Hire in New Zealand

Probationary periods, stipulated in the employment agreement, may vary in duration. Employers are obligated to adhere to a fair process during the probation period, offering feedback, support, and training, while providing opportunities for improvement. Failure to follow this process appropriately may lead to employees raising a personal grievance for dismissal.

Employers with a staff count of fewer than 20 individuals have the option to implement a 90-day trial period, subject to inclusion in the employment contract and specifying a valid notice period. During this trial period, employees are restricted from filing a personal grievance for unjustified dismissal or pursuing legal actions related to their termination, as long as the notice period is duly observed (unless the trial period is invalidated by the Employment Relations Authority). Employers are not obliged to provide reasons for dismissal.

It’s important to note that a probationary period cannot be enforced subsequent to a trial period.

The designated quantity of work hours must be explicitly stated in the employment agreement. Working hours should not exceed 40 hours per week (exclusive of overtime) unless both the employer and the employee mutually consent to a different arrangement.

The hours specified in the employment agreement typically constitute the regular work hours for an employee. In New Zealand, employees often receive compensation if their employer requires them to work beyond their usual hours.

Any arrangement regarding overtime must be mutually agreed upon by both the employer and the employee. This could involve integrating overtime into the employee’s salary, compensating them at their regular pay rate (at least the minimum wage), or providing additional compensation. It is essential to document these terms in the employment agreement to ensure clarity for both parties.

In the absence of specific hours outlined in a written agreement, it becomes imperative to maintain an accurate and prompt written record detailing the exact hours worked by the employee.

Eligibility for annual leave varies by location, and workers may carry over their annual leave; however, the accumulation of earned leave is typically capped at a maximum of 45 days.

If an employment contract expires before a worker can take their annual leave, compensation for the leave is calculated proportionately based on the number of months worked and the number of working hours per week.

Bonuses are not obligatory, but numerous employers provide them as incentives and for retention motives. The nature and extent of bonuses vary depending on the industry and the employee’s level of seniority.

Employers looking to terminate an employee must adhere to the following principles:

1) Demonstrate good faith in their actions.
2) Provide a valid reason for the dismissal.
3) Adhere to a fair and reasonable process.
4) Maintain an open mind during issue resolution to prevent predetermined outcomes.

Failure to comply with these guidelines may empower the employee to file a personal grievance claim against the employer. Valid reasons for dismissal encompass:

• Serious misconduct,
• repeated misconduct,
• performance deficiencies, issues arising
• during a trial period,
• redundancy,
• incompatibility, 
• incapacity are all recognized grounds for dismissal.

Employers must adhere to fair process principles when addressing serious misconduct, repeated misconduct, and performance issues. Termination requires providing written notice of the last employment day or making a payment in lieu of notice. Serious misconduct may lead to immediate dismissal, yet employers must fulfill outstanding entitlements. Disputes can be brought before the Employment Relations Authority (ERA) for resolution.

Upon terminating an employee, a fair and reasonable notice, considering factors like length of service, job type, and replacement time, must be given (excluding serious misconduct cases). If the employment agreement lacks a notice period, two to four weeks’ notice is often considered fair, dependent on the role. Collective employment agreements or contracts may stipulate the notice employees must provide upon resignation. Notice can usually be given in writing. It’s crucial to note that having a notice period doesn’t authorize the employer to dismiss the employee arbitrarily; a valid reason and fair process are still imperative.

Employers and employees can mutually agree that the final payment will be disbursed on the employee’s last working day. Ideally, employees should receive their final payment no later than the pay day for their concluding employment period. The final pay encompasses compensation for all hours worked from the last pay until the termination of employment, accrued annual holidays, public and alternative holidays, and any additional lump sum or outstanding payments. These details can be stipulated in the employment agreement or negotiated later as part of an exit package. Authorized deductions may be subtracted from the final pay. In case of the employee providing the required notice, compensation extends until the end of the notice period. If the employee gives less than the agreed notice, the employer pays only up to the last working day. Employers have the authority to deduct pay in lieu of notice from any existing amounts owed to the employee.

New Zealand law does not include a provision for the suspension of an employment contract in instances of plant closure or economic decline. In the absence of a specific clause in an employment agreement stipulating a notice period for redundancy situations, the employer is required to provide ‘reasonable notice.’ The duration of ‘reasonable notice’ is contingent on various factors, including:

• the rationale behind the redundancy
• the employee’s tenure with the company
• the employee’s level of experience and compensation package
• established customs, practices, and industry standards
• the employee’s prospects of securing alternative employment
• the extent of compensation offered (if applicable)

Employers are required to follow the workplace change process before considering redundancy, treating it as a last resort. Redundancy compensation, if applicable, should be explored only after exhausting all redeployment options. The notice period must align with the duration specified in the employment agreement or workplace policies, and an extended notice period may be agreed upon if the employee consents to continue in their role or undertake a special project.

Redundancy Compensation

The eligibility for redundancy payments varies based on the terms outlined in employment agreements, subject to negotiation between the parties involved. However, any employee facing redundancy must receive notice as per the terms of the employment agreement. Employers can mandate employees to work through the notice period. It’s important to note that redundancy payments are considered taxable income.

Under the Fair Work Act, employers are obligated to maintain time and wages records for a duration of six years. These records must be easily accessible to a Labor Inspector, presented in English, and must be legible.

Employees possess complete autonomy in deciding whether to join a union, and any attempt by employers to influence this decision is deemed illegal. A trade union, aiming to support or promote claims tied to a proposed registered agreement, must have a minimum of 15 members who are employees. The New Zealand Council of Trade Unions (NZCTU or CTU) stands as the largest trade union, boasting a membership of 360,000 workers.

Fixed-term contracts (FTCs) are subject to regulation in New Zealand. While there are no statutory constraints on the maximum number of successive FTCs, the Employment Relations Authority (ERA) mandates that employers must have legitimate and reasonable grounds for opting for fixed-term employment. Employers are required to communicate to the employee when or how their employment will conclude and provide reasons justifying this decision.

According to section 66 of the ERA, an employee and an employer can mutually agree that the employment will terminate:

(a) at the close of a specified date or period,

(b) on the occurrence of a specified event, or

(c) at the conclusion of a specified project.

Section 66(3) of the ERA specifies that certain reasons are not considered genuine, including:

(a) to exclude or limit the rights of the employee under the ERA,

(b) to assess the suitability of the employee for permanent employment, and

(c) to exclude or limit the rights of an employee under the Holidays Act 2003.

Employees may find themselves in a triangular employment situation, where they are employed by one entity but carry out their day-to-day tasks under the direction of another business or organization—the controlling third party. This triangular arrangement involves three distinct parties: the employer, the employee, and the third-party controller, each with separate relationships.

To address this scenario, the Employment Relations (Triangular Employment) Amendment Act 2019 came into effect on 28 June 2020, filling a legislative gap concerning employees in triangular employment setups, such as labor-for-hire arrangements. Under this amendment, employees have the right to apply to the Employment Relations Authority (ERA) to include a ‘controlling third party’—like a ‘host’ employer in a labor hire agreement—in a personal grievance claim. Employers can also submit an application to involve a controlling third party in a personal grievance. The ERA has the authority to apportion responsibility for providing remedies based on the contributions of the employer and the controlling third party to the personal grievance.

Issuing pay slips is not mandatory in New Zealand. However, if provided, pay slips can take the form of either electronic or hardcopy documents, outlining specific details such as payments, deductions, and superannuation contributions for each pay period.

• Both full-time and part-time employees are eligible for four weeks of paid annual holidays following 12 consecutive months of employment. For those with less than a year of service, no annual leave entitlement is mandated, though employers may permit them to take leave in advance. Employers have the flexibility to offer more annual leave than the minimum stipulated by the National Employment Standards (NES).
• Employees have the option to request the conversion of up to one week of their annual holidays into cash each year. The accrual of annual leave begins in hours from the commencement of employment, including the probation period. Accumulated but unused annual leave carries over from one year to the next and is disbursed upon termination of employment.
• To streamline the tracking of leave, all employees in New Zealand are required to utilize the GoGlobal leave tracking system. This system ensures the accurate and timely determination of accrued leave, providing employees with up-to-date information on their leave entitlements.

• Sick leave allows employees to take time off to care for a sick or injured spouse, partner, dependent child, or any other dependent individual.
• This form of leave is financially supported by the employer. Eligibility for sick leave commences after six months of continuous employment with the current employer, providing the employee with an entitlement to 10 days of paid leave annually.
• In instances where an employee is sick for three or more consecutive days, employers may request proof, but the employer must agree to cover the cost of the doctor’s fee.
• Any unused leave, as stipulated in the employment contract, can be carried forward to the next year, with the maximum accumulation capped at 20 days or a higher limit if determined by the employer.

• All employees have the right to three days of paid compassionate leave (bereavement leave) in the event of the death of their partner, parent, child, sibling, grandparent, grandchild, or their partner’s parent. This entitlement is accessible after the employee has maintained continuous employment for six months and is renewable every 12 months.
• Additionally, employees are entitled to one day of compassionate leave following the death of a person outside their immediate family, depending on the circumstances.
• If both parties—employee and employer—agree, leave days can be taken in advance.
• Employers have the option to request supporting evidence, such as a funeral notice, death notice, or statutory declaration.

• As stipulated by the Domestic Violence – Victims’ Protection Act, employees possess a legal entitlement to 10 days of paid family and domestic violence leave annually, provided they have completed six consecutive months of employment. This provision covers instances of violent, threatening, or abusive conduct by a close relative with the intent to exert control over an employee, causing harm or instilling fear. The timing of the domestic violence events is irrelevant, and employees retain this right even if such events occurred before their commencement with the current employer.
• Additionally, employees have the option to request short-term flexible working arrangements, spanning up to two months.

• Parental leave becomes applicable when an employee undergoes childbirth, when the employee’s spouse or de facto partner gives birth, or when the employee adopts a child under six years old.
• Employees meeting the criterion of having worked for an employer for an average of at least 10 hours per week for 12 months or more just before the anticipated birth of the child (or the date they assume care of the child) are entitled to 26 weeks of government-funded paid parental leave, along with an additional 26 weeks of extended leave.
• For employees who have maintained a minimum of 10 hours of work per week for six months or more by the expected delivery date or adoption day, they are entitled to 26 weeks of unpaid parental leave and 26 weeks of government-funded paid parental leave.
• Working fathers and partners, including same-sex partners, have the right to one week of leave if they have been employed for an average of at least 10 hours a week for six months. Additionally, they can take two weeks of unpaid leave if their employment history includes at least an average of 10 hours a week for 12 months.
• Pregnant employees are also eligible for 10 days of unpaid special leave to fulfill obligations such as attending doctor’s appointments and antenatal classes. This special leave can be taken before initiating primary carer leave.

• Each employee is entitled to observe a maximum of 11 public holidays annually.
• On public holidays that coincide with an employee’s regular working day, they are entitled to a paid day off. If an employee works on a public holiday, they are compensated at a rate of time and a half and may also be granted an alternative day off.
• An employee’s entitlement to a public holiday is contingent on the public holiday occurring on a day they would typically work if it were not designated as a public holiday.
• Certain public holidays may be ‘Mondayized’ or ‘Tuesdayized’ when they fall on a Saturday or Sunday, provided those days are not part of the employee’s usual working schedule.

• If an employee is required to work on a public holiday, they are granted an alternative holiday, providing them with a compensatory day off at a later time. These alternative holidays are occasionally referred to as ‘lieu days’ or ‘days off in lieu,’ although it’s advisable to use the accurate terminology for clarity.
• If an employee is on call during a public holiday and their activities are restricted due to the on-call responsibilities, they are entitled to a full day’s paid alternate holiday, irrespective of whether they ultimately had to work on that day.

• Employees have the right to take leave for voluntary emergency management activities, jury service (including attendance for jury selection), and defense force volunteer work.
• Community service leave, which includes jury service, is typically unpaid. While there’s no specific restriction on the amount of community service leave employees can take, employers have the option to request an exemption for the employee from such duties if there are special commitments at the workplace.
• Employers are not obligated to provide payment to employees during jury service, but some choose to supplement the compensation received from the Ministry of Justice to ensure employees receive their regular pay.

In accordance with part 6AA of the Employment Relations Act 2000, every employee has the right to request a modification of their working arrangements at any point. Employers are required to address these requests promptly, responding no later than one month after the request is received. While there are specific but comprehensive grounds for employers to reject a request (such as challenges in hiring additional staff or reorganizing work),

flexibility in work encompasses various arrangements beyond the conventional working week, designed to cater to individual employee preferences. Common examples include:

• adjusting the number of working hours (e.g., opting for part-time)
• modifying time frames for work (e.g., starting and concluding early)
• embracing remote work arrangements
• participating in job-sharing arrangements
• utilizing additional leave entitlements
• opting for supplementary unpaid leave

Additional leave options encompass garden leave, long service leave, voting leave, jury service, defense forces leave, and leave provisions for workplace stress or post-natural disasters.