Your Guide to NZ Employment Contracts
Staring at a blank document, wondering where on earth to start with an employment contract? You’re not alone. An employment contract is the legally binding agreement that lays out the terms and conditions of a job. It's a mandatory document for every single person you employ in New Zealand, from your full-time manager to your casual holiday staff.
Why getting your employment contract right matters
For many Kiwi business owners, drafting an employment agreement feels like one of the most daunting parts of hiring. It’s tempting to grab a generic template online and just hope for the best, but that approach can lead to some serious headaches down the track.
Think of your employment contract as the foundation of your relationship with a new team member. It’s not just a formality- it’s a legal must-have in New Zealand. Getting it right from day one protects both your business and your employee by setting crystal-clear expectations from the get-go.
More than just a piece of paper
A well-crafted contract does more than just tick a legal box. It’s your first and best tool for preventing misunderstandings and costly personal grievances. When roles, responsibilities, hours, and pay are clearly defined in writing, there's far less room for confusion or disputes later on.
This clarity provides a solid framework for managing performance and navigating any issues that might pop up. It establishes a professional tone and shows you take your obligations as an employer seriously, building trust right from the beginning.
A clear contract is your roadmap for the entire employment journey. It guides both parties, ensuring everyone knows the rules of the road and how to handle bumps along the way.
The legal backbone of your team
Under New Zealand law, failing to provide a written employment agreement can hit you where it hurts. The Employment Relations Authority can fine businesses $1,000 per employee who doesn't have a written contract. That underscores just how critical this document really is.
The type of contract also matters immensely, reflecting the different ways people work. For instance, recent workforce data showed that permanent contracts are by far the most common arrangement, with around 1,110,200 males and 1,073,500 females in these roles. This highlights how important it is to choose the right agreement for each specific hire. You can dig deeper into employment trends in New Zealand over at Figure.NZ.
Ultimately, a robust employment contract isn’t about restricting people- it’s about creating a fair, transparent, and legally sound working environment. It gives you the confidence to hire correctly so you can focus on what you do best: running your business.
Feeling unsure about your contracts? The expert team at Konnect Koncepts can help you create rock-solid agreements that protect your business and set your team up for success.
The non-negotiable clauses for every NZ employment contract
If your employment contract is the foundation of your relationship with a new hire, then these mandatory clauses are the steel reinforcing bars holding it all together.
These aren't optional extras or nice-to-haves; they are the absolute, non-negotiable minimums required by New Zealand law. Getting these right is your first and most critical step towards a legally sound contract you can actually rely on.
Think of this as your essential checklist. Every single one of these clauses must be in every written employment agreement you issue- it doesn’t matter if the person is full-time, part-time, or casual. Let's break them down in plain English so you know exactly what’s needed and why.
This image shows the basic structure of a compliant employment contract, breaking it down into its core components.
As you can see, a solid contract starts by clearly identifying everyone involved, spelling out the terms and conditions, and being properly signed off.
To make sure you don't miss anything, here’s a quick checklist of the clauses that are legally required in every NZ employment agreement.
Mandatory clauses checklist for your employment contract
| Clause | What it must include | Why it is critical |
|---|---|---|
| Names of the parties | Full legal names of the employer (your business) and the employee. | Establishes who the agreement is between, forming the legal basis of the contract. |
| Description of work | A clear outline of the role, duties, and responsibilities. | Prevents confusion about job expectations and performance standards. |
| Place of work | The physical address where the employee will be based. | Clarifies the primary work location and sets expectations for remote or multi-site roles. |
| Hours of work | Agreed hours, including start/finish times, days of the week, or roster details. | Defines the work commitment and provides a basis for calculating overtime and leave. |
| Wages or salary | The exact pay rate (hourly or annual salary) and payment frequency. | Ensures transparency and meets minimum wage obligations. |
| Public holidays | A statement confirming payment of at least time-and-a-half for working on a public holiday. | A non-negotiable legal requirement under the Holidays Act 2003. |
| Resolving problems | A plain-language explanation of how employment relationship problems will be handled. | Provides a clear, fair process for addressing disputes before they escalate. |
| Employment protection | An outline of what happens to the employee's job if the business is sold or restructured. | Protects employee rights during business transitions. |
Let's dive a bit deeper into what some of these mean in practice.
The absolute essentials
These first few clauses are all about setting clear expectations right from the start and heading off any future confusion.
The names of the parties: This sounds obvious, but it’s a crucial first step. You need the full legal name of your business and the full legal name of the person you’re hiring. No nicknames or abbreviations.
A clear description of the work: What will the employee actually be doing? You need a solid description of their role and key responsibilities. A great way to handle this is to attach a full job description to the agreement and refer to it directly in this clause.
The place of work: Where will they be based? State the physical address. If the role involves travel, working from multiple sites, or has a remote component, this all needs to be clearly outlined here.
Agreed hours of work: Be specific. For a salaried employee, this might be "a minimum of 40 hours per week, from Monday to Friday". For a shift worker, you’ll need to detail how the roster system works. For casuals, you must state that there are no guaranteed hours.
Getting these fundamentals right is your first line of defence. If a dispute ever comes up about an employee’s duties or where they're meant to be working, this is the part of the contract everyone will look at first.
Pay, leave, and protections
This is where many businesses trip up. Getting the details around pay, leave, and problem-solving right isn't just about compliance- it's about building trust with your team.
Your employment agreement is the single source of truth for an employee's entitlements. Clear, accurate clauses on pay and leave prevent the most common payroll mistakes and potential disputes.
The agreement must clearly state:
The wage or salary: Specify the exact amount and how it will be paid (e.g., hourly rate or annual salary). You also need to state the pay cycle, like weekly, fortnightly, or monthly. And of course, it must be at or above the current minimum wage.
Public holidays: You must include a statement confirming the employee will get at least time-and-a-half for any part of a public holiday they work. This is a bare minimum legal requirement.
Resolving employment problems: Your contract needs a plain-language explanation of the process for sorting out employment relationship problems. This has to include the 90-day time limit for an employee to raise a personal grievance (12 months for sexual harassment).
Employment protection provisions: This mandatory clause explains what will happen to the employee's job if the business is sold or their work is contracted out to another company.
Drafting these clauses requires a good understanding of how to write legal documents so that your wording is clear, compliant, and doesn't leave any room for misinterpretation.
Leaving out any of these mandatory clauses makes your contract non-compliant and opens your business up to potential penalties and disputes down the track.
Juggling all these legal requirements can feel like a massive task on top of everything else you do. If you want certainty that your employment contracts are watertight and fully compliant, reach out to the team at Konnect Koncepts for an expert review.
This article reflects employment law and best practice in New Zealand as at October 2024. It is intended as general guidance only and does not replace professional legal advice tailored to your situation.
Choosing the right type of employment agreement
Just as you wouldn’t use the same tools for every job, you shouldn't use the same employment contract for every hire. Picking the right agreement isn't just a box-ticking exercise; it's a critical step for legal compliance and setting crystal-clear expectations from day one.
In New Zealand, employment agreements generally fall into three main categories, each designed for a completely different working relationship.
Getting this choice right from the start prevents a world of confusion later. It ensures your employee’s rights and entitlements are correct and protects your business from the risks that come with misclassifying a role. Let’s break down the options so you can confidently match the contract to the job.
Permanent employment agreements
This is the workhorse of employment contracts businesses use, and it's the default for most roles. A permanent agreement simply means the employment has no set end date. It continues until either you or the employee decides to end it by giving the required notice.
Permanent agreements cover both full-time and part-time work- the key is the ongoing, stable nature of the role.
Full-time: Typically for employees working 30 to 40 hours per week. The exact hours should always be specified clearly in the agreement.
Part-time: For employees who work fewer hours than a full-timer. They get all the same legal entitlements as full-time staff, just on a pro-rata basis (meaning, in proportion to the hours they work).
This type of agreement provides security and stability for both the employee and your business, making it ideal for the core team members who are essential to your daily operations.
Fixed-term employment agreements
Ever needed an extra pair of hands for a specific project, to cover parental leave, or for a frantic busy season? That’s exactly what a fixed-term agreement is for. This type of contract has a specific end date or a specific event that triggers the end of the employment.
But here’s the crucial part: you can’t just put someone on a fixed-term contract to "try them out" or sidestep the obligations of a permanent role. The law is very strict on this.
To use a fixed-term agreement, you must have a genuine business reason based on reasonable grounds. This reason must be clearly stated in the written employment contract, along with exactly how and when the employment will end.
Common genuine reasons include:
Covering for an employee on extended leave (e.g., parental or long-service leave).
Completing a specific, one-off project with a clear timeline.
Managing a seasonal peak in workload, like in horticulture, retail, or tourism.
Hiring for a role where external funding is only secured for a limited time.
If you don't have a genuine, documented reason, the law may view the employee as a permanent staff member, giving them all the associated rights and protections. It's a costly mistake to make.
Casual employment agreements
Casual employment is one of the most misunderstood and incorrectly used agreements out there. A true casual employee is someone you call on an 'as and when required' basis. There are no guaranteed hours of work, and they have the right to turn down any shift you offer without providing a reason.
This setup is perfect for genuinely unpredictable workloads, like covering for last-minute staff sickness or catering for an unexpected event. Each time a casual employee accepts a shift, they are technically entering into a new, distinct period of employment.
The key features of a true casual agreement are:
No obligation: You are not obliged to offer work, and they are not obliged to accept it.
Irregular work pattern: There is no regular or systematic schedule of work. If a pattern emerges, you're on shaky ground.
Pay-as-you-go holiday pay: Their 8% holiday pay entitlement is usually paid with their regular wages. This must be specified in their contract.
Be careful. If a "casual" employee starts working regular, predictable hours, their employment status could legally shift to permanent part-time. That would automatically entitle them to benefits like paid sick leave and accrued annual leave, often back-paid.
When choosing the right type of agreement, exploring efficient methods like AI-powered employment contract creation tools can significantly aid the drafting process.
Making the right choice between permanent, fixed-term, and casual agreements is fundamental. If you’re unsure which contract best fits a new role, get in touch with Konnect Koncepts. We’ll help you choose the right one to keep your business compliant and your team happy.
Including clauses that protect your business
Once you've got the non-negotiable clauses sorted, you can start thinking about adding some extra layers of protection for your business. An employment contract shouldn't just be about ticking legal boxes; it should be a powerful tool that safeguards your hard work, your ideas, and your customer relationships.
Think of these extra clauses as your peace of mind. They set clear boundaries around sensitive business information and lay out a fair process for seeing if a new hire is the right fit, protecting you as your team grows. Let’s walk through some of the most common and valuable ones you should consider.
Trial and probation periods
These two get mixed up all the time, but they serve completely different purposes. Getting them right is critical, especially when you're bringing someone new into a small team.
Trial periods A trial period lets you dismiss an employee within the first 90 days without them being able to raise a personal grievance for unfair dismissal. Here's the catch: this is only available to businesses with 19 or fewer employees.
There are very strict rules you have to follow to make a trial period valid:
The clause has to be in the written employment agreement.
The employee must sign that agreement before they start their first day of work.
You can't use it for someone who has worked for you before.
Miss any of these steps, and the trial period is invalid. A dismissal could then be challenged, landing you in hot water.
Probation periods Unlike a trial period, a probation period can be used by any business, no matter the size. Its purpose is to give both you and the new employee time to assess their skills and fit for the role. This is usually set for three to six months.
During a probation period, you have to follow a fair performance management process. You can't just let someone go without good reason. That means providing regular feedback, offering support, and giving them a genuine chance to improve before making any final decisions about their future with the company.
Confidentiality and intellectual property clauses
As a business owner, your confidential information is one of your most valuable assets. This could be anything from your client list and pricing models to your unique internal processes or secret recipes.
A confidentiality clause legally binds an employee not to share or use your sensitive business information for their own gain or for a competitor's, both while they work for you and after they leave.
Imagine you run a tech startup. Your source code and product roadmap are your crown jewels. A strong intellectual property (IP) clause makes it crystal clear that any code, designs, or brilliant ideas an employee creates as part of their job belong to the business, not to them personally. This is what stops a developer from walking out the door with your innovations.
Restraint of trade and notice periods
These clauses are all about managing the end of an employment relationship smoothly and protecting your business when an employee moves on.
Notice periods A notice period clause simply states how much warning either you or the employee must give before ending the employment relationship. This period has to be reasonable and should be the same for both parties. Two to four weeks is pretty standard, but it might be longer for more senior roles. It gives you crucial time to plan a handover and kick off the recruitment process.
Restraint of trade This is one of the trickiest clauses to get right. A restraint of trade clause tries to stop an ex-employee from working for a direct competitor or setting up a similar business in a specific area for a set amount of time after they leave.
For this clause to hold up in New Zealand, it must be reasonable. That means it can only protect a genuine business interest and can't unfairly stop someone from earning a living.
Let's look at a couple of examples:
Reasonable: A senior hairdresser at a salon in Ponsonby is restricted from opening a competing salon on the same street for six months. This is fair because it protects the salon's local client base.
Unreasonable: The same hairdresser is restricted from working anywhere in Auckland for two years. This is far too broad and would almost certainly be thrown out by a court.
Thinking about adding these protective clauses but not sure how to word them correctly? Contact Konnect Koncepts for expert advice on drafting an employment contract that truly safeguards your business.
Common mistakes NZ employers make and how to avoid them
We’ve seen it all before- well-meaning business owners juggling a million things, who accidentally stumble into the same common pitfalls when it comes to employment contracts. Learning from others' mistakes is far less painful (and less expensive) than making them yourself.
Think of this as your practical 'what not to do' list. It’s designed to help you sidestep the legal headaches that can spring from a simple oversight and build a foundation of trust with your team from day one.
Using outdated or generic online templates
It’s tempting to do a quick search, download the first free template you find, and call it a day. But this is one of the riskiest shortcuts you can take. A proper employment contract must comply with current Kiwi law, which is constantly evolving.
A generic template from an overseas site won't have the right clauses for New Zealand, and even a local one could be years out of date. This can leave you non-compliant and exposed to personal grievances. Always start with a current, NZ-specific template or, even better, get one professionally drafted.
Failing to provide the contract before work starts
This one is huge. The employment agreement must be signed before your new employee works their first minute on the job. If they start work without a signed agreement in place, crucial clauses like a 90-day trial period become instantly invalid.
You can learn more about the strict rules in our guide on the 90-day trial period in New Zealand.
The rule is simple: no signature, no start. Present the offer with the contract, give them reasonable time to look it over and get advice, and only schedule their first day after you have the signed copy back in your hands.
Misclassifying employees as contractors
Confusing an employee with an independent contractor is a frequent and costly error. A contractor runs their own business and is hired for a specific outcome. An employee, on the other hand, works for you as part of your business. The distinction is critical, as employees have a whole raft of legal entitlements- like minimum wage, holiday pay, and sick leave- that contractors do not.
Getting this wrong can lead to the Employment Relations Authority ruling that your 'contractor' was actually an employee all along. This could result in a hefty bill for back-paid leave and other entitlements. Always be certain about the nature of the working relationship right from the outset.
Creating illegal or unreasonable clauses
Just because a clause is written in a contract doesn't automatically make it legal or enforceable. You can’t include terms that offer less than the legal minimums, such as providing fewer than four weeks of annual leave.
Likewise, clauses that make unreasonable deductions from wages or have an overly restrictive restraint of trade won't hold up. Any term that undermines an employee’s basic rights will be considered void, no matter what the contract says.
Interestingly, trends in employment structures show a strong preference for secure roles. For example, by mid-2024 in New Zealand's Public Service, 95.1% of employees were on permanent contracts. Only a tiny 4.9% were on fixed-term agreements, the lowest level since 2000.
Feeling overwhelmed by the potential pitfalls of drafting an employment contract? Contact Konnect Koncepts today for a chat about how we can create compliant, robust agreements that protect your business.
Finalising your employment contracts
You’ve nailed it. The employment contract is drafted, all the mandatory clauses are in, and you’ve even added those extra protections your business needs. It’s a huge step, but you're not quite at the finish line. How you present, finalise, and store the agreement is just as crucial for staying compliant and starting the relationship off on the right foot.
Think of this as your pre-flight checklist before a new hire officially comes on board. Rushing these final steps can undo all your hard work – and even invalidate key clauses – so it’s worth taking a moment to get them right.
Giving time for independent advice
A cornerstone of being a good employer in New Zealand is acting in good faith. A massive part of that is giving a prospective employee a decent chance to get independent advice on their employment agreement before they sign anything.
This isn’t just a nice-to-have; it's a legal requirement. Handing someone a contract and expecting them to sign it on the spot is a major red flag. Instead, you need to:
Provide the written agreement at the same time as the formal job offer.
Clearly state that they are entitled to seek advice from a lawyer, union representative, or a trusted advisor.
Give them a reasonable amount of time to do this. A few days is standard practice.
This simple step shows you’re transparent and fair, sending a clear message that you’re an employer who respects your team’s rights.
Handling negotiations and storing records
So, what happens if your candidate comes back wanting to negotiate something, like their start date or salary? Don't panic. This is a completely normal part of hiring. Engage in a good faith discussion and, if you agree to any changes, make sure you update the written agreement before anyone signs. The final signed copy has to be the single source of truth.
Once the ink is dry and the contract is signed by both of you, your job still isn't done. You must:
Provide a copy to the employee: They are legally entitled to their own copy of the signed agreement.
Store your copy securely: You’re required to keep employment records, including the contract, for at least seven years after the employee leaves your business. These records also need to be easily accessible if a Labour Inspector ever asks to see them.
When to review your contracts
An employment contract is not a "set and forget" document. Laws change, business needs shift, and roles naturally evolve. Regular reviews are essential to make sure your agreements are still relevant and compliant, especially in a changing job market.
For example, recent figures showed New Zealand’s labour market saw a slight dip in filled jobs, with about 2.34 million roles filled by June 2025, a decrease of around 1.2% from the previous year. You can get more information on recent labour market statistics from Stats NZ. In an environment like this, having clear, current, and fair contracts is more important than ever for attracting and holding on to top talent.
A regular contract health check- maybe once a year or whenever employment law changes- protects your business from creeping non-compliance and ensures your agreements still reflect the reality of each role.
Juggling staff, customers, and compliance is a massive task. If you’re feeling stretched and want to be certain your employment contracts are rock-solid, get in touch with Konnect Koncepts. We can make sure you’re protected, so you can focus on running your business.
This article reflects employment law and best practice in New Zealand as at the date of publishing. It is intended as general guidance only and does not replace professional legal advice tailored to your situation.
Got questions? We’ve got answers
Juggling the legal side of employment can throw up a lot of tricky questions. To make things a bit easier, we’ve put together some quick, clear answers to the most common queries we hear from Kiwi business owners about the humble employment contract.
What happens if an employee starts work without a written contract?
This is a big one. In New Zealand, it's not a suggestion- it's a legal requirement for every single employee to have a written employment agreement. If you don't provide one, you could be staring down the barrel of penalties from the Employment Relations Authority.
Even without a written document, that person is still legally your employee. They're covered by all minimum employment rights, and their working conditions will be based on whatever was verbally agreed upon. As you can imagine, that can get messy and lead to disputes very quickly. It's crucial to get a signed employment contract in place before they start.
Can I change the terms after it's been signed?
In short, no- not by yourself. You can’t just decide to change the terms of an employment agreement unilaterally. Any changes have to be agreed upon by both you and the employee, and that agreement needs to be in writing.
This means you need to go through a proper consultation process, carried out in good faith. You have to formally propose the change, clearly explain your reasons for it, and give the employee a genuine chance to think it over and give you feedback. Trying to force a change through can easily be seen as a breach of contract.
How long do I need to keep a copy of a contract?
Under the Employment Relations Act 2000, you are legally required to keep a copy of every employee's employment agreement.
You must hold onto this record - along with other wage, time, and holiday records - for at least seven years, even long after the employee has left your business. These records also need to be easy to find if a labour inspector ever asks to see them.
Feeling uncertain about the details of your employment contracts? Konnect Koncepts can provide the clarity and confidence you need. Reach out to our team for expert guidance on creating rock-solid agreements that protect your business.
