Every NZ employment agreement must include the names of both parties, job description, pay and how it's calculated, hours of work, workplace location, and a reference to how to raise employment relationship problems, as required under the Employment Relations Act. Employment New Zealand provides a free template covering all mandatory clauses.
The common belief is that any written agreement will do, as long as both people sign something. The reality is the Act specifies exactly what has to be in there, and a signed agreement missing a mandatory clause can still land you in a dispute you didn't see coming, especially around pay calculation or hours.
Is a verbal agreement with a handshake enough?
No, and this trips up more small employers than you'd think, usually the ones hiring their first person ever, a sparky taking on an apprentice or a shop owner bringing on their first casual. A verbal agreement can still be legally binding in some respects, but you're required to have a written employment agreement, and without one you're exposed if a dispute comes up over pay, hours or termination. There's nothing to point to.
The fix isn't complicated. Employment New Zealand has a free template on their website that already contains every mandatory clause in the right order, so you're not drafting legal language from scratch at 9pm the night before someone starts.
Source: Employment agreements
Does "pay and how it's calculated" just mean the hourly rate?
Not quite. It means stating the rate, but also how it's worked out, whether that's a flat hourly rate, a salary divided across pay periods, or a rate plus commission for a sales role. If you're paying the adult minimum wage of $23.95 an hour or the training and starting-out rate of $19.16 an hour, the agreement needs to say which applies and why, particularly if you're using the starting-out rate for a 16 or 17 year old new to the workforce.
Source: Minimum wage
Getting this vague is where a lot of pay disputes start. "Standard hourly rate" with no number attached isn't enough. Say the dollar figure, say how often it's reviewed if at all, and say what happens with overtime or weekend rates if your business pays them differently.
What about hours, location and the job description itself?
These three get treated as filler by employers in a hurry, but they're mandatory for a reason. Hours of work needs to state what's guaranteed, not just "casual as required", because that phrase alone has caused real disputes over whether someone has guaranteed hours at all. If your rest home needs someone for three set night shifts a week plus occasional cover, say that.
Workplace location matters more than it sounds for anyone running more than one site, a cafe with a second branch across town, a retail owner covering two stores. State which location the role is based at, and whether the person can be asked to work at another one.
The job description doesn't need to be a full position description document, but it needs enough detail that both sides agree on what the role actually covers. For an entry level hire this matters even more, because there's no prior role to compare it to, the agreement is the only reference point for what was agreed.
What's the one clause employers most often leave out?
The reference to how to raise employment relationship problems. It sounds like boilerplate, which is probably why it gets skipped, but it's a legal requirement and it's there so an employee knows where to go if something goes wrong, rather than the first conversation about a problem happening in the heat of the moment. The Employment New Zealand template includes standard wording for this, so there's no reason to leave it out or draft it yourself.
Key takeaways
- A written agreement is required, a verbal one or a handshake deal is not enough protection for either side.
- Pay must state the actual rate and how it's calculated, not just "standard rate", especially if you're using the $19.16 starting-out wage.
- Guaranteed hours need to be spelled out. "Casual as required" with nothing else attached is a common source of disputes.
- Workplace location and a basic job description are both mandatory, not optional extras for a short or entry level role.
- Employment New Zealand's free template already contains every mandatory clause, correctly worded, so use it rather than writing your own.
Frequently asked questions
Is a verbal job offer legally binding in NZ?
Some terms of a verbal agreement can be binding, but you are still required to provide a written employment agreement. Without one, disputes over pay, hours or dismissal are much harder for either side to resolve.
Do I need a different agreement for casual staff?
The same mandatory clauses apply, but the hours section should reflect that work isn't guaranteed and is offered and accepted shift by shift, rather than stating fixed hours that don't exist.
Can I write my own employment agreement from scratch?
You can, but it needs to cover every mandatory clause under the Employment Relations Act. Using Employment New Zealand's free template is faster and avoids missing something that later becomes a dispute.
What happens if my agreement is missing a mandatory clause?
The agreement may still be considered valid overall, but a missing clause, particularly around pay calculation or problem resolution, weakens your position if a dispute goes to the Employment Relations Authority.
Once your agreement's sorted, get the role itself in front of the right people at the free employer job posting page.