Last Updated March 15, 2024
What is an Employment Contract?
An Employment Contract, also known as an employment agreement, is a document that outlines the rights, responsibilities, and obligations of an employer and employee. For instance, this agreement typically contains information about wages, benefits, hours, and job responsibilities.
Use LawDepot’s Employment Contract template for employees who work:
- Full time: A full-time employee typically works more than 30 hours a week and receives benefits that other employees don’t.
- Part-time: A part-time employee typically works less than 30 hours a week with a guaranteed minimum number of work hours.
- Casual: A casual employee doesn’t have a guaranteed minimum number of hours, but they work as needed.
- In permanent or fixed-term positions: You may or may not specify an end date for the employee’s position. The contract automatically expires with a set end date; neither party needs to give any notice to end employment.
What if I don’t have an Employment Contract?
New Zealand laws require employers to keep a written Employment Contract for every employee. Typically, after hiring an employee, employers have 30 days to issue a contract. Without a written agreement, employers may face fines.
A signed contract protects the interests of both employees and employers.
The terms set out in the agreement help mitigate any risks to an employer when hiring a new employee. For instance, the contract often includes conditions (such as prohibited behaviours) upon which an employer may terminate the employee without notice. For example, if the employee behaves violently or steals from the company, the employer might have the right to immediately dismiss them.
An Employment Contract also outlines an employee’s entitlements, including compensation, working hours, benefits packages, and vacation time. If an employer fails to provide the proper amount of compensation or work time, an employee could pursue legal action against them. In this case, the employee could use the Employment Contract as evidence of their agreement in court.
Use an Independent Contractor Agreement for contractors, not employees, as different laws apply to contractors.
What should an Employment Contract include?
Typically, the information you need to write an Employment Contract includes:
- Party details: List the employee’s and the employer’s name and contact information. Include the place of employment’s address as well.
- Job description: Describe the position title, initial duties, and obligations.If there is a probationary period, specify its length.
- Remuneration: Explain how you will pay the employee (e.g., an hourly wage, salary, commission, or a combination of payment types), overtime payments, and pay periods. Specify if the employer will enrol the employee in KiwiSaver, how much each party will contribute, and how to pay taxes on contributions.
- Work hours and leave: State the employee’s normal hours of work and their annual leave entitlements (i.e., vacation, sick days, bereavement, and domestic violence leave).
- Post-employment restrictions: Prevent the employee from sharing confidential information or recruiting the employer’s current employees or contracts. These restrictions typically remain in effect after the employee leaves the company.
- Termination notice periods: Specify how much notice the employer or employee must give to terminate the employment agreement.
LawDepot’s Employment Contract template also allows you to write additional clauses into the agreement yourself. For example, some employers may wish to include a non-compete clause that prohibits an employee from working for the company’s competitors once they’ve left the company.
What happens when someone breaches the Employment Contract?
An Employment Contract is a legally binding agreement. If one party breaches the contract, the other may take legal action against the other to enforce the terms in court.
If the employer breaches the contract (e.g., by failing to provide leave entitlements), the employee may either resolve the issue on their own, or they might contact a lawyer and file a court claim.
If the employee breaches the contract (e.g., by using illegal substances on company property), the employer might terminate the employee without notice. Alternatively, they might send the employee a warning letter and give them the chance to remedy the problem.
How do I make changes to my Employment Contract?
Use an Amending Agreement to make minor changes, additions, or deletions to your Employment Contract. This document modifies the existing agreement while the original terms and conditions remain intact. Keep in mind that both parties must agree to the changes and sign the Amending Agreement.
If you are changing a fundamental part of the agreement (such as going from full-time to casual employment), it might be best to create a new Employment Contract.
