Updated on: 2025/08/04 14:03 (UTC)
Overview
The main legislation governing labor and employment is the Employment Relations Act 2000, which combines a market model for employment with greater obligations on the parties to the employment relationship to demonstrate “good faith” behaviors.
Hiring
Employment Contracts
Under the Employment Relations Act 2000, there are two categories of employment agreement, individual and collective. Whether individual or collective, all agreements must contain the following provisions:
- an employee protection provision setting out what is to occur in the event of restructuring (for this purpose, defined as the contracting out of work or the sale or transfer of business),
- information about the employee’s entitlements under the Holidays Act 2003,
- confirmation that the employee is entitled to paid time and a half for hours worked on a public holiday and
- an employment relationship problem-resolution process.
Individual employment agreements are the dominant form of employment contract and are negotiated between the employer and the employee directly. The employee must be provided with a copy of the intended agreement and given a reasonable chance to consider it. The major requirement in establishing and maintaining employment agreements is an ongoing obligation for parties to act in utmost good faith towards one another.
“Good faith” is contextual but the core tenets are:
- Employers and employees should be responsive to and communicative with each other.
- The employment agreement should reflect genuine discussion and negotiation between employer and employee.
- Employees should have access to appropriate information when the employer is making decisions that may affect their jobs.
- Problems that arise should be dealt with in a reasonable manner.
The individual employment agreement must be in writing and at a minimum contain the following information:
- the employee’s name,
- the employer’s name,
- the employee’s job title,
- the employee’s remuneration,
- the employee’s general place of work,
- the employee’s normal times of work and
- a plain-language description of dispute-resolution procedures including time limits for raising grievances.
Employers are required to retain a copy of the agreement or the latest terms that the employee has agreed to.
Employer with less than 20 employees may include a clause in any employment agreement stating that the employee is subject to a trial period no longer than 90 days. During this period, the employer may dismiss the employee without the employee being able to raise a personal grievance for unjustified dismissal. The employee can still raise a personal grievance for harassment, discrimination or unpaid wages or on other grounds.
A trial period is only effective for a new employee and when it is included in the employment agreement before the employee starts work.
A probation period is where the employer can assess the employee’s skills and suitability for the position for a defined period. If dismissed during a probation period, the employee can still raise a personal grievance for unjustified dismissal and the employer must show that the dismissal was justified. A probation period should be included in the employment agreement at the outset of the employment relationship. Probation periods are now not widely used by employers, which favour the greater flexibility offered by trial periods.
Employees must be paid during both trial and probation periods.
Restrictions on Hiring
There is no absolute minimum or maximum age to work in New Zealand except where retirement age is specified in the employment agreement or set out in legislation, although the following restrictions do apply:
- Individuals under the age of 16 may not work after 10 p.m. or before 6 a.m., and their employment must not interfere with attending school.
- Work for people under 15 must be safe and cannot include (for example) employment in factories or in forestry occupations.
Recordkeeping
Employers must keep adequate wage and time records for all employees. Failure to keep these records will mean that the employee’s submission on any issues of back or unpaid wages will be accepted as correct if at issue.
Employers must also keep current records of holiday and sick leave entitlements and KiwiSaver contributions.
Employers should maintain individual employee files including:
- tax code information;
- offer of employment and job description;
- signed employment agreement;
- evidence of citizenship or right to work in New Zealand;
- personal, emergency and banking details and
- any other employment documents.
Background Checks
Background checks can only be conducted with the consent of the prospective employee, although an offer of employment can be made contingent on a satisfactory medical check. An employer can request a copy of a prospective employee’s criminal record only with the applicant’s written permission.
Under the Privacy Act 1993, background checks can only be conducted with the consent of the prospective employee. An employer can request a copy of a prospective employee’s criminal record only with the applicant’s written permission.
Under the Criminal Records (Clean Slate) Act 2004, prospective employees with certain minor convictions that did not result in imprisonment do not have to declare their criminal records if seven years have elapsed since their last conviction. Such convictions will not be included in a criminal record sent by the police to an employer.
An offer of employment can be made contingent on a satisfactory medical check, and employers may ask applicants if they have any medical conditions that might affect their job performance. Employers need to be sure that any mandatory medical requirements are reasonable for the position to avoid inadvertent or indirect discrimination.
Noncompetition Agreements
Known as restraint-of-trade clauses in New Zealand, noncompetition agreements are regulated by the common law and are prima facie unenforceable. To enforce a restraint-of-trade clause, the employer must show that it is reasonable in the circumstances to protect the proprietary interest of the employer.
In general, restraint-of-trade clauses are upheld in cases where the departing employee has trade secrets or other confidential information over which the employer may claim a proprietary right. Restraint-of-trade clauses should be entered into at the beginning of the employment relationship but can be added to existing employment agreements by emending the original agreement or creating a new agreement.
Noncompete agreements must be reasonable in duration and in geographical scope.
Reference Citations
Employment Contracts: Employment Relations Act, No. 24 of 2000 (as amended), §§ 51-55, 60-67
Recordkeeping: Employment Relations Act, No. 24 of 2000 (as amended), §§ 130-132
Background checks: Criminal Records Act, No. 36 of 2004; Privacy Act, No. 28 of 1993
Immigration and Work Permits
In General
To obtain a work visa, an applicant must have a job offer in New Zealand, and his or her employer must establish that the applicant is eligible to work in New Zealand. Prospective employees must meet health and character requirements, and their qualifications and work experience must be checked and approved by Immigration New Zealand.
Visas and Work Permits
There are different categories of work visas, and they operate differently.
Essential Skills visa. This visa allows employees to work temporarily if they have a job offer in New Zealand and are eligible to work in the country. The occupation must be on the essential skills list and the applicant must be sufficiently qualified and/or experienced to do the work. The employer must perform a labor market test to ensure there are no suitable New Zealanders available for the position.
The government uses a points system based on factors such as age, work experience, and other qualifications to determine eligibility. Minimum salary thresholds have also been introduced as a means of defining skilled employment.
Essential Skills work visas are generally valid for up to three years but may be granted for up to five years depending on the skill level and salary.
Lower skilled visa holders may remain in New Zealand for three years, after which they must spend at least 12 months outside New Zealand before they can apply for a new visa. They are not permitted to bring family members as dependants.
Skilled Migrant visa. In order to obtain a Skilled Migrant visa, the applicant must:
- have an offer of skilled employment,
- have experience and qualifications that meet the definition of “skilled,”
- meet New Zealand “good character” requirements,
- meet certain health requirements,
- be under the age of 55,
- meet the minimum English requirements,
- meet minimum salary thresholds, and
- qualify for a minimum number of immigration points.
The Skilled Migrant visa is permanent and employees who have lived in New Zealand at least five years with a residence visa can apply for New Zealand citizenship.
Australian citizens can work in New Zealand without a visa.
Penalties
Employers that breach immigration laws face penalties of up to seven years in prison and a NZ$100,000 fine. Employers that have incurred a penalty for breaching employment standards also will be barred from recruiting migrant workers for between 6 months to 2 years, depending on the severity of the breach.
Reference Citations
Visas and Work Permits: Amendment Circular No. 2017/11, Amendment to the Immigration New Zealand Operation Manual
Nondiscrimination
In General
It is unlawful to discriminate against people in employment on the basis of age, marital status, gender, employment status, religion, ethnic origin, ethical beliefs, color, race, disability (including illness), sexual orientation, political opinion or family status.
If a prohibited ground is an integral part of a position, however, discrimination will be permitted. It is not discrimination, for example, to specify that a successful applicant for a position as a priest in a Catholic Church be Catholic. The employer cannot justify discrimination, however, if with reasonable adjustments to a position an employee would be able to perform the duties associated with the position.
Indirect as well as direct discrimination is prohibited. Indirect discrimination occurs when a policy that appears neutral has the effect of discriminating against a particular group without good justification.
Pay Discrimination
The Equal Pay Act 1972 prohibits discrimination on the basis of sex, including paying different rates for substantially the same work. Under the Pay Equity Amendment Act 2020, employers are forbidden to pay lower wages to employees based on their gender, ethnicity, or age.
Reference Citations
Nondiscrimination: Employment Relations Act, No. 24 of 2000 (as amended), §§ 104-105
Pay Discrimination: Equal Pay Act, 1974
Employee Privacy
Employee Data
Employers may collect, store, and process personal information in accordance with the following principles:
- the personal information is needed for a lawful purpose connected with the employer’s work;
- the personal information is collected directly from the employee;
- before the personal information is collected, the employer has taken reasonable steps to ensure that the employee knows that the information is being collected, why it is being collected, how the collection is authorized or required by law, and the consequences for not providing the requested information;
- the personal information is collected in a lawful and fair way and does not unreasonably invade a person’s privacy;
- the personal information is kept reasonably safe from being lost, accessed, used, modified, or disclosed to unauthorized persons;
- the employee has access to the information and is entitled to request a correction;
- the employer ensures that the personal information is accurate, up to date, complete, relevant, and not misleading; and
- the information is not be kept any longer than it is needed.
Upon request, employers must give employees access to their personal information within 20 days.
An employer should not disclose personal information to another entity unless the disclosure is one of the purposes for which the information was obtained.
Employee Monitoring and Surveillance
Monitoring and surveillance of employees at work, particularly their internet use, is generally legal as long as they are informed.
Any monitoring and surveillance must be balanced against the right to privacy, however, and will depend to some extent on the employment agreement. If there is no provision for private internet use in the agreement, the employer can investigate all internet use including private social media and email. If there is provision for some reasonable private use, the right to privacy may prevail. In all cases, the monitoring of internet use must be reasonable in the circumstances and in consideration of the employment agreement.
Video and audio monitoring of employees is also generally legal as long as it complies with the provisions of the Privacy Act. Employers may set up overt video surveillance provided that they notify employees in advance that the monitoring will take place, what the information will be used for, how long it will be kept, and who will have access to it. Video surveillance cannot occur in places where employees have a reasonable expectation of privacy, for example in bathrooms.
Covert video surveillance can be used in limited circumstances—for example, to combat rampant theft or ensure employee safety—or in cases where disclosing the surveillance would make the information gathering pointless. Employers cannot prolong covert surveillance once its purpose has been met.
Reference Citations
Employee Data: Privacy Act, 1993, § 6
Employee Monitoring and Surveillance: Privacy Act, 1993
Compensation
Hours of Work
The workweek is generally defined as 40 hours and five days in length unless otherwise negotiated and included in the employment agreement.
Amendments to the Employment Relations Act that took effect in 2015 make break requirements more flexible and practical for employers, allowing them to eliminate breaks altogether if employees are adequately compensated or the employer’s situation makes it unreasonable to give breaks.
The act says an employee is entitled to rest and meal breaks that:
- give the employee a reasonable chance during the work period to rest, refresh and take care of personal matters and
- are appropriate for the length of the employee’s work period.
There are no specific requirements as to how long breaks should be or when they should be scheduled, which is left for employers and employees to negotiate as part of the collective bargaining process.
The employer must give an employee a reasonable chance to negotiate the timing and length of rest and meal breaks and try to reach agreement in good faith. If the employer and the employee cannot reach agreement, the employer may set reasonable times and lengths for breaks that allow it to maintain service or production. What is reasonable will depend on the employee’s interests and the operational environment or resources.
Employers can only restrict rest and meal breaks when the restrictions are reasonable and either of the following conditions is met:
- the restriction is necessary, considering the nature of the employee’s work, in which case the employer can specify what restrictions apply or
- the restriction is agreed to by the employer and employee.
The act also imposed new requirements regarding flexible working arrangements. Under the new changes:
- all employees have the right to request a change to their working arrangements;
- employees can request flexible working arrangements from their first day of employment, whereas previously they had to wait six months;
- there is no limit on how many requests can be made in a year and
- the maximum time an employer has to respond to a request has been reduced from three months to one month.
Minimum Wage
Effective from April 1, 2024, to March 31, 2025, the standard minimum wage is NZ$23.15 per hour. Effective from April 1, 2023, to March 31, 2024, the standard minimum wage was NZ$22.70 per hour.
New Zealand’s standard minimum wage applies to workers who are at least 20 years of age and who are not enrolled in an industry-recognized training program, as well as those between 16 and 19 who generally have completed at least six continuous months of employment. There are no mandatory shift premiums except that work on a public holiday must be compensated at time and a half a worker’s regular rate.
Overtime
Overtime rates are negotiated between the employer and employee. There is no legal requirement to pay overtime at a premium rate, although employees on an hourly wage must be paid for all hours worked. The compensation of salaried employees need not be adjusted when they work more than their normal weekly hours unless this is provided for in the employment agreement.
Wage Payment
The Wages Protection Act 1983 regulates payment of and deductions from wages.
The default position under the act is that wages must be paid in cash (notes and coins) unless otherwise stated in the employment agreement. In practice, very few employees are paid in cash.
Deductions may not be made from employees’ wages without permission or agreement in writing from the employee (including in the employment agreement) except those required under law or by court decree (taxes and child support, for example).
Mandatory Bonuses
Bonuses are agreed upon between the employer and the employee and taxed as normal income.
Reference Citations
Hours of Work: Employment Relations Act, No. 24 of 2000 (as amended) §§ 67C, 69ZC-69ZE
Wage Payment: Wages Protection Act, No. 143 of 1983, §§ 4-7
Benefits
Vacation
All employees are entitled to at least four weeks’ paid vacation a year. Employees get their annual holiday entitlements on their first and subsequent anniversaries after starting work. This is meant to be paid leave and can only be converted into cash in limited circumstances.
Annual vacation can be taken at any time agreed between the employer and the employee, although employees must be given the opportunity to take at least two of the four weeks’ vacation continuously if they wish to do so.
Casual and fixed-term employees of under one year’s service can agree to receive annual leave pay as they work, calculated and paid as 8 percent of wages, without the requirement that the entitlement be taken as actual leave.
Employees can ask in writing to be paid out up to one week of their annual leave entitlement each year, but employers cannot pressure employees to be paid out and employment contracts cannot stipulate that employees be paid out.
Annual leave requests by employees must not be unreasonably refused but are subject to the operational requirements of the employer’s business. Employers can require employees to take annual leave during a shutdown period provided they give at least 14 days’ notice. If a shutdown period includes public holidays, employees must be paid for those days if they would normally be working days.
Employees are entitled to receive their pay for annual vacations before the vacation commences, unless the employer and employee agree that the normal pay cycle will continue undisturbed by the time off work.
Holidays
There are 11 public holidays in New Zealand:
- Jan. 1-2: New Year’s
- Feb. 6: Waitangi Day
- April 25: ANZAC Day
- Good Friday and Easter Monday
- Queen’s Birthday (first Monday in June)
- Matariki (late June or early July)
- Labour Day (fourth Monday in October)
- Dec. 25: Christmas Day
- Dec. 26: Boxing Day
- Provincial Anniversary Day (date determined locally)
Note: New Zealand has declared Monday, Sept. 26, 2022, a national holiday for the funeral of Queen Elizabeth II.
If they fall on a Saturday or Sunday, Waitangi Day, ANZAC Day, Christmas, Boxing Day, New Years’ Day and Jan. 2 will be observed on the following Monday or the following work day.
If an employee normally works on the day a public holiday falls, he or she must generally be given the day off with pay.
An employee, whether hourly or salaried, who works on a public holiday must be paid 1.5 times his or her normal wage. Salaried employees’ daily rates are calculated by dividing annual wages by 52 and then again by five. In addition, an employee who works on a public holiday is entitled to an alternative holiday (another day’s paid leave) if the public holiday falls on a day that would otherwise be a working day for the employee.
Maternity Leave
Employees who are having a baby or are going to take the permanent primary responsibility for a child under 6 years are entitled to parental leave. Parental leave can be taken by one parent or divided between the two. Employees who have worked for at least an average of 10 hours a week during the 12 months just before the expected birth of the child or the date they will assume responsibility for care of the child are entitled to:
- 52 weeks of unpaid parental leave and
- 26 weeks of government-funded parental leave payments.
The amount of unpaid leave is halved for employees who have worked for at least an average 10 hours a week during the six months just before the expected birth of the child or the date they will assume responsibility for care of the child.
Employees who intend to take parental leave must give their employer at least three months’ written notice before the due date. Up to six weeks of the leave entitlement may be taken before the expected date of birth or adoption.
Pregnant employees can also take 10 days of unpaid special leave for issues related to the pregnancy. Employees on parental leave are allowed to work up to 40 hours for their employer while on paid or unpaid leave.
While on maternity leave employees may be allowed to work periodically to keep in touch with their employer. “Keeping-in-touch” work could include activities such as attending a team-building exercise or important meeting, as long as:
- the employee only does a total of 64 hours or less of paid work for the employer during her parental leave payment period and
- this work is not within the first 28 days after her child is born.
In most cases, an employee is entitled to return to her previous position at the end of maternity leave. Employees deemed to hold key positions need not be guaranteed a return to them following leave, although they must be given preference for similar jobs for six months after the end of the leave entitlement.
Paternity Leave
Employees who are going to take the permanent primary responsibility for a child under 6 years are entitled to parental leave. Parental leave can be taken by one parent or divided between the two. Employees who have worked for at least an average of 10 hours a week during the 12 months just before the expected birth of the child or the date they will assume responsibility for care of the child are entitled to:
- 52 weeks of unpaid parental leave and
- 26 weeks of government-funded parental leave payments.
The amount of unpaid leave is halved for employees who have worked for at least an average 10 hours a week during the six months just before the expected birth of the child or the date they will assume responsibility for care of the child.
Employees who intend to take parental leave must give their employer at least three months written notice before the due date.
In addition to parental leave, fathers are entitled to:
- one week of unpaid leave if they have worked for the employer at least an average 10 hours a week for six months or
- two weeks of unpaid leave if they have worked for the employer at least an average of 10 hours a week for 12 months.
This leave can be taken in the period beginning 21 days before the expected birth or the date their partner intends to become the primary carer and 21 days after unless the employer and the employee agree otherwise. Employees are allowed to work up to 40 hours for their employer while on paid or unpaid leave.
While on parental leave, the father may be allowed to work periodically to keep in touch with his employer. “Keeping-in-touch” work could include activities such as attending a team-building exercise or important meeting, as long as:
- the employee only does a total of 64 hours or less of paid work for the employer during his parental leave payment period and
- this work is not within the first 28 days after his child is born.
In most cases, an employee is entitled to return to his previous position at the end of parental leave. Employees deemed to hold key positions need not be guaranteed a return to them following leave, although they must be given preference for similar jobs for six months after the end of the leave entitlement.
Sick Leave
The Holidays Act 2003 provides employees a minimum of five days’ paid sick leave a year after the first six months of continuous employment and an additional five days paid sick leave after each subsequent 12 month period.
The sick leave allowance can be increased by agreement between the employer and the employee. At any time, the employer and the employee can agree to the employee going into sick leave debt and any debt can be deducted from the following 12-month period.
Unused sick leave is accumulated to a maximum 20 days, which can be extended by agreement. There is no legal requirement that unused sick leave be paid out on termination of employment.
If an employee receives Accident Compensation Corporation (workers’ compensation) payments for more than five days, the employer and the employee can agree to top up the ACC payment from 80 percent to 100 percent by reducing the employee’s sick leave by one day for each five days’ ACC leave.
Other Leave
Bereavement leave. After six months of employment, employees are entitled to three days’ paid bereavement leave following the death of an immediate family member, defined as the employee’s spouse, parent, child, sibling, grandparent, grandchild or mother/father-in-law. Under an amendment to the Holidays Act of 2003, the mother and her partner or spouse are entitled to up the three days of paid bereavement leave for the unplanned end of a pregnancy by miscarriage or still-birth.
Where there is more than one death, the employee is entitled to an additional three days’ bereavement leave per death.
For other deaths, up to one day paid leave may be taken if the employer accepts that the employee is bereaved. Factors for deciding bereavement include:
- how close the association was between the employee and the other person,
- whether the employee is responsible for any aspects of the ceremonies around the death and
- whether the employee has any cultural responsibilities to fulfil in respect of the death.
Domestic Violence Leave. Employees who are victims of domestic violence have the right to claim up to 10 days of paid domestic violence leave in each 12 month period. Employees will also be able to request a short-term (two months or less) variation in their hours, days, or place of work in order to help cope with the effects of being subject to domestic violence. To be eligible, employees must have:
- worked for their employer for least six continuous months, or
- over a six-month period, worked at least an average of 10 hours during that period and no less than 1 hour in every week or no less than 40 hours in every month during that period.
Employees must submit their request in writing, specifying the nature of their request, the date on which it will commence, and how it will assist them. The employer must notify the employee as soon as possible, but not less than 10 working days after receiving the request, of its decision to approve or refuse. If the employer refuses the request it must state in writing the grounds for refusing and explain the reasons for those grounds. Employers can request that employees provide proof of domestic violence to support their request for domestic violence leave.
Domestic violence leave cannot be rolled over or added to the following year’s leave entitlements.
Volunteer Defense Force Leave. Under the Volunteers Employment Protection Act 1973, if an employee volunteers in the armed forces, the employer has to allow the employee to take unpaid leave for training. If the employee volunteers or is called up to a “situation of national interest,” the employer may be required to hold the employee’s job open for up to 12 months.
Pensions and Social Security
New Zealand doesn’t have an official retirement age, but 65 is the age at which most superannuation (retirement) plans begin to pay benefits, including the government-funded NZ Superannuation.
New Zealand has an opt-out work-based savings initiative known as KiwiSaver. Employee members contribute at least 3 percent of their pay, which employers must match up to that 3 percent. A total remuneration package may be agreed upon at the commencement of employment that includes employer KiwiSaver contributions. On hiring, employers must report employee information to Inland Revenue, which automatically enrolls the employee in a default KiwiSaver scheme. Employees must opt out if they do not wish to participate. If an employee opts out of KiwiSaver, the employer does not have to contribute.
Workers’ Compensation
Administered by the Accident Compensation Corporation, accident compensation insurance covers both workplace and nonworkplace injuries involving both New Zealanders and visitors to New Zealand.
ACC is a no-fault insurer funded by levies on earners and employers and providing both treatment and compensation. If an injury prevents a person from earning a living, ACC will pay weekly compensation up to 80 percent of previous wages.
Employers must pay an annual levy (the “workplace cover”) in an amount depending on the employer’s category and total payroll. Employees are also required to contribute through payroll withholding. Employers must pay the first week’s compensation if an injury is work-related.
While there is a statutory bar on most personal injury claims under the Accident Compensation Act 2001, exemplary damages may be sought in exceptional cases but even then are not compensatory in nature and are usually modest. Consequently, an individual employee’s ability to sue an employer directly for a workplace accident is very limited, although liability may arise under provisions of the Health and Safety in Employment Act 1992.
Reference Citations
Vacation: Holidays’ Act, No. 129 of 2003 (as amended), §§ 16-19
Holidays: Holidays’ Act, No. 129 of 2003 (as amended), §§ 44-55
Maternity Leave: Parental Leave and Employment Protection Act, No. 129 of 1987 (as amended), §§ 8-9, 23-28, 31-32
Paternity Leave: Parental Leave and Employment Protection Act, No. 129 of 1987 (as amended), §§ 8-9, 23-28, 31-32
Sick Leave: Holidays’ Act, No. 129 of 2003 (as amended), §§ 65-68
Other Leave: Holidays’ Act, No. 129 of 2003 (as amended), §§ 69-70; Domestic Violence-Victims’ Protection Act 2018; Parental Leave and Employment Protection Act, No. 129 of 1987 (as amended), § 9.
Labor Relations
In General
Employees have a right to organize and to join a union if they wish. Anyone can start a union as long as there are at least 15 members. Mediation is the dominant employment dispute resolution process. Strikes and lockouts are considered lawful if they relate to bargaining for a collective agreement, there is no current collective agreement and more than 40 days have passed since collective bargaining was initiated. Employers may not replace striking employees unless the safety of plant and personnel require it but may ask, although they cannot require, existing employees to cover the work of striking colleagues.
When ownership of a business is transferred, the successor employer becomes responsible for its predecessor’s duties under an existing collective agreement.
Effective Dec. 1, 2022, the Fair Payment Agreements Act requires unions and employers entering into a collective agreement that covers an industry or occupation to establish at a minimum terms and conditions addressing wages, job training, the agreement duration, and the bargaining process.
Right to Organize
Employees have a right to organize and to join a union if they wish. Union membership is entirely voluntary and no pressure may be placed on an employee to join a union by any person. An employer may not attempt to influence an employee’s decision to join a union. Employers may not unreasonably deny union representatives access to workplaces, but union representatives do require the employer’s permission. A failure of the employer to respond to a request for access will be understood as consent.
Anyone can start a union as long as there are at least 15 members. Unions must be registered by first becoming an incorporated society (under the Incorporated Societies Act 1908) and subsequently registering as a union under the Employment Relations Act 2000, which requires that the union have as its aim the promotion of its members’ employment interests, that its rules be democratic and reasonable and that it be independent of employer influence.
Collective agreements are negotiated between employers and trade unions and like individual employment contracts are governed by the obligation of good faith. The duration of a collective agreement can be no longer than three years. Agreements apply only to employees who are members of the bargaining unions and others specifically identified at the outset of negotiations. Employers party to a collective agreement must tell new employees of its existence and provide union contact information. Less than 10 percent of private sector employees work under a collective agreement.
Under amendments to the Employment Relations Act, union participation is no longer necessary to negotiate a collective agreement and the requirement that a new employee be automatically covered by an existing agreement for his or her first 30 days of employment has been eliminated.
Under the Fair Payment Agreements Act, effective Dec. 1, 2022, collective agreements covering an industry or occupation must establish at a minimum terms and conditions addressing wages, job training, agreement duration, and the bargaining process.
Works Councils
New Zealand does not have a works council system.
Dispute Resolution
Mediation is the dominant employment dispute resolution process in New Zealand and is a necessary step prior to a dispute being submitted for adjudication to the Employment Relations Authority. The parties can by mutual consent agree to have a dispute arbitrated, but this is an option rarely exercised. The majority of employment disputes are resolved by or before mediation.
In the event of a failure to reach resolution through mediation, the parties can proceed to the Employment Relations Authority, which can issue a binding determination. Either party can appeal this determination to the Employment Court and then to the Court of Appeal and the Supreme Court.
It is worth noting that the obligation for employers and employees to deal with each other in good faith applies to the resolution of disputes before they reach these formal mechanisms. There is a particular emphasis on open and honest communication designed to facilitate settlement.
Strikes and Lockouts
Strikes and lockouts are regulated by the Employment Relations Act 2000 and considered lawful if they relate to bargaining for a collective agreement, there is no current collective agreement and more than 40 days have passed since collective bargaining was initiated.
Employers may not replace striking employees unless the safety of plant and personnel require it but may ask, although they cannot require, existing employees to cover the work of striking colleagues.
An employer may suspend a striking employee without pay, and nonstriking employees may be suspended due to lack of work. There is no obligation to pay someone on a complete strike, but persons on a partial strike (performing only some duties) must be paid for work performed.
The employer must report a strike or lockout to the Ministry of Business, Innovation and Employment.
Successorship Clauses
In cases where a business is sold or transferred, the successor employer becomes responsible for its predecessor’s rights and duties towards the employees under the collective agreement.
Reference Citations
Right to Organize: Employment Relations Act, No. 24 of 2000 (as amended), §§ 8-17
Dispute Resolution: Employment Relations Act, No. 24 of 2000 (as amended), § 129
Strikes and Lockouts: Employment Relations Act, No. 24 of 2000 (as amended), §§ 80-95
Safety, Health and Security
In General
Employers are responsible for providing a safe workplace and for ensuring the health and safety of workers and visitors. Drug and alcohol use must be managed like other workplace hazards, and drug and alcohol testing is allowed if reasonable. Monitoring and surveillance of employees at work, including their internet use, is generally legal as long as they are informed.
Workplace Health and Safety
The Health and Safety at Work Act imposes new responsibilities on both employers and employees. An employer now has a “primary duty of care” to ensure the health and safety of workers and others affected by the work it carries out, including workers at locations where it shares a work site and visitors to the workplace. Employees also must take reasonable care for their own and their fellow workers’ health and safety.
For employers, the primary duty of care includes, so far as is reasonably practicable:
- providing and maintaining a work environment that is without risks to health and safety;
- providing and maintaining safe systems of work;
- providing adequate facilities for the welfare of employees performing work for the business or undertaking, including ensuring access to those facilities;
- providing any information, training, instruction or supervision necessary to protect all people from risks to their health and safety and
- monitoring the health of workers and the conditions at the workplace for the purpose of preventing injuries or illnesses.
Both individuals and the corporate entity can be held accountable for reckless conduct, with fines of up to NZ$3 million for corporations and NZ$600,000 and/or up to five years’ imprisonment for individuals.
Drug and Alcohol Use
Smoking is banned in all workplaces under the Smoke-free Environments Act 1990.
Drug and alcohol use is classified as a hazard under the Smoke-free Environments Act 1990 and must be managed like other workplace hazards. A written drug and alcohol policy should clearly set out expectations and responsibilities of both employees and employers.
Drug and alcohol testing must balance the rights under Australian law of privacy and workplace safety. While there are no specific laws regarding drug and alcohol testing, clear principles have emerged.
Testing is commonly done:
- when an employee starts work in a safety-conscious sector,
- after an accident involving the employee,
- when there is a reasonable belief that the employee is using drugs or alcohol or
- as part of the monitoring of an employee who has tested positive for drug or alcohol use in the past.
Random drug testing is likely to be permissible only where the “safety sensitive” nature of the position makes it necessary. Refusal to consent to a drug test can be viewed as failure to follow reasonable and legal instructions and be grounds for discipline, up to and including dismissal.
Reference Citations
Workplace Safety and Health: Health and Safety at Work Act, No. 70 of 2015, §§ 30-57
Drug and Alcohol Use: Smoke-Free Environments Act, No. 108 of 1990 (as amended), § 5
Termination
Termination by Employer
Under the Employment Relations Act 2000, there is no “at-will” employment in New Zealand, and an employer requires cause to terminate an employee except during a trial period.
Either employer or employee may terminate the employment relationship in accordance with the terms of the employment agreement by giving the required notice, although the employer may only give notice for just cause and after following a fair process.
The necessary notice period should be stipulated in the employment agreement, as should any other notice provisions, such as whether an employee may be given “garden leave” (paid leave during the notice period) in place of being required to work the notice out.
In cases of serious misconduct, an employer may terminate an employee without notice and without paying out the notice period. “Serious misconduct” must undermine or destroy the relationship of trust and confidence that exists between the employer and the employee.
Examples of serious misconduct may be listed in the employment agreement, although this is not definitive or exclusive.
When dismissing an employee for serious misconduct, the employer must still follow a fair process, and the employee must be given a chance to both hear and respond to the allegations of misconduct.
The duty to act in good faith applies here, and open and honest communication is needed. Failure to follow a fair process may open the employer to a personal grievance for unjustified dismissal.
A terminated employee has the right to request the reasons for dismissal within 60 days and must raise a personal grievance with the employer within 90 days of dismissal.
Justification of dismissal involves the reasonableness of the outcome and the fairness of the process followed by the employer. Employers should not predetermine the outcome of an employment investigation nor should they refuse to discuss the situation with the employee. Employers should outline the information against the employee, allow time for the employee to respond and then genuinely consider that response.
If requested, reinstatement must be the first course of action considered by the Employment Relations Authority for employees who have been found to be unfairly dismissed.
Long-term incapacity can be a valid reason for termination of employment if the incapacity has a material impact on an employee’s work. The employer must allow a reasonable time for recovery and take reasonable measures to assist the employee to return to work, considering all alternatives to dismissal.
If an employee is unable to work and is receiving Accident Compensation Corporation entitlements, ACC may write to the employer and set out vocational rehabilitation goals to assist the employee to return to work. The employer must take all reasonable steps to help the employee achieve these goals. If an employer is considering the dismissal of an employee on ACC, it must consult with the employee.
Constructive dismissal is when employees feel they have been forced into resignation by the actions of the employer—for example, when an employee is given a choice between resigning or being dismissed or the employer follows a course of action with the dominant purpose of forcing the employee to resign. Employees who have been constructively dismissed may lodge a personal grievance against the employer.
Whistleblowing. Effective July 1, 2022, employees can make protected disclosures directly to relevant authorities instead of having to initially make such disclosures to their employer. Employers must implement internal whistleblowing procedures for ensuring confidentiality and timely acknowledgement and investigation of protected disclosures.
Plant Closings and Mass Layoffs
In a redundancy (mass layoff), an employer restructures its business with the result that an employee’s position is eliminated. A redundancy must be fair, reasonable and based on genuine business necessity.
Legitimate reasons for redundancy can include:
- technology making an employee’s position obsolete,
- relocation of operations,
- restructuring of operations,
- sale of the business and
- closure of the business.
The Employment Relations Act 2000 requires that employers and employees act in good faith. In relation to redundancy or restructuring, good faith requires consultation and genuine consideration of the employee’s response before a decision is made.
All relevant information must be supplied to the employee about the restructuring and redundancy situation. In cases of redundancy, the employer is required to give only the notice set out in the employment agreement. While there is no statutory requirement for a redundancy payment, such payments are commonly included in employment agreements.
Payment on Termination
Unless covered in the individual or collective employment agreement, an employer is under no obligation to pay an employee severance beyond payment of all wages due at termination and compensation for any unused vacation.
Unemployment Insurance
Unemployment benefits are paid through the Jobseeker Support program managed by Work and Income New Zealand. To be eligible for Jobseeker Support, an individual must:
- not be in full-time employment,
- be available for and seeking full-time employment and
- have taken reasonable steps to find and be willing and able to undertake employment.
Jobseeker Support is dependent on beneficiaries taking offered positions. If a beneficiary declines a position, benefits can be reduced. Failure to seek full-time employment can also result in loss or reduction of benefits.
Reference Citations
Termination by Employer: Employment Relations Act, No. 24 of 2000 (as amended), §§ 3-4, 67A, 67B, 114
Plant Closings and Mass Layoffs: Employment Relations Act, No. 24 of 2000 (as amended), § 4
Personal Taxes
Residency Requirements
Individuals are deemed to be resident in New Zealand for income tax purposes if they have a permanent place of abode in New Zealand or if they are physically present in the country for more than 183 days in any 12-month period.
Taxable Income
Residents are taxed on their worldwide income, nonresidents only on New Zealand-source income.
Tax Rates
Personal income tax is assessed on a graduated scale from 10.5 percent to 39 percent depending on income.
Reference Citations
Residency Requirements: Income Tax Act, No. 97 of 2007 (as amended), Subpart YD
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