Whether you are hiring your first employee or starting a new job yourself, having a written employment agreement is not just helpful- it’s a legal requirement in New Zealand.

What Is an Employment Agreement?
An employment agreement is a legal document that sets out the terms of the working relationship between an employer and an employee. It must specify pay, hours of work, holiday entitlements, and the process for resolving any issues that arise.

Why Employment Agreements Matter
Facing a claim as an employer can be extremely stressful. Aside from the financial impact, a personal grievance can damage morale, affect team culture, and harm the long-term success of the business. Many small businesses struggle to recover after a claim is upheld in favour of an employee.

New Zealand’s employment laws provide strong protections for employees, and employers can face difficulties if they do not comply with the Employment Relations Act 2000. Personal grievances may arise where an employee believes they have been harassed, bullied, discriminated against, or unjustifiably dismissed. Employers can reduce this risk by following a fair, consistent, and lawful process. A properly drafted employment agreement that is upheld at all times helps minimise disputes.

Why You Need a Written Agreement
Some small businesses operate without formal agreements, but these documents are essential for both parties. An employment agreement is a legally binding contract that outlines obligations, procedures, and expectations. For employers, it provides a clear framework for addressing issues such as performance or conduct and serves as evidence if a dispute arises. A poorly drafted or generic agreement may not hold up before the Employment Relations Authority or the Employment Court.

For employees, an agreement provides certainty by setting out their responsibilities, remuneration, and entitlements. It must comply with minimum legal standards for wages and holidays. Additional benefits or bonuses can be included but must be honoured to avoid breach of contract.

A well-drafted agreement can also protect a business by including provisions such as restraints of trade, confidentiality clauses, and notice periods. These are particularly important for specialist roles or positions involving access to sensitive information. Without a written agreement, uncertainty can lead to misunderstandings and damage the employment relationship.

What to Include in an Employment Agreement
An agreement should clearly outline the rights and duties of the employee, performance expectations, and the company’s policies, including disciplinary procedures. It should also explain the consequences of failing to meet the terms of employment. Without clear documentation, employers are often disadvantaged if a dispute escalates.

Before employment begins, both parties should review the agreement together so that any concerns can be addressed. The employer must keep a copy of the signed agreement, and the employee is entitled to one as well.

Employers should also take care when hiring casual workers. If a casual employee performs ongoing work similar to that of a permanent employee, they may be considered permanent in the eyes of the law. This can cause difficulties if the employer later reduces hours or terminates employment without proper procedure.

All employment agreements should be in writing and reviewed by a lawyer. While basic templates are available online, every agreement should be tailored to the specific role and the needs of the business. Verbal agreements offer no certainty and are difficult to enforce. A written agreement provides clarity, consistency, and protection for both parties.

A clear and well-drafted employment agreement helps prevent disputes, supports a positive workplace culture, and reduces the risk of litigation. It is vital that every agreement is properly drafted and compliant with current law. Contact us today to ensure your employment agreements protect both your business and your employees.