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Contract work policy in New Zealand

Contract terms in New Zealand

Contract extension in New Zealand

Fixed-term contracts in New Zealand

Working hours in New Zealand

Remote work in New Zealand

Tailored employment contracts in 100+ countries

Employment contracts in New Zealand

When hiring in New Zealand, it is crucial to ensure compliance with the local labour laws and regulations. This includes understanding and following the standard employment contract policies set in place to prevent any legal trouble down the line.

In this comprehensive guide, we will provide everything you need to know about employment contracts in New Zealand, including the contract extensions, fixed-term contracts, working hours, and remote work considerations.

Employment contracts law in New Zealand

The primary legislation governing employment contracts in New Zealand is the Employment Relations Act 2000. This act covers a wide array of employment issues, including the enforcement of individual and collective employment contracts, promoting good faith in employment relationships, and detailing processes for resolving employment disputes.

The Employment Relations Act 2000 aims to build productive employment relationships through the promotion of good faith in all aspects of employment interactions and the acknowledgement of international labour standards.

Standard employment contract in New Zealand

It is mandatory for businesses to provide all employees with a written employment agreement. This should outline the employee’s remuneration, rights, the specified number of working hours agreed upon, and duties, as well as the responsibilities of the employer.

The employment contract should also highlight the avenues for resolution in case of employment-related disputes and stipulate that any personal grievances need to be addressed within a 90-day timeframe.

In addition, there must be a clause guaranteeing employment protection, along with a provision ensuring that employees receive a minimum time-and-a-half pay rate for any work done on public holidays, with the potential for an additional day off in certain circumstances.

The agreement should be comprehensive, covering any other mutually agreed topics, such as trial periods, probationary terms, availability expectations, or specific arrangements pertinent to fixed-term employment.

It’s also important to note that the agreement must direct employees to the Ministry of Business, Innovation, and Employment for an in-depth understanding of their rights as per the Holidays Act 2003.

Casual employment contract in New Zealand

An individual under a casual employment contract works on an “as needed” basis without any guaranteed hours. Unlike permanent employees, casual employees work irregular hours, and there’s often an understanding that work is not continuously guaranteed.

Casual employment contracts provide flexibility for both employers and employees. Employers can provide work as it becomes available, and employees can accept or decline the offered shifts. Despite the lack of a fixed schedule, casual employees are still entitled to the same rights as other employees, including holiday pay and sick leave, albeit accrued in a way that reflects their irregular hours.

Moreover, it is important to clearly outline the nature of casual employment agreements. This should include a clause about hours of work in such an agreement, which is good practice, explaining that the workload may often change, how the employee will be advised of work opportunities, and that they are not obliged to make themselves available for work.

The flexibility inherent in casual employment does not exempt employers from meeting their obligations under New Zealand law, including providing a written employment contract and adhering to the minimum rights of workers.

Contract work policy in New Zealand

Immigration policy for work visa in New Zealand

New Zealand and Australian nationals, along with permanent residents, are automatically eligible to work in New Zealand. For international talent, on the other hand, there are several work visa options they have to apply to, including:

Work-to-residence visa: This option supports the entry of individuals with in-demand skills, offering them a direct route towards becoming permanent residents.
Essential Skills visa: Intended for temporarily addressing skill shortages, this visa allows international workers to fill positions when local talent is unavailable.
Specific purpose or event visa: Tailored for individuals whose unique skills, expertise, or contributions are poised to benefit New Zealand.
Skilled migrant resident visa: This is for individuals who are currently employed or have a job offer in New Zealand and can achieve the necessary points for their skills and work experience.
Students and trainees visa: Enables students and trainees to acquire practical work experience or pursue training integral to their academic programs.
Care workforce work-to-residence visa: This is for workers who have a job offer from an accredited employer and have worked in a care workforce role for 24 months.

Additionally, a select number of special category visas cater to specific sectors, such as horticulture, viticulture, fishing, and religious industries. There are also visas designed for family reunification and humanitarian purposes.

Meanwhile, to work in New Zealand under an accredited employer, you must receive at least 30 hours of work per week from an employer who has received accreditation. This visa category also allows holders to study for up to three months within any 12-month period or undertake any study that is a requirement of their employment.

Essential skills work policy in New Zealand

When no suitable New Zealand citizens or residents are available to fill these roles, employers in New Zealand can recruit overseas workers under the essential skills work visa.

This visa policy allows non-resident talent to be employed in New Zealand. To be eligible for this visa category, applicants must have a job offer from a New Zealand employer, and the role must align with the essential skills as designated by the New Zealand’s immigration.

Lone worker policy in New Zealand

The lone worker policy is built around the Health and Safety at Work Act 2015, which sets out the responsibilities of employers to ensure the safety of their employees, including those who work alone.

This legislation requires businesses, known as ‘PCBUs’ (Persons Conducting a Business or Undertaking), to manage health and safety risks associated with lone working and ensure that lone workers are not exposed to risks that arise out of or in the course of their work.

Under this legislation, employers must identify potential hazards that lone workers may face, assess the associated risks, and implement effective measures to minimise or eliminate them. This involves providing training, support, and the necessary equipment to ensure that lone workers can perform their roles as safely as possible.

In addition, employers must also have effective communication strategies in place, particularly for occasions when lone workers are in remote or isolated areas. This can include regular check-ins, emergency procedures, and access to communication devices to summon help if needed.

Probationary periods in New Zealand

The length of a probationary period in New Zealand is not strictly defined by law, and it can vary based on the terms agreed upon in the employment agreement. However, the length typically ranges from a few months to a year, with the standard duration being approximately three to six months. Both the employer and the employee must clearly document their agreement on the probationary period’s duration in the employment contract.

During the probationary period, employers assess whether new hires (or current employees moving into new roles) can successfully perform their job duties. During this time, the terms and expectations are typically laid out in the individual’s employment agreement.

Unlike probationary periods, trial periods have a more clearly defined length and are explicitly designed for new employees, allowing employers to assess their capability in the role for up to the first 90 calendar days of employment.

Employment contract policies in New Zealand

While not legally required, it is strongly advised to implement policies pertaining to anti-discrimination, harassment, bullying, and health and safety. Having these policies in place is beneficial, as their absence can significantly impact the resolution process in cases of a dispute.

Third-party approval in New Zealand

There is no obligation to submit employment contracts or policies for external approval or registration.

Contract terms in New Zealand

All employment contract terms must meet or exceed the minimum legal entitlements as stipulated by relevant legislation in New Zealand. The Employment Relations Act 2000 and other applicable laws, such as the Holidays Act 2003 and the Minimum Wage Act 1983, prominently detail these statutory requirements, which employers must fully understand.

It’s important to note that contract terms offering any condition less favourable than the legal minimum would be both unacceptable and unenforceable.

In addition, an employment contract must comprehensively cover aspects including, but not limited to, the minimum wage, leave entitlements, working hours, and health and safety regulations. If your operations are subject to a collective agreement, it is your responsibility to uphold its terms in the individual employment contracts.

Moreover, all employment contracts are required by law to be in written form to protect both employer and employee interests.

What are considered unfair contract terms in New Zealand?

Unfair employment contract terms could be those that are not compliant with the Employment Relations Act 2000, which sets out the minimum rights of employees and the obligations of employers. For example, contract terms that do not respect the minimum legal entitlements, like below-minimum wage rates, incorrect holiday provisions, or inadequate rest breaks, would be considered unfair and unenforceable.

In addition, an employee could challenge as unfair any terms that are overly restrictive or oppressive, such as excessive restraint of trade clauses that unreasonably prevent an employee from working in their field after leaving a job. Terms that allow for unjustified dismissal or penalise an employee without a fair process aligning with principles of natural justice could likewise be deemed unfair.

While the employment context has its particularities, the principle that terms create a significant imbalance in the parties’ rights and duties to the detriment of the employee and that are not necessary to protect the legitimate interests of the employer could be considered unfair. Essential aspects of fairness in employment contracts include mutual obligations, clarity, and a genuine balance of power and remedies.

Collective employment agreement in New Zealand

A collective employment agreement in New Zealand is defined as an agreement that includes at least two employees and involves at least one employer and at least one registered union.

These agreements can cover various types of employment relationships, including permanent, full-time, part-time, fixed-term, and casual employment. However, they may not necessarily include all employees in a workplace, especially if some workers are not union members. The coverage of these agreements is specified by a coverage clause, which outlines exactly what types of employees and job categories are encompassed by the agreement.

Contract extension in New Zealand

Contract extension for independent contractors in New Zealand

While there is no statutory cap on the duration of contracts for independent contractors, they are typically established for periods less than a year or designed to conclude upon the finalisation of a specific project. This structure is intentional to ensure that the nature of the contract aligns with the contractor’s independent status and the short-term requirements of the task at hand.

An extended or continuous working relationship with a contractor can often lead to a re-evaluation of their employment status by the Employment Relations Authority (ERA). The longer a contractor serves a client, the more likely it is that the client may reclassify their engagement as an employee. Such a reclassification carries significant legal and financial implications, as it changes the nature of the obligations between the parties involved.

Contract extension for employees in New Zealand

When extending an employment contract, both the employer and the employee must agree to any changes in the terms of employment, and these changes must be recorded in writing.

If the employee is on a fixed-term contract, there has to be a genuine reason based on reasonable grounds for the extension, and it must be put in writing at the time the agreement is entered into.

Without a valid reason, employers cannot simply extend a fixed-term contract. For example, continuing the project that required the original fixed-term contract could be a reason. Any variation to the initial terms of the employment contract, including an extension, must be documented and a copy provided to the employee.

Moreover, the Employment Relations Authority may investigate the authenticity of any fixed-term employment arrangement, particularly when the contract is extended over a long period. This scrutiny helps prevent the use of fixed-term contracts as a means to deny an employee permanent status and the corresponding rights and protections under employment law.

Fixed-term contracts in New Zealand

In New Zealand, a fixed-term contract is an employment agreement with a specific duration and an agreed-upon end date, or it can be project-based, with the contract ending upon the completion of a specific task or project.

Companies often use fixed-term contracts for covering periods of leave, peak times, or completing particular projects. While these contracts offer flexibility for employers, there are several critical considerations and legal requirements that companies must adhere to ensure compliance with New Zealand employment law, including:

Genuine reason based on reasonable grounds: There should be a genuine reason for offering a fixed-term contract instead of a permanent position. This reason should relate directly to the nature of the employment. For example, an employer may need to hire a fixed-term employee to cover for another employee who is on maternity leave or to work on a specific project with a definite end date.
Detailed contract: When drafting a fixed-term contract, employers should include the reasons for its fixed term nature and the way it will end (e.g., a specific date or upon the completion of a certain project). It must be clearly stated in writing within the employment agreement. This is to avoid any ambiguity and to provide clarity for both the employer and employee.

Moreover, employers should be mindful when it comes to extending a fixed-term contract. The extension should also be agreed upon in writing to reflect any modifications to the terms of employment.

Failure to comply with these requirements could potentially result in legal disputes, including claims of unjustified dismissal if the employee argues that their employment ended without a valid reason.

Businesses should be aware that employees on fixed-term contracts have the same rights as permanent employees, including the right to holidays, leave, and fair and reasonable treatment throughout their employment.

Fixed-term contracts: advantages and disadvantages in New Zealand

Engaging with workers under fixed-term contracts offers both advantages and disadvantages. Understanding these can help you make informed decisions about employment agreements.

Advantages of fixed-term contracts

Skills and experience: Fixed-term contracts allow businesses to bring in skills and experience that their existing staff may not have. This can be particularly advantageous for specific projects or during peak seasons.
Flexibility: These contracts offer flexibility for companies to cover parental leave or to manage predictable surges in seasonal demand. They allow employers to respond to the fluctuating needs of the business without committing to long-term employment contracts.
Specific project focus: For project-based work, fixed-term contracts can be highly efficient. They ensure that employees are focused on a specific goal or project, potentially leading to higher productivity and accountability.

Disadvantages of fixed-term contracts

Job insecurity for employees: One of the significant downsides of fixed-term contracts is the job insecurity faced by employees. This insecurity can impact morale and loyalty, potentially leading to a less engaged workforce.
Potential disparities in benefits: Employees on fixed-term contracts may face disparities in benefits compared to their permanent counterparts. This difference could affect their satisfaction and equity within the workplace.
Legal obligations and restrictions: Employers must have a genuine reason for employing someone on a fixed-term basis rather than permanently. Failure to comply with legal requirements, such as specifying the end conditions of the contract in writing, can lead to legal disputes.

Working hours in New Zealand

The average working hours for full-time employees in New Zealand are typically around 38 to 39 hours per week. Employment agreements must specify the maximum number of hours to be worked by the employee at no more than 40 hours per week, not including overtime, unless the employer and employee agree otherwise.

Working hours policy in New Zealand

While there’s no legally mandated maximum working hours, the standard full-time working hours are commonly 35 to 40 hours per week, with a maximum of 40 hours spread over 5 days being typical. Although not standardised, a regular working day often ranges from 9:00 a.m. to 5:00 p.m.

Rest and meal breaks are also prescribed, with the number and duration dependent on the working hours. For instance, an employee is entitled to at least one 10-minute paid rest break for a work period of between 2 and 4 hours, at least one 30-minute meal break, and one 10-minute rest break for a work period of between 4 and 6 hours, and so on. Additionally, for women who are breastfeeding or expressing milk, there may be extra breaks and facilities provided where it’s reasonable and practical to do so.

Student working hours in New Zealand

During the academic year, individuals on a student visa typically have the ability to work part-time for up to 20 hours a week. They can work full-time during scheduled holidays, such as the Christmas and New Year holiday periods.

Overtime rate in New Zealand

There is no legislation governing overtime rates in New Zealand. Often, the calculation of overtime pay exceeds the employee’s regular rate of pay. The employment agreement between the employer and the employee usually determines the specific rate for overtime. Employers and employees can agree on any pay rate for overtime, but it is common practice to pay 1.5 times the normal rate for hours worked over the standard.

If overtime pay rates are not specified in an employment agreement, then the standard wage rate would apply for overtime hours. However, some collective agreements or industry standards might dictate specific overtime pay rates or conditions.

Working week in New Zealand

Monday – Friday

Remote work in New Zealand

In New Zealand, employees have the right to work from home. The Fair Work Act 2013 outlines the right to request flexible work arrangements, which include remote work opportunities. Employers have to consider these requests and can only refuse them on reasonable business grounds.

In addition, the Health and Safety at Work Act 2015 is another crucial piece of legislation that impacts remote work in New Zealand. This act holds employers responsible for ensuring the health and safety of their workers, regardless of whether they are working on-site or remotely. Employers should ensure that employees have a safe and suitable place to work remotely and that all health and safety requirements are met.

To avoid overwork or stress, employers must maintain clear communication with remote workers and establish policies around work conditions, safety protocols, and measures for managing workloads.

There should be policies that outline the process for handling flexibility requests, considering the employee’s requirements, the business’s operational requirements, the nature of the work, and the equipment available to support remote work.

Working remotely in New Zealand for Australian employers

When Australian employers consider hiring employees to work remotely in New Zealand, there are several important factors to keep in mind. Here are key considerations:

Visa and work permissions: Generally, Australians can work in New Zealand without the need for a specific work visa due to the Trans-Tasman travel arrangement. However, if the employee is not an Australian citizen, you’ll need to consider the visa requirements for them to work remotely in New Zealand.
Tax obligations: Australian employers should be aware of the tax implications for employees working remotely in New Zealand. This includes understanding the employee’s tax residency status and the potential for double taxation. Consulting with a tax professional who has expertise in trans-Tasman tax laws is advisable to navigate this complex area.
Compliance with labour laws and regulations: New Zealand’s employment laws, including health and safety, working hours, privacy laws, and employment rights, must be adhered to even if the employer is based in Australia. It’s important to familiarise yourself with the New Zealand employment legal framework to ensure compliance.
Payroll and employee benefits: Consider whether you will run payroll in Australia or New Zealand. This decision may impact the employee’s entitlement to certain benefits and superannuation contributions. Employers may find it beneficial to use a global employment service or employer of record (EoR), such as CXC, to manage payroll, taxes, and compliance with local employment laws on their behalf.
Cultural consideration: While Australia and New Zealand share many cultural similarities, being mindful of local customs and practices in the workplace can facilitate better communication and work dynamics.
Insurance and liability: Make sure that your worker’s compensation and liability insurance policies cover employees working remotely in New Zealand. This may require adjusting existing policies or obtaining additional coverage.

Remote work visa in New Zealand

Currently, New Zealand does not offer a specific remote work visa or digital nomad visa targeted exclusively at individuals looking to live in New Zealand solely to work remotely for foreign employers.

However, there are existing visa options that could potentially align with the needs of remote workers and location-independent individuals. For example, the Working Holiday Visa allows people aged 18 to 30 from certain countries to work and travel in New Zealand for up to 12 months, which may offer a temporary solution for remote workers and digital nomads under the right circumstances.

Depending on the individual’s unique circumstances and eligibility, New Zealand offers more than 100 different temporary visa options and 28 permanent visa options for foreigners in addition to the Working Holiday Visa.

For long-term remote work options in New Zealand, individuals may need to consider visas that are not specifically designed for remote work but allow for prolonged stays, work, or business activities in the country under certain conditions. It’s essential for potential remote workers to check the specific requirements and conditions of each visa type to determine eligibility and compliance with New Zealand immigration laws.

Tailored employment contracts in 100+ countries

Like any other country, New Zealand has its own set of regulations when it comes to employment contracts — and failing to adhere to these rules could put your company at risks.

Thankfully, our dedicated team of experts is experienced in crafting tailored, compliant contracts in New Zealand (and in 100+ countries). That means that, when you partner with us, you won’t need to waste time worrying about compliance. Instead, you can focus on what matters most: growing your business.

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