leaves the union?

If the employee resigns from the union, they will be employed on an individual employment agreement based on the collective agreement and any individual terms. The employer and employee can agree to change this individual employment agreement or negotiate a brand new individual employment agreement. If a collective agreement later comes into effect, then union members will automatically move off any individual employment agreement onto the collective agreement.

If there is no current collective agreement that covers them, new employees will be employed an on individual employment agreement negotiated with the employer even if they are members of the union.

Renegotiation

If a collective agreement is renegotiated, it must be ratified by the union members who are covered by the coverage clause before it can take effect. If the collective agreement isn't ratified, the proposed agreement will not be final or binding on employers, employees or unions. This may mean bargaining has to continue around the unresolved issues. If the new collective agreement is not agreed before the old agreement expires, employees go onto individual employment agreements on the same terms as the collective agreement.

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