New Zealand Employment Guide

Essential Components of an Employment Contract in New Zealand

An employment contract in New Zealand must be drafted in English, presented in written form, and signed by both the employer and the employee. This foundational document ensures clarity and legal compliance from the outset of the employment relationship.

To be considered valid and comprehensive, the contract must include the following key elements:

• Parties Involved: The full legal names of both the employer and the employee.
• Role Description: A clear and detailed description of the job duties and responsibilities.
• Work Location: A specification of the primary workplace or an acknowledgment of remote work arrangements.
• Work Schedule: Details regarding working hours, which should cover the total hours per week, specific start and finish times, and the number of working days.
• Compensation: The wage or salary rate, which must meet or exceed the national minimum wage. The method of payment (e.g., bank transfer) should also be stipulated, especially if it is not a cash payment.
• Dispute Resolution: A clear process for addressing employment relationship problems, including the recommendation that personal grievances be raised within 90 days.
• Public Holiday Pay: A clause stating that employees working on public holidays are entitled to receive at least 1.5 times their regular rate of pay.
• Employment Protection: Provisions that protect employees in scenarios such as the sale or transfer of the business or the outsourcing of their role.

Additionally, the contract should address other mutually agreed terms, such as trial periods, probationary arrangements, or availability provisions. If the employment is for a fixed term, the nature and duration of this arrangement must be explicitly stated. It is also noteworthy that in New Zealand, contracts can be made effective retroactively for a short period.

Understanding Trial Periods

A trial period allows employers to assess a new employee's suitability for a role. The maximum allowable trial period is 180 days, with a 90-day trial being the standard practice adopted by many organizations, including SailGlobal. This period provides a reasonable timeframe for evaluation while maintaining fairness for the employee.

Case Study: Implementing a 90-Day Trial

Consider a technology firm like SailGlobal hiring a software developer. By utilizing a 90-day trial period as outlined in the employment contract, the company can effectively gauge the developer's technical skills and cultural fit. This practice, when managed correctly, reduces long-term hiring risks and supports a successful onboarding process.