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Employment contracts

This range of UK employment agreements are suitable for causal workers, independent contractors and other industry professionals.

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This casual employment contract is also referred to as a zero hours contract. It provides the means for an employer to offer work that is available with no obligation for further work.

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How to bring a personal grievance against your employer

Introduction

To bring a personal grievance against your employer you must start by raising the grievance with your employer. There is a time limit of 90 days. If your employer doesn't deal with the problem you can take your grievance to the Employment Relations Authority.

The Employment Relations Authority was set up by the EMPLOYMENT RELATIONS ACT 2000 (which came into force on 1 October 2000), replacing the Employment Tribunal. Under the EMPLOYMENT RELATIONS ACT 2000 there is more emphasis on mediation in dealing with personal grievances and other employment problems; the Employment Relations Authority also has a more informal and investigative function than the old Tribunal.

The Department of Labour's Employment Relations Service can provide you with information, mediation services and general assistance: contact them on 0800 800 863.

What are the grounds for bringing a personal grievance?

You have grounds to bring a personal grievance claim if any of the following situations apply to you:

  • You have been dismissed unjustifiably, whether for redundancy, poor work performance, illness or injury, or serious misconduct. Whether the dismissal was justifiable depends on an objective test - namely, whether what the employer did, and how they did it, meets the standard of a fair and reasonable employer in those circumstances.
  • Your employer has unjustifiably changed your employment conditions in a way that you feel has disadvantaged you (including any condition that goes past the end of your employment). Again, whether the employer's actions were justifiable depends on the test of the "fair and reasonable employer".
  • You have been discriminated against at work
    • on the basis of sex, marital status, religious belief, ethical belief, colour, race, ethnic or national origins, disability, age, political opinion, employment status, family status or sexual orientation, or
    • because you refused to do work you believed was likely to cause you serious harm, or
    • on the basis of your involvement in union activities
  • You have been sexually harassed at work by your employer or one of his or her representatives, or you have been sexually harassed by a co-worker or one of your employer's customers or clients and your employer has not taken steps to deal with it. (See How to bring a sexual harassment claim against your employer.)
  • You have been racially harassed at work by your employer or one of his or her representatives, or you have been racially harassed by a co-worker or one of your employer's customers or clients and your employer has not taken steps to deal with it.
  • Your employer has subjected you to duress because you belong or don't belong to a union.

Is there a time limit for raising a personal grievance?

Yes. If you believe that one of the above grounds applies to you, it's vital that you take action quickly: you have 90 days from the date the grievance arose or came to your notice to raise the grievance with your employer. If you don't do this within the 90 days, the employer doesn't have to consider the grievance and you cannot take your grievance to the Employment Relations Authority.

Assuming your employer does not consent to you raising the grievance outside the 90-day limit, you will be able to raise a late grievance only if you can satisfy the Employment Relations Authority that there are exceptional circumstances.

When do "exceptional circumstances" for bringing a late grievance exist?

Exceptional circumstances include the following:

  • You were so affected or traumatised by the relevant incidents that you were unable to properly consider raising the grievance within the 90-day period.
  • You made reasonable arrangements for someone to raise the grievance on your behalf, but that person failed to do this in time.
  • Your employment agreement does not contain an explanation of the personal grievance procedure, as the law requires.
  • Your employer failed to give you a written statement of reasons for dismissing you after you requested it.

Do I have to raise the grievance in writing?

To raise the grievance with your employer you do not have to make a written complaint. You are required only to make the employer aware, or take reasonable steps to make him or her aware, that you allege a personal grievance that you want addressed.

However, it is advisable that you do raise the grievance in writing, stating the nature of the grievance, the relevant facts, and what you want done to put it right.

What if my employer doesn't deal with the problem?

If your employer doesn't correct the situation, then you can take your grievance to the Employment Relations Authority by lodging an application in the prescribed form.

You cannot bring a personal grievance to the Authority more than three years after you raised the grievance with your employer.

Before taking your grievance to the Authority you may, however, wish to seek mediation assistance to resolve the issue. The Department of Labour's Employment Relations Service provides mediation services and general information and assistance to help resolve personal grievances and other employment-related conflicts: contact them on 0800 800 863. If the matter proceeds to the Employment Relations Authority you will usually be referred to mediation in any case.

How does the Employment Relations Authority deal with personal grievance claims?

If you bring your personal grievance to the Employment Relations Authority, the Authority will attempt to resolve the issue through mediation, and if that is not successful it will investigate the issue and make a decision.

The EMPLOYMENT RELATIONS ACT 2000 puts greater emphasis than did the previous Act on mediation in resolving employment conflicts, including personal grievances. Under the old law a person bringing a personal grievance to the Employment Tribunal (replaced by the Employment Relations Authority) had the option of choosing mediation or "adjudication" (a formal hearing). But under the EMPLOYMENT RELATIONS ACT 2000 mediation is a compulsory first stage in all matters before the Authority.

When an issue comes before the Authority it must first consider whether the parties have attempted to resolve it through mediation. It must order that mediation or, as the case may be, further mediation be used before it investigates the matter, unless it thinks that this will not be useful.

What happens at mediation?

Mediation is a technique that allows the parties to resolve their differences with the help of an employment mediator. A mediator may talk to both parties together or separately. The mediator should listen to both sides of the story, clarify the needs of each party, encourage the parties to discuss together how they each see the situation, and help the parties to reach a solution that is acceptable to them both.

If the parties are able to reach an agreement the mediator will record the agreement and it then becomes binding and can be enforced by either party. The parties can also agree to have the mediator decide the issue.

An important advantage of mediation is that it is informal and private: the media and public are not permitted to be present.

Whereas previously mediation was a formal procedure and normally consisted of a hearing at the Employment Tribunal offices, under the EMPLOYMENT RELATIONS ACT 2000 it can be a more flexible and informal process, with mediators having a broad discretion to decide exactly what form the mediation should take. Mediation may include, for example, visiting the parties at their workplace.

From 1 December 2004, a different mediation process is available for certain types of problems. In these cases the length of the mediation process will be limited and the mediator will decide the matter if the parties cannot agree. This new process is designed to provide speedy resolution where the parties think the dispute can be resolved with only moderate outside assistance and they agree to accept the mediator's decision if mediation doesn't resolve the matter.

What if mediation doesn't resolve my grievance?

If no agreement can be reached through mediation, the matter will go to the Employment Relations Authority for it to investigate the matter and make a decision.

A disadvantage of going to this stage rather than reaching a mediated settlement may be that it is normally open to the public and media. This stage is also more legalistic than mediation; however, under the Act it is intended to be less legalistic than previously.

The Authority has much flexibility in how it comes to a decision on a matter. It is primarily an investigative body, with the role of resolving employment problems by establishing the facts and making a decision on the substantial merits of the case, without regard to technicalities. For example, it can interview either of the parties or anyone else before, during or after an investigation meeting.

The EMPLOYMENT RELATIONS ACT 2000 requires the Authority to comply with the principles of natural justice, which generally means that the Authority must be free from bias and that it must grant each party the right to be heard. However, this doesn't require the Authority to allow the cross-examination of any party or person, although the Authority can allow this if it chooses to. The Act also requires the Authority to act reasonably having regard to its investigative function.

It is common practice for the party who loses to be ordered to compensate the successful party for some or all of his or her legal costs.

What can the Employment Relations Authority do if it upholds my claim?

If the Authority decides that you do have a personal grievance, it may do one or more of the following things:

  • reinstate you in your old position or place you in a new position that is at least as advantageous to you as your old position
  • order you to be reimbursed for some or all of the wages or other money that you have lost as a result of the grievance
  • order your employer to pay you compensation, including compensation for humiliation, loss of dignity, and injury to feelings, and compensation for loss of any benefit (monetary or otherwise) that you might otherwise have been expected to get
  • if it finds that any workplace conduct or practices are a significant factor in the personal grievance, recommend to your employer what action it should take to prevent similar employment relationship problems happening
  • if you were sexually or racially harassed in your employment, recommend to your employer what he or she should do about the person who harassed you (such as a transfer or disciplinary action) or about any other action necessary to prevent harassment in that workplace

The EMPLOYMENT RELATIONS ACT 2000 puts the emphasis on reinstatement as the main remedy to be used. If reinstatement is one of the remedies you have sought in bringing your personal grievance, then the Employment Relations Authority must reinstate you if this is practicable, regardless of any other remedies it orders.

What if I'm not happy with the Employment Relations Authority's decision?

If either you or your employer is dissatisfied with the Authority's decision, you can appeal to the Employment Court for it to hear the matter. You have 28 days to lodge your appeal

You have a choice as to whether the Court hears the matter "de novo", which means that there is a full hearing in which the Court considers all questions of fact and law, or whether there is a limited appeal only on particular grounds.

If you do request a full hearing, the Court may ask the Authority to provide it with a written report on whether you and your employer facilitated rather than obstructed the Authority's investigation and whether you acted in good faith towards each other.

Will I need to get someone to represent me?

In taking a personal grievance claim, it may be very useful to have someone that can represent your point of view and who is able to advise you on each step. This could be either a lawyer or a union representative. Likewise your employer is entitled to have someone such as a lawyer or other professional advocate to represent his or her view.

These representatives are entitled to attend any meetings held between you and your employer, and can assist in attempting to resolve disputes quickly and informally before they are referred to the Employment Relations Authority.

If the matter is likely to proceed to the Authority it is advisable that you obtain the services of a person who is skilled in and familiar with this area of law and the processes involved.

Complaints under the Human Rights Act

If you were discriminated against or sexually or racially harassed, you have the option of pursuing the matter through the Human Rights Commission under the HUMAN RIGHTS ACT 1993, instead of taking a personal grievance. You must do one or the other - you cannot do both.

If your complaint is upheld, there are a variety of remedies that you may be granted: see How to complain about discrimination to the Human Rights Commission.

Cautionary notes
  • Special procedures apply when the grievance is for sexual harassment (see How to bring a sexual harassment claim against your employer) or for wrongful dismissal (see How to bring a wrongful dismissal claim against your employer).
  • You should check your employment contract before lodging a personal grievance, as it may set out an alternative procedure that you are contractually bound to follow.
  • The importance of acting promptly cannot be emphasised enough, given the strict 90-day time limit. It is essential that you seek advice early on about your rights and the options available to you.

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How to defend a personal grievance claim brought by an employee

How is a personal grievance claim begun?

An employee who believes he or she has grounds for a personal grievance against you must raise it with you within 90 days. If the employee is not satisfied with your response, he or she can take the grievance to the Employment Relations Authority.

The Employment Relations Authority was set up by the EMPLOYMENT RELATIONS ACT 2000 (which came into force on 1 October 2000), replacing the Employment Tribunal. Under the EMPLOYMENT RELATIONS ACT 2000 there is more emphasis on mediation in dealing with personal grievances and other employment problems; the Employment Relations Authority also has a more informal and investigative function than the old Tribunal.

For further information on personal grievances, contact the Department of Labour's Employment Relations Service on 0800 800 863. They can provide you with mediation and other assistance to resolve the problem.

Time limit for bringing personal grievance

Your employee has 90 days beginning from the date of the alleged behaviour to raise the grievance with you. This does not have to be in writing.

This time limit is enforced strictly by the courts, except in two situations:

  • if you as the employer consent to a claim being lodged outside the 90-day period, or
  • if there are exceptional circumstances

On what grounds can an employee bring a personal grievance?

An employee has grounds to bring a personal grievance claim if any of the following situations apply:

  • The employee was dismissed unjustifiably, whether for redundancy, poor work performance, illness or injury, or serious misconduct. Employers must follow certain procedures when dismissing an employee, and therefore an employee can bring a personal grievance on the grounds that the dismissal was procedurally unfair, as well as that it was substantively unjustified: see How to discipline an employee [011] and How to dismiss an employee [012]. Whether the dismissal was justifiable depends on an objective test - namely, whether what you did, and how you did it, met the standard of a fair and reasonable employer in those circumstances.
  • The employee's employment conditions were unjustifiably changed in a way that the employee feels has disadvantaged him or her (including any condition that goes past the end of the employment). Again, whether your actions were justifiable depends on the test of the "fair and reasonable employer".
  • The employee was discriminated against at work
    • on the basis of sex, marital status, religious belief, ethical belief, colour, race, ethnic or national origins, disability, age, political opinion, employment status, family status or sexual orientation, or
    • because they refused to do work they believed was likely to cause them serious harm, or
    • on the basis of their involvement in union activities
  • The employee was sexually harassed at work by an employer or a representative of the employer, or was sexually harassed by a co-worker or one of the employer's customers or clients and the employer did not take steps to deal with it. (See How to bring a sexual harassment claim against your employer.)
  • The employee was racially harassed at work by an employer or a representative of the employer, or was racially harassed by a co-worker or one of the employer's customers or clients and the employer did not take steps to deal with it.
  • The employee was subjected to duress by an employer because the employee belongs or doesn't belong to a union.

Will I need legal representation?

The employer and the employee each have the right to choose another person to represent them in taking or defending an action under the personal grievance procedure. It is often very useful to have someone who can present your point of view and who can advise you at each step in the process.

This includes the right to have a lawyer or other professional representative present at any meetings held between the parties and to assist in attempting to resolve disputes quickly and informally, if possible before they are referred to the Employment Relations Authority.

If the matter is likely to proceed to the Authority it is advisable that you obtain the services of a person who is skilled in and familiar with this area of law and the processes involved.

Resolving the dispute through mediation before it goes to the Employment Relations Authority

If an employee raises a personal grievance with you that you do not believe is well founded, there are mediation services available that can help you and the employee resolve the issue. Contact the Department of Labour's Employment Relations Service on 0800 800 863. If the matter proceeds to the Employment Relations Authority you will usually be referred to mediation in any case.

How does the Employment Relations Authority deal with personal grievances?

If your employee takes the personal grievance to the Employment Relations Authority, the Authority will attempt to resolve the issue through mediation, and if that is not successful it will investigate the issue and make a decision.

The EMPLOYMENT RELATIONS ACT 2000 puts greater emphasis than did the previous Act on mediation in resolving employment conflicts, including personal grievances. Under the old law a person bringing a personal grievance to the Employment Tribunal (replaced by the Employment Relations Authority) had the option of choosing mediation or "adjudication" (a formal hearing). But under the EMPLOYMENT RELATIONS ACT 2000 mediation is a compulsory first stage in all matters before the Authority.

When an issue comes before the Authority it must first consider whether the parties have attempted to resolve it through mediation. It must order that mediation or, as the case may be, further mediation be used before it investigates the matter, unless it thinks that this will not be useful.

What happens at mediation?

Mediation is a technique that allows the parties to resolve their differences with the help of an employment mediator. A mediator may talk to both parties together or separately. The mediator should listen to both sides of the story, clarify the needs of each party, encourage the parties to discuss together how they each see the situation, and help the parties to reach a solution that is acceptable to them both.

If the parties are able to reach an agreement the mediator will record the agreement and it then becomes binding and can be enforced by either party. The parties can also agree to have the mediator decide the issue.

An important advantage of mediation is that it is informal and private: the media and public are not permitted to be present.

Whereas previously mediation was a formal procedure and normally consisted of a hearing at the Employment Tribunal offices, under the EMPLOYMENT RELATIONS ACT 2000 it can be a more flexible and informal process, with mediators having a broad discretion to decide exactly what form the mediation should take. Mediation may include, for example, visiting the parties at their workplace.

From 1 December 2004, a different mediation process is available for certain types of problems. In these cases the length of the mediation process will be limited and the mediator will decide the matter if the parties cannot agree. This new process is designed to provide speedy resolution where the parties think the dispute can be resolved with only moderate outside assistance and they agree to accept the mediator's decision if mediation doesn't resolve the matter.

What if mediation doesn't resolve the issue?

If no agreement can be reached through mediation, the matter will go to the Employment Relations Authority for it to investigate the matter and make a decision.

A disadvantage of going to this stage rather than reaching a mediated settlement may be that it is normally open to the public and media. This stage is also more legalistic than mediation; however, under the Act it is intended to be less legalistic than previously.

The Authority has much flexibility in how it comes to a decision on a matter. It is primarily an investigative body, with the role of resolving employment problems by establishing the facts and making a decision on the substantial merits of the case, without regard to technicalities. For example, it can interview either of the parties or anyone else before, during or after an investigation meeting.

The EMPLOYMENT RELATIONS ACT 2000 requires the Authority to comply with the principles of natural justice, which generally means that the Authority must be free from bias and that it must grant each party the right to be heard. However, this doesn't require the Authority to allow the cross-examination of any party or person, although the Authority can allow this if it chooses to. The Act also requires the Authority to act reasonably having regard to its investigative function.

It is common practice for the party who loses to be ordered to compensate the successful party for some or all of his or her legal costs.

What can the Employment Relations Authority do if it finds against me?

If the Authority decides that the employee does have a personal grievance, it may do one or more of the following things:

  • reinstate the employee in his or her old position or place the employee in a new position that is at least as advantageous as the old one
  • order the employee to be reimbursed for some or all of the wages or other money lost as a result of the grievance
  • order you to pay the employee compensation, including compensation for humiliation, loss of dignity, and injury to feelings, and compensation for loss of any benefit (monetary or otherwise) that the employee might otherwise have been expected to get
  • if it finds that any workplace conduct or practices are a significant factor in the personal grievance, recommend what action you should take to prevent similar employment relationship problems happening
  • if the employee was sexually or racially harassed, recommend to you what you should do about the person who did the harassing (such as a transfer or disciplinary action) or about any other action necessary to prevent harassment in that workplace

The EMPLOYMENT RELATIONS ACT 2002 puts the emphasis on reinstatement as the main remedy to be used. If reinstatement is one of the remedies the employee sought in bringing the personal grievance, then the Employment Relations Authority must reinstate the employee if this is practicable, regardless of what other remedies it orders.

Can I appeal the Authority's decision?

If either you or the employee is dissatisfied with the Authority's decision, you can appeal to the Employment Court for it to hear the matter. You have 28 days to lodge your appeal.

You have a choice as to whether the Court hears the matter "de novo", which means that there is a full hearing in which the Court considers all questions of fact and law, or whether there is a limited appeal only on particular grounds.

If you do request a full hearing, the Court may ask the Authority to provide it with a written report on whether you and the employee facilitated rather than obstructed the Authority's investigation and whether you acted in good faith towards each other.

Cautionary notes
  • It is important that you as an employer familiarise yourself at an early stage with your rights and obligations and with those of your employees – for example, your duty to give appropriate warnings should you wish to take disciplinary action against an employee. Being aware of these rights and obligations will mean that you will be less likely to be confronted with a personal grievance claim and that you will be able to resolve or defend it more effectively should a claim be brought against you.
  • Special procedures exist for sexual harassment claims (see How to bring a sexual harassment claim against your employer). You should therefore seek professional advice if faced with such a claim.

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How to discipline an employee

Introduction

An employer taking disciplinary action against an employee must ensure:

  • that the action taken is justified, and
  • that it is carried out in a manner that is procedurally fair

Relations between employers and employees are governed by the EMPLOYMENT RELATIONS ACT 2000, which came into force on 1 October 2000. The Act requires employers and employees to act in good faith in dealing with each other; this duty will clearly apply to an employer taking disciplinary action against an employee.

The Employment Relations Service in the Department of Labour can provide information and mediation services to help deal with employment problems. Contact them on 0800 800 863.

The steps that must be followed

There are a number of steps that an employer must take to ensure that any disciplinary action is justified and is carried out in a way that is procedurally fair:

  • The investigation. Carry out a full investigation into the alleged behaviour. This can include taking statements from witnesses.
  • Inform the employee of the allegations. When you have a clear and precise understanding of what the allegations are, the employee should be informed about the exact nature of the allegations and, where appropriate, that dismissal is a possible outcome of the disciplinary process.
  • The employee's right to a fair hearing. The employee should be given the opportunity to respond to the allegations; in other words, the employee must be given a fair hearing. It is critical that the employer does not form a conclusion about the allegations before the employee has had a chance to be heard.
  • The right to a support person. The employee is entitled to have a support person present when he or she is responding to the allegations; this could be a lawyer or a union representative. The employee should be informed of this right and given the opportunity to arrange for a support person to attend.
  • Inform the employee of the process. The employee should also be informed precisely about the different steps of the process that the employer is following.
  • The action taken. After hearing the employee's side of the story, the employer should decide what action, if any, to take. The action taken must be fair. It must also be in accordance with the terms of the employment contract between the employer and the employee.

Warnings

If you decide to give the employee a warning, you should outline what the employee must do to improve his or her performance and give the employee a chance to do so. If appropriate, you should give the employee assistance in this.

Except where summary dismissal is justified, the accepted procedure is usually to first give an oral warning, then a formal written warning, then a final written warning, and then, if necessary, dismissal.

If the employee is a new employee on a period of probation or trial, the requirements of procedural fairness apply just as if he or she were a permanent employee.

Dismissal

If the employer intends to dismiss the employee there are special considerations to take into account: see How to dismiss an employee.

Personal grievances by employees in response to disciplinary action

An employee can lodge a personal grievance claim against an employer who has issued a warning, changed an employment condition or dismissed the employee, if the action taken was unjustifiable or was carried out in a way that was procedurally unfair. The test of whether the action was justifiable or the process was fair is an objective one - namely, whether it meets the standard of what a fair and reasonable employer would have done.

If successful, the employee can be awarded damages for lost wages as well as for distress. See How to defend a personal grievance claim brought by an employee.

Cautionary Notes
  • A personal grievance claim brought by an employee can be very costly to an employer both in damages and legal fees. It is therefore critical that employers have legal advice at every stage of the disciplinary process. Each situation is different and the way the guidelines set out above apply can vary.

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How to enter into an employment agreement as an employer

Introduction

The Employment Relations Act

Employment law is governed by the EMPLOYMENT RELATIONS ACT 2000, which came into force on 1 October 2000.

The previous Act, the Employment Contracts Act 1991, tended to treat employment contracts like any other contracts; by contrast, the EMPLOYMENT RELATIONS ACT 2000 recognises the inherent inequality in power between employers and employees and therefore promotes collective bargaining through unions to offset this. The Act also requires the parties to an employment relationship to deal with each other in "good faith" at all times.

The Act provides for the Minister to approve various "codes of employment practice" to provide guidance on how the Act should be interpreted, either generally or in relation to particular types of situations or particular areas of the employment environment. The Employment Relations Authority and the Employment Court can take these codes into account when making decisions.

Substantial amendments to the Act were made on 1 December 2004 by the EMPLOYMENT RELATIONS AMENDMENT ACT (NO 2) 2004. Those amendments are included in this information sheet.

What does "good faith" mean and when does it apply?

The Act requires the parties to an employment relationship to deal with each in good faith, which includes not doing anything (directly or indirectly) that would mislead or deceive the other. Good faith requires the parties to be active and constructive in achieving employment relationships in which the parties are, among other things, responsive and communicative.

This duty applies to employers and employees dealing with each other, to unions and employers dealing with each other, and various other employment relationships, such as unions and their members. So you will be bound by this duty whenever you negotiate an agreement with your existing employees, whether it is a collective or an individual agreement.

Good faith also requires you to consult with your employees if you are proposing to do something that would negatively affect the continuation of their employment, such as selling the business (for the rules that apply in those and other restructuring cases, including new laws introduced on 1 December 2004, see How to make an employee redundant).

It's a breach of good faith for you to advise an employee, or attempt to induce them, not to be involved in collective bargaining or not to be covered by a collective agreement. (For the requirements of good faith in the context of bargaining for collective agreements, see below, "Collective agreements and collective bargaining / Good faith and collective bargaining".)

While the general duty of good faith doesn't appear to apply to negotiations between an employer and a prospective employee, a different provision in the Act also protects against "unfair bargaining" for any individual employment agreement (see below, "Individual employment agreements / Protection against ‘unfair bargaining'"), and this protects prospective employees. Employers also have specific obligations towards prospective employees and new employees (see below, "Collective agreements and collective bargaining / New employees: Your obligations when a collective agreement exists" and "Individual employment agreements / Your obligations in bargaining for individual agreements, terms and conditions").

Penalties for breaches of good faith

A party to an employment relationship who breaches the general duty of good faith is subject to a penalty under the EMPLOYMENT RELATIONS ACT 2000 if the breach

  • was deliberate, serious and sustained, or
  • was intended to undermine an employment relationship or agreement, or undermine bargaining for an agreement, or
  • consisted of intentionally undermining a collective agreement or collective bargaining by passing on, to other employees, terms from that agreement or terms reached in that bargaining (see below, "Collective agreements and collective bargaining / Passing on terms from collective agreements")

"Collective" versus "individual" employment agreements

The EMPLOYMENT RELATIONS ACT 2000 allows employees and employers to negotiate either collective or individual agreements. However, the Act actively promotes collective bargaining and collective agreements. Only unions can negotiate collective agreements for employees and only union members can belong to a collective agreement (although a collective agreement can provide for non-members to get the terms and conditions in the agreement if they pay the union a "bargaining fee": see below, "Collective agreements and collective bargaining / Bargaining fee arrangements"). Unions must be registered with the Department of Labour, which means they have to meet particular requirements (see How to: Union rights).

Although employers can't give preferential treatment or conditions based on being or not being a union member, this doesn't prevent collective agreements including a term intended to recognise the benefits of collective agreements (such as an additional payment or other additional benefits).

Individual employees covered by a collective agreement can negotiate terms additional to the collective agreement.

There's nothing to stop employees who are not union members from negotiating collectively, but the end result can only be a number of individual agreements, not a collective agreement.

When you hire new employees who are already union members, they are automatically covered by any collective agreement that exists in your workplace. If there is no collective agreement, employees can negotiate individual agreements with you, whether or not they are union members.

If a collective agreement expires, the employees are covered by individual agreements based on the terms of the collective agreement. The same applies if a union member covered by a collective agreement resigns from the union.

Collective agreements and collective bargaining

Good faith and collective bargaining

The EMPLOYMENT RELATIONS ACT 2000 requires collective bargaining between unions and employers to be conducted in good faith. This means they must meet with each other, consider and respond to each other's proposals, and give reasons if they reject any offer or proposal. If they're deadlocked on an issue, they must continue to bargain about any other issues on which they've not reached agreement.

The duty of good faith requires unions and employers to reach an agreement unless there's a genuine reason, based on reasonable grounds, not to do so. It doesn't amount to a "genuine reason" that a party objects in principle to collective agreements or to bargaining for them, or that the party disagrees about including a "bargaining fee" clause (for bargaining fees, see below).

The parties must also provide each other, if requested, with information to substantiate claims or responses to claims made during bargaining. This can be provided to an agreed third party. If you're concerned about the confidentiality of the information, you can supply it to a mutually agreed third party - an "independent reviewer". If the independent reviewer thinks the information should be kept confidential he or she must decide whether or not the information does substantiate the claim or response in question, then inform the parties of this and answer any questions they have.

You cannot advise employees, or attempt to induce them, not to be involved in collective bargaining or not to be covered by a collective agreement.

A Code of Good Faith for collective bargaining was drawn up in 2000. The Employment Relations Authority and the Employment Court can consider the Code in deciding whether the parties have bargained in good faith It doesn't reflect the amendments made to the Act on 1 December 2004, and is currently being reviewed. There is also a specific Code of Good Faith for the Public Health Sector (contained in Schedule 1B of the Act).

Passing on terms from collective agreements

Employers are prevented from undermining collective agreements and collective bargaining by automatically passing on collectively bargained terms and conditions to employees who aren't covered by them.

Under these rules, the duty of good faith prohibits employers from intentionally undermining a collective agreement by passing on its terms to individuals who aren't party to that agreement, or intentionally undermining collective bargaining by passing on to an employee a term that the parties to the collective bargaining have agreed will be part of the collective agreement when it's concluded.

Similarly, good faith prohibits employers from intentionally undermining one collective agreement by passing on its terms to another collective agreement, or from intentionally undermining collective bargaining by passing on, to another collective agreement, a term that the parties to the bargaining have agreed will be part of the collective agreement when it's concluded.

Employers who breach these rules are liable to a penalty.

However, the rules above don't prevent unions and employers agreeing to pass on collective terms and conditions to other unions or employees – for example, through a "bargaining fee" arrangement (see below).

"Facilitation": Assistance from Employment Relations Authority to resolve disputes

In some cases, collective bargaining that breaks down can be referred to the Employment Relations Authority for it to "facilitate" the bargaining. The Authority will play this role only if

  • there has been a serious and sustained breach of good faith, or
  • the bargaining has been unnecessarily drawn-out and extensive efforts to resolve the differences have failed, or
  • there has been protracted or acrimonious strike or lock-out action, or
  • a strike or lock-out has been proposed that would substantially affect the public interest (because it would endanger someone's life, safety or health, or significantly disrupt social, environmental or economic interests)

The facilitation process must be carried out in private. But otherwise the Authority is free to decide what process will be used. Statements made during the process cannot later be used in any proceedings in the Authority or the courts.

The Authority can make recommendations at the end of the process. The parties don't have to follow these recommendations, but they do have to consider them in good faith.

Authority can determine collective agreement in case of serious breach

The Employment Relations Authority can fix the terms and conditions of a collective agreement if:

  • a breach of good faith has been so serious and sustained that it has significantly undermined the collective bargaining, and
  • all other reasonable alternatives have been exhausted, and
  • this is the only effective remedy for the innocent party

What must be included in a collective agreement?

A collective agreement must be in writing and must be signed by each union and employer that is a party to it, otherwise the agreement has no effect.

The agreement must contain:

  • a "coverage clause" (this is a clause specifying the work that the agreement covers, whether by reference to the work or type of work, or to employees or types of employees, including referring to named employees, or to the work or type of work done by named employees, to whom the collective agreement applies)
  • a plain language explanation of the services available for resolving employment relationship problems, including the 90-day time limit for raising a personal grievance with the employer (see How to defend a personal grievance claim brought by an employee)
  • for new agreements made after 1 April 2004, a clause confirming the right of an employee who works on a public holiday to be paid either time and a half or penal rates contained in the agreement, whichever is more (Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005.) (For more details, see How to ensure you receive your full holiday and leave entitlement as an employee.)
  • for new agreements made after 1 December 2004 (unless the agreement covers one of the industries specified in the Act), a provision negotiated between the parties that protects employees affected by restructuring (Agreements already existing on 1 December 2004 must be amended to include this by 1 December 2005, or the next time they're amended, or before the restructuring takes effect, whichever is earliest.) (These "employee protection provisions" for employees affected by restructuring are explained in detail in How to make an employee redundant.)
  • a clause providing how the agreement can be varied
  • the expiry date

Apart from these requirements, the agreement can contain any provisions that the parties agree on, provided they're not unlawful or inconsistent with the rights and obligations contained in the Act (see below, "Other issues / What other matters should be included in an employment agreement?").

Bargaining fee arrangements

This is an arrangement whereby employees who are not members of a union can be employed on the same terms and conditions as those contained in a collective agreement if they pay a bargaining fee to the union that negotiated the collective agreement.

The arrangement must be agreed to by the employer and the union in a collective agreement and then agreed to in a secret ballot by majority vote of all employees (union members and non-members) whose work is covered by the coverage clause in the collective agreement. The ballot must be held before the collective agreement comes into force, and must be run jointly by the union and employer.

Non-union employees who don't want to pay the bargaining fee must notify the employer of this in writing, within the period specified for this purpose in the collective agreement. Those employees will not be required to pay the fee, and their terms and conditions will remain the same, rather than being based on the collective agreement.

Bargaining fees are deducted from the employee's wages by the employer and paid to the union. The fee cannot be more than the employee would pay as a union fee if a union member.

New employees: Your obligations when a collective agreement exists

If there is an existing collective agreement in your workplace, new employees who already belong to a union that is a party to the agreement will automatically be covered by the collective agreement.

If a new employee doesn't belong to the union, you must tell him or her that the collective agreement exists. The employee then has 30 days to decide whether or not to join the union and be covered by the agreement. During the 30 days the employee is covered by an individual agreement on the same terms as the collective one.

If after 30 days the employee decides not to join the union, you can then negotiate a new individual agreement. If you don't negotiate a new agreement, the employee continues to be covered by an individual agreement on the same terms as the collective agreement.

Individual employment agreements

Good faith in bargaining for individual agreements

In determining whether an employer and employee bargaining for an individual agreement are dealing with each other in good faith, a relevant factor is the circumstances of each of them, including the "operational environment" of the employer and employee and the resources available to them.

Your obligations in bargaining for individual agreements, terms and conditions

You have the following obligations towards employees whenever you're bargaining for an individual employment agreement, or bargaining for individual terms and conditions that are additional to a collective agreement:

  • You must give the employee a copy of the intended agreement, or the part of it, that's under discussion.
  • You must inform the employee that they're entitled to seek independent advice about it.
  • You must give the employee a reasonable opportunity to seek this advice.
  • You must consider any issues the employee raises, and respond to them.

Those obligations apply in all of the following situations:

  • when the employee is bargaining for individual terms and conditions additional to a collective agreement that covers the employee
  • when the employee is bargaining for individual terms and conditions additional to a collective agreement on which their current individual agreement is based, or bargaining for variations to those individual terms and conditions (This applies where the collective agreement has expired or the employee has resigned from the union, in which case the employee is covered by an individual agreement based on the collective one.)
  • in the case of a new employee who's not a union member, when they're bargaining for individual terms and conditions additional to the terms, based on the collective agreement, that cover them for the first 30 days
  • when the 30 days have expired and the employee has decided not to join the union, and they're bargaining for any variations to the individual agreement that applied during the 30 days
  • when no collective agreement covers the employee and they're bargaining for an individual agreement
  • when a fixed-term agreement, or a probationary or trial period, is proposed
  • when the employee is bargaining over an "employee protection provision" to cover restructuring situations (This situation, which applies only to workers outside certain industries specified in the Act, is explained in detail in How to make an employee redundant.)
  • when the employee is bargaining with you, as a new employer to whom they've transferred as part of their previous employer's restructuring, over redundancy entitlements (This situation, which applies only to employees in the industries specified in the Act, is explained in detail in How to make an employee redundant.)

Protection against "unfair bargaining"

The EMPLOYMENT RELATIONS ACT 2000 places some restrictions on unfair bargaining for any individual employment agreement. This applies to negotiations with prospective employees and negotiations for new individual agreements with existing employees.

If it finds that you as an employer have bargained unfairly, the Employment Relations Authority can order you to pay compensation to the employee, or it can cancel or alter the employment agreement or make some other order.

"Unfair bargaining" exists if, when bargaining is taking place or when the agreement is entered into, one of the following circumstances existed, and you (or your representative) were or should have been aware of those circumstances:

  • The employee was unable to understand the agreement adequately because of, for example, age, sickness, mental or educational disability, a disability relating to communication, or emotional distress.
  • The employee reasonably relied on your skill, care, or advice or on that of someone acting for you.
  • The employee was induced to enter into the agreement by oppressive means, undue influence, or duress.
  • You did not give the employee the proper information and opportunity to obtain advice as you are required to under the Act (see above, "Your obligations in bargaining for individual agreements, terms and conditions").

Employers are also protected against unfair bargaining by employees.

What must be included in an individual employment agreement?

An individual employment agreement must be in writing and must include:

  • the names of the employee and employer concerned
  • a description of the work to be performed
  • an indication of where the employee is to perform the work
  • an indication of the arrangements for hours of work
  • the wages or salary
  • a plain language explanation of the services available for resolving employment relationship problems, including the 90-day time limit for raising a personal grievance with the employer (see How to defend a personal grievance claim brought by an employee)
  • for new agreements made after 1 April 2004, a clause confirming the right of an employee who works on a public holiday to be paid either time and a half or penal rates contained in the agreement, whichever is more (Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005.) (For more details, see How to ensure you receive your full holiday and leave entitlement as an employee.)
  • for new agreements made after 1 December 2004 (unless the agreement covers one of the industries specified in the Act), a provision negotiated between the parties that protects employees affected by restructuring (Agreements already existing on 1 December 2004 must be amended to include this by 1 December 2005, or the next time they're amended, or before the restructuring takes effect, whichever is earliest.) (These "employee protection provisions" for employees affected by restructuring are explained in detail in How to make an employee redundant.)

Apart from these requirements, the agreement can contain any provisions that the parties agree on, provided they're not unlawful or inconsistent with the rights and obligations contained in the Act (see below, "Other issues / What other matters should be included in an employment agreement?").

Requirement to inform new employees about holiday and leave entitlements

When you enter into an employment agreement with an employee, you must tell them about their minimum rights under the HOLIDAYS ACT 2003. You must also tell them that they can get more information from their union (if they're a member) or from the Department of Labour. See How to ensure you receive your full holiday and leave entitlement as an employee.

Can an agreement be for a fixed term?

Yes, an employer and employee can agree that the agreement will end after a certain period, or when a particular event happens, or when a particular project is completed.

However, you as employer must have genuine reasons based on reasonable grounds for this. You cannot negotiate a fixed-term agreement merely as a means of denying the employee his or her rights under the Act, nor to set up a period of probation, nor to exclude or limit the employee's rights under the HOLIDAYS ACT 2003.

Before a fixed-term agreement is entered into, you must advise the employee of when or how the agreement will end and the reasons why it is for a fixed term. This must also be stated in the agreement in writing.

If this information isn't included in writing in the agreement, or if the reasons aren't genuine ones based on reasonable grounds, the employee can choose to treat the fixed-term aspect of the agreement as ineffective, in which case you won't be able to end the employee's employment in reliance on it. However, the validity of the rest of the employment agreement won't be affected.

Can an agreement include a period of probation?

It can be part of an employment agreement that the employee will serve a period of probation or trial, in which case the agreement must state this is writing. If it's not stated in writing in the agreement, the employee can choose to treat this aspect of the agreement as ineffective, in which case you won't be able to rely on it; however, the validity of the rest of the agreement won't be affected.

Even if the agreement does include a probation period, the employer must still follow the requirements of procedural fairness in dismissing the employee: the employer must provide the proper warnings and provide the employee with assistance, training and opportunities to improve his or her performance, the same as with any other employee.

However, it may be that an employer will be permitted a wider discretion in the area of substantive reasons for the dismissal than is the case with permanent employees.

Other issues

What other matters should be included in an employment agreement?

Other matters commonly included in employment agreements are:

  • your company policies (see below)
  • procedures for taking disciplinary action (see below)
  • a confidentiality clause (see below)
  • remuneration and fringe benefits – for example, long-service leave and staff options to buy company products or services
  • arrangements for parental leave (see How to: Entitlements to parental leave)
  • indexing of wages to the Consumers Price Index
  • health and safety issues (see How to complain about health and safety standards in your workplace)
  • provision for employees on jury service

Incorporating company policies into the contract

The employment contract is the appropriate way for the employer to state and enforce company policy on issues that the employer considers important. By making these policies part of the contract, they become binding on the parties and their importance to the company is stressed. This may include policies on, for example, discrimination, illegal substances, smoking, equal employment opportunities and retirement.

Disciplinary procedures

It is best if a formal disciplinary procedure is included in the contract (whether an individual or a collective agreement). The parties therefore have a written document to refer to should it become necessary. This also allows for easier action if the claim goes before the Employment Relations Authority or Employment Court.

Confidentiality agreements

You should consider the nature of your business and whether there is any need to make a confidentiality arrangement with your staff.

Negotiating the contract: do I need a representative?

Employees and employers can choose some other person or organisation to represent them in negotiating the contract and in dealing with employment issues generally. In the case of an employer, the representative might be a lawyer or an industrial-relations consultant.

"Employee" versus "independent contractor": Is an employment agreement required in my case?

It may be that the person you are hiring would in fact be an independent contractor, and not an employee, in which case an employment agreement is not applicable.

The courts have applied a number of tests to determine whether a particular business relationship is one of employment. A helpful test that is often applied is the "control" test – this asks whether the person performing the services is performing them as a person in business on his or her own account. If this is so, the person will be considered to be an independent contractor, not an employee.

Problematic situations have included deciding whether an agent or salesperson paid by commission is an employee. Courier operators, owner-driver operators and contract tradespeople are generally regarded as independent contractors, not employees. The EMPLOYMENT RELATIONS ACT 2000 also makes clear that real estate agents and sharemilkers are not employees.

In determining whether a particular person is an employee or a contractor, the Employment Relations Authority and the Employment Court must decide on the basis of the real nature of the agreement and not the particular words the agreement uses.

Cautionary notes
  • As well as assisting you in negotiating the terms of the employment agreement, your lawyer or industrial-relations consultant will be able to advise you of your rights and obligations under employment law. He or she will also be able to advise and represent you should you need to defend a personal grievance claim (see How to defend a personal grievance claim brought by an employee).

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How to enter into an employment agreement as an employee

Introduction

The Employment Relations Act

Employment law is governed by the EMPLOYMENT RELATIONS ACT 2000, which came into force on 1 October 2000.

The previous Act, the Employment Contracts Act 1991, tended to treat employment contracts like any other contracts; by contrast, the EMPLOYMENT RELATIONS ACT 2000 recognises the inherent inequality in power between employers and employees and therefore promotes collective bargaining through unions to offset this. The Act also requires the parties to an employment relationship to deal with each other in "good faith" at all times.

The Act provides for the Minister to approve various "codes of employment practice" to provide guidance on how the Act should be interpreted, either generally or in relation to particular types of situations or particular areas of the employment environment. The Employment Relations Authority and the Employment Court can take these codes into account when making decisions.

Substantial amendments to the Act were made on 1 December 2004 by the EMPLOYMENT RELATIONS AMENDMENT ACT (NO 2) 2004. Those amendments are included in this information sheet.

What does "good faith" mean and when does it apply?

The Act requires the parties to an employment relationship to deal with each in good faith, which includes not doing anything (directly or indirectly) that would mislead or deceive the other. Good faith requires the parties to be active and constructive in achieving employment relationships in which the parties are, among other things, responsive and communicative.

This duty applies to employers and employees dealing with each other, to unions and employers dealing with each other, and various other employment relationships, such as unions and their members.

Good faith also requires your employer to consult with you if they are proposing to do something that would negatively affect the continuation of your employment, such as selling the business (for the rules that apply in those and other restructuring cases, including new laws introduced on 1 December 2004, see How to challenge a redundancy).

It's a breach of good faith for an employer to advise you, or attempt to induce you, not to be involved in collective bargaining or not to be covered by a collective agreement. (For the requirements of good faith in the context of bargaining for collective agreements, see below, "Collective agreements and collective bargaining / Good faith and collective bargaining".)

While the general duty of good faith doesn't appear to apply to negotiations between an employer and a prospective employee, a different provision in the Act also protects against "unfair bargaining" for any individual employment agreement (see below, "Individual employment agreements / Protection against ‘unfair bargaining'"), and this protects prospective employees. Employers also have specific obligations towards prospective employees and new employees (see below, "Collective agreements and collective bargaining / New employees: The employer's obligations when a collective agreement exists" and "Individual employment agreements / Employer's obligations in bargaining for individual agreements, terms and conditions").

Penalties for breaches of good faith

A party to an employment relationship who breaches the general duty of good faith is subject to a penalty under the EMPLOYMENT RELATIONS ACT 2000 if the breach

  • was deliberate, serious and sustained, or
  • was intended to undermine an employment relationship or agreement, or undermine bargaining for an agreement, or
  • consisted of intentionally undermining a collective agreement or collective bargaining by passing on, to other employees, terms from that agreement or terms reached in that bargaining (see below, "Collective agreements and collective bargaining / Passing on terms from collective agreements")

"Collective" versus "individual" employment agreements

The EMPLOYMENT RELATIONS ACT 2000 allows employees and employers to negotiate either collective or individual agreements. However, the Act actively promotes collective bargaining and collective agreements. Only unions can negotiate collective agreements for employees and only union members can belong to a collective agreement (although a collective agreement can provide for non-members to get the terms and conditions in the agreement if they pay the union a "bargaining fee": see below, "Collective agreements and collective bargaining / Bargaining fee arrangements"). Unions must be registered with the Department of Labour, which means they have to meet particular requirements (see How to: Union rights).

Although employers can't give preferential treatment or conditions based on being or not being a union member, this doesn't prevent collective agreements including a term intended to recognise the benefits of collective agreements (such as an additional payment or other additional benefits).

Individual employees covered by a collective agreement can negotiate terms additional to the collective agreement.

There's nothing to stop employees who are not union members from negotiating collectively, but the end result can only be a number of individual agreements, not a collective agreement.

If you start work in a workplace where there is a collective agreement and you're already a union member, you'll automatically be covered by the collective agreement. If there's no collective agreement, you can negotiate an individual agreements with the employer, whether or not you are a union member.

If your collective agreement expires, you're covered by an individual agreement based on the terms of the collective agreement. The same applies if you resign from your union.

Collective agreements and collective bargaining

Good faith and collective bargaining

The EMPLOYMENT RELATIONS ACT 2000 requires collective bargaining between unions and employers to be conducted in good faith. This means they must meet with each other, consider and respond to each other's proposals, and give reasons if they reject any offer or proposal. If they're deadlocked on an issue, they must continue to bargain about any other issues on which they've not reached agreement. The parties must also provide each other, if requested, with information to substantiate claims or responses to claims made during bargaining. This information can be provided to an agreed third party.

The duty of good faith requires unions and employers to reach an agreement unless there's a genuine reason, based on reasonable grounds, not to do so. It doesn't amount to a "genuine reason" that a party objects in principle to collective agreements or to bargaining for them, or that the party disagrees about including a "bargaining fee" clause (for bargaining fees, see below).

Employers cannot advise employees, or attempt to induce them, not to be involved in collective bargaining or not to be covered by a collective agreement.

A Code of Good Faith for collective bargaining was drawn up in 2000. The Employment Relations Authority and the Employment Court can consider the Code in deciding whether the parties have bargained in good faith.

Passing on terms from collective agreements

Employers are prevented from undermining collective agreements and collective bargaining by automatically passing on collectively bargained terms and conditions to employees who aren't covered by them.

Under these rules, the duty of good faith prohibits employers from intentionally undermining a collective agreement by passing on its terms to individuals who aren't party to that agreement, or intentionally undermining collective bargaining by passing on to an employee a term that the parties to the collective bargaining have agreed will be part of the collective agreement when it's concluded.

Similarly, good faith prohibits employers from intentionally undermining one collective agreement by passing on its terms to another collective agreement, or from intentionally undermining collective bargaining by passing on, to another collective agreement, a term that the parties to the bargaining have agreed will be part of the collective agreement when it's concluded.

Employers who breach these rules are liable to a penalty.

However, the rules above don't prevent unions and employers agreeing to pass on collective terms and conditions to other unions or employees – for example, through a "bargaining fee" arrangement (see below).

"Facilitation": Assistance from Employment Relations Authority to resolve disputes

In some cases, collective bargaining that breaks down can be referred to the Employment Relations Authority for it to "facilitate" the bargaining. The Authority will play this role only if

  • there has been a serious and sustained breach of good faith, or
  • the bargaining has been unnecessarily drawn-out and extensive efforts to resolve the differences have failed, or
  • there has been protracted or acrimonious strike or lock-out action, or
  • a strike or lock-out has been proposed that would substantially affect the public interest (because it would endanger someone's life, safety or health, or significantly disrupt social, environmental or economic interests)

The facilitation process must be carried out in private. But otherwise the Authority is free to decide what process will be used. Statements made during the process cannot later be used in any proceedings in the Authority or the courts.

The Authority can make recommendations at the end of the process. The parties don't have to follow these recommendations, but they do have to consider them in good faith.

Authority can determine collective agreement in case of serious breach

The Employment Relations Authority can fix the terms and conditions of a collective agreement if

  • a breach of good faith has been so serious and sustained that it has significantly undermined the collective bargaining, and
  • all other reasonable alternatives have been exhausted, and
  • this is the only effective remedy for the innocent party

What must be included in a collective agreement?

A collective agreement must be in writing and must be signed by each union and employer that is a party to it, otherwise the agreement has no effect.

The agreement must contain

  • a "coverage clause" (this is a clause specifying the work that the agreement covers, whether by reference to the work or type of work, or to employees or types of employees, including referring to named employees, or to the work or type of work done by named employees, to whom the collective agreement applies)
  • a plain language explanation of the services available for resolving employment relationship problems, including the 90-day time limit for raising a personal grievance with the employer (see How to bring a personal grievance against your employer)
  • for new agreements made after 1 April 2004, a clause confirming the right of an employee who works on a public holiday to be paid either time and a half or penal rates contained in the agreement, whichever is more (Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005.) (For more details, see How to ensure you receive your full holiday and leave entitlement as an employee.)
  • for new agreements made after 1 December 2004 (unless the agreement covers one of the industries specified in the Act), a provision negotiated between the parties that protects employees affected by restructuring (Agreements already existing on 1 December 2004 must be amended to include this by 1 December 2005, or the next time they're amended, or before the restructuring takes effect, whichever is earliest.) (These "employee protection provisions" for employees affected by restructuring are explained in detail in How to challenge a redundancy.)
  • a clause providing how the agreement can be varied
  • the expiry date

Apart from these requirements, the agreement can contain any provisions that the parties agree on, provided they're not unlawful or inconsistent with the rights and obligations contained in the Act (see below, "Other issues / What other matters should be included in an employment agreement?").

Bargaining fee arrangements

This is an arrangement whereby employees who are not members of a union can be employed on the same terms and conditions as those contained in a collective agreement if they pay a bargaining fee to the union that negotiated the collective agreement.

The arrangement must be agreed to by the employer and the union in a collective agreement and then agreed to in a secret ballot by majority vote of all employees (union members and non-members) whose work is covered by the coverage clause in the collective agreement. The ballot must be held before the collective agreement comes into force, and must be run jointly by the union and employer.

Non-union employees who don't want to pay the bargaining fee must notify the employer of this in writing, within the period specified for this purpose in the collective agreement. Those employees will not be required to pay the fee, and their terms and conditions will remain the same, rather than being based on the collective agreement.

Bargaining fees are deducted from the employee's wages by the employer and paid to the union. The fee cannot be more than the employee would pay as a union fee if a union member.

New employees: The employer's obligations when a collective agreement exists

If there's an existing collective agreement in the workplace, new employees who already belong to a union that is a party to the agreement will automatically be covered by the agreement.

If when you start work you don't belong to a union that's party to the collective agreement, the employer must tell you that the agreement exists. You then have 30 days to decide whether or not to join the union and be covered by the agreement. During the 30 days you are covered by an individual agreement on the same terms as the collective one.

If after 30 days you decide not to join the union, you can then negotiate a new individual agreement. If you don't negotiate a new agreement, you continue to be covered by an individual agreement on the same terms as the collective agreement.

Individual employment agreements

Good faith in bargaining for individual agreements

In determining whether an employer and employee bargaining for an individual agreement are dealing with each other in good faith, a relevant factor is the circumstances of each of them, including the "operational environment" of the employer and employee and the resources available to them.

Employer's obligations in bargaining for individual agreements, terms and conditions

Employers have the following obligations towards you whenever you're bargaining for an individual agreement, or bargaining for individual terms and conditions that are additional to a collective agreement:

  • You must be given a copy of the intended agreement, or the part of it, that's under discussion.
  • You must be informed that you're entitled to seek independent advice about it.
  • You must be given a reasonable opportunity to seek this advice.
  • The employer must consider any issues you raise, and respond to them.

Those obligations apply in all of the following situations:

  • when you're bargaining for individual terms and conditions additional to a collective agreement that covers you
  • when you're bargaining for individual terms and conditions additional to a collective agreement on which your current individual agreement is based, or bargaining for variations to those individual terms and conditions (This applies where the collective agreement has expired or you've resigned from the union, in which case you're covered by an individual agreement based on the collective one.)
  • when you're a new employee who's not a union member, and you're bargaining for individual terms and conditions additional to the terms, based on the collective agreement, that cover you for the first 30 days
  • when the 30 days have expired and you've decided not to join the union, and you're bargaining for any variations to the individual agreement that applied during the 30 days
  • when no collective agreement covers you and you're bargaining for an individual agreement
  • when a fixed-term agreement, or a probationary or trial period, is proposed
  • when you're bargaining over an "employee protection provision" to cover restructuring situations (This situation, which applies only to workers outside certain industries specified in the Act, is explained in detail in How to challenge a redundancy.)
  • when you're bargaining with a new employer, to whom you've transferred as part of your previous employer's restructuring, over redundancy entitlements (This situation, which applies only to employees in the industries specified in the Act, is explained in detail in How to challenge a redundancy.)

Protection against "unfair bargaining"

The EMPLOYMENT RELATIONS ACT 2000 places some restrictions on unfair bargaining for individual employment agreements. This applies to negotiations with prospective employees and negotiations for new individual agreements with existing employees.

If it finds that an employer has bargained unfairly with you, the Employment Relations Authority can order the employer to pay you compensation, or it can cancel or alter the employment agreement or make some other order.

"Unfair bargaining" exists if, when bargaining is taking place or when the agreement is entered into, one of the following circumstances applied to you, and the employer (or his or her representative) was or should have been aware of those circumstances:

  • You were unable to understand the agreement adequately because of, for example, age, sickness, mental or educational disability, a disability relating to communication, or emotional distress.
  • You relied on the skill, care, or advice of the employer or someone acting for the employer, and it was reasonable for you to do this.
  • You were induced to enter into the agreement by oppressive means, undue influence, or duress.
  • You weren't given the proper information and opportunity to obtain advice as required under the Act (see above, "Employer's obligations in bargaining for individual agreements, terms and conditions").

Employers are also protected against unfair bargaining by employees.

What must be included in an individual agreement?

An individual employment agreement must be in writing and must include:

  • the names of the employee and employer concerned
  • a description of the work to be performed
  • an indication of where the employee is to perform the work
  • an indication of the arrangements for hours of work
  • the wages or salary
  • a plain language explanation of the services available for resolving employment relationship problems, including the 90-day time limit for raising a personal grievance with the employer (see How to bring a personal grievance against your employer)
  • for new agreements made after 1 April 2004, a clause confirming the right of an employee who works on a public holiday to be paid either time and a half or penal rates contained in the agreement, whichever is more (Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005.) (For more details, see How to ensure you receive your full holiday and leave entitlement as an employee.)
  • for new agreements made after 1 December 2004 (unless the agreement covers one of the industries specified in the Act), a provision negotiated between the parties that protects employees affected by restructuring (Agreements already existing on 1 December 2004 must be amended to include this by 1 December 2005, or the next time they're amended, or before the restructuring takes effect, whichever is earliest.) (These "employee protection provisions" for employees affected by restructuring are explained in detail in How to challenge a redundancy.)

Apart from these requirements, the agreement can contain any provisions that the parties agree on, provided they're not unlawful or inconsistent with the rights and obligations contained in the Act (see below, "Other issues / What other matters should be included in an employment agreement?").

Information your employer must give you about holidays and leave

When you enter into an employment agreement, your employer must tell you about your minimum rights under the HOLIDAYS ACT 2003: see How to ensure you receive your full holiday and leave entitlement as an employee. They must also tell you that you can get more information from your union (if you're a member) or from the Department of Labour. The Department's Employment Relations Service has much useful information on its website at www.ers.dol.govt.nz. You can also phone their free Employment Relations Infoline on 0800 800 863.

Can an agreement be for a fixed term?

Yes, an employer and employee can agree that the agreement will end after a certain period, or when a particular event happens, or when a particular project is completed.

However, the employer must have genuine reasons based on reasonable grounds for this. The employer cannot negotiate a fixed-term agreement merely as a means of denying you your rights under the Act, nor to set up a period of probation, nor to exclude or limit your rights under the HOLIDAYS ACT 2003.

Before a fixed-term agreement is entered into, the employer must advise you of when or how the agreement will end and the reasons why it is for a fixed term. This must also be stated in your agreement in writing.

If this information isn't included in writing in your agreement, or if the reasons aren't genuine ones based on reasonable grounds, you can choose to treat the fixed-term aspect of your agreement as ineffective, in which case your employer won't be able to end your employment in reliance on it. However, the validity of the rest of your employment agreement won't be affected.

Can an agreement include a period of probation?

It can be part of an employment agreement that you will serve a period of probation or trial, in which case the agreement must state this is writing. If it's not stated in writing in the agreement, you can choose to treat this aspect of your agreement as ineffective, in which case your employer won't be able to rely on it; however, the validity of the rest of your agreement won't be affected.

Even if your agreement does include a probation period, the employer must still follow the requirements of procedural fairness in dismissing you: the employer must provide the proper warnings and provide you with assistance, training and opportunities to improve your performance, the same as with any other employee. (See How to bring a wrongful dismissal claim against your employer and How to dismiss an employee for the procedure the employer must follow.)

However, it may be that an employer will be permitted a wider discretion in the area of substantive reasons for the dismissal than is the case with permanent employees.

Other issues

What other matters should be included in an employment agreement?

Other matters commonly included in employment agreements are:

  • company policies on matters such as discrimination and equal employment opportunities
  • the procedure for disciplinary action by the employer
  • any restraint of trade or confidentiality clauses
  • remuneration and fringe benefits – for example, long-service leave and staff options to buy company products or services
  • arrangements for parental leave (see How to: Entitlements to parental leave)
  • indexing of wages to the Consumers Price Index
  • health and safety issues (see How to complain about health and safety standards in your workplace)
Cautionary notes
  • It is advisable that you seek legal advice before entering into any individual employment agreement.
  • For more information on the EMPLOYMENT RELATIONS ACT 2000 and your rights and obligations under it as an employee, you may wish to consult a lawyer. Information and assistance is also available from the Department of Labour's Employment Relations Service, which can be contacted on 0800 800 863.

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How to ensure you receive your full holiday and leave entitlement as an employee

Introduction

Minimum rights to public holidays and leave

It's important that you as an employee are aware of your rights to public holidays, annual leave and other types of leave. Your minimum entitlements are contained in the HOLIDAYS ACT 2003.

You may be entitled to additional leave under the terms of your particular employment agreement. Your agreement cannot take away any of your rights and entitlements under the Act.

The HOLIDAYS ACT 2003 came into force on 1 April 2004, replacing the HOLIDAYS ACT 1981. The 2003 Act was amended on 22 October 2004; the amendments are included in this information sheet.

Information your employer must give you

When you start work, your employer must tell you about your minimum rights under the HOLIDAYS ACT 2003. They must also tell you that you can get more information from your union (if you're a member) or from the Department of Labour.

The Department's Employment Relations Service has much useful information on its website at www.ers.dol.govt.nz. You can also phone their free Employment Relations Infoline on 0800 800 863.

Public (or "statutory") holidays

The 11 public holidays

  • Christmas Day
  • Boxing Day
  • New Year's Day
  • 2 January
  • Waitangi Day
  • Good Friday
  • Easter Monday
  • ANZAC Day
  • Labour Day
  • Queen's Birthday
  • your province's Anniversary Day

When am I entitled to be paid for a public holiday?

You will receive a paid holiday for each of the 11 public holidays if it would normally be a working day for you. If you would normally work any amount of time on a public holiday, that day must be treated as normally being a working day for you.

If you and your employer can't agree on whether a particular day would normally be a working day, you can approach the Labour Department and a Labour Inspector will decide the issue.

What if I work the public holiday?

You can agree with your employer that you will work on the public holiday, in which case you must:

  • be paid at least time and a half for that day (see below), and
  • be given an alternative paid holiday

The alternative holiday is to be taken on a day agreed between you, and on a day that would normally be a working day for you. The alternative holiday must be a whole day off, even if you worked only part of the public holiday.

If you work a public holiday that would not normally be a working day for you, your employer must pay you at time and a half, but you're not entitled to an alternative paid holiday.

Calculating your pay if you work a public holiday

The amount you must be paid for working a public holiday is whichever is the greater of the following two amounts:

  • what you would get under your employment agreement for your hours worked that day, not including penal rates, plus half that amount again, or
  • what you would get under your agreement for your hours worked that day, including penal rates

"Penal rates" is limited here to any additional amount paid to compensate you for working a particular day of the week or a public holiday. It doesn't include, for example, additional amounts for working more than five days a week, or for working at particular times (such as overtime or shift allowances).

So in other words, you're entitled to either the "penal rates" in your agreement or to the minimum time and a half required under the Holidays Act, whichever is more, but not both. If, for example, you work a public holiday that falls on a Saturday, and your agreement gives you time and a quarter for working Saturdays, you must be paid the time and a half minimum under the Act. If on the other hand you work a public holiday that falls on a Sunday, and your agreement provides for double-time on Sundays, you must be paid the double-time under the agreement.

There's a temporary exemption for employers who already pay employees for working on public holidays as part of their regular pay. The employer can continue doing this temporarily, if this had previously been genuinely negotiated into the regular pay in order to achieve the same ends as the minimum requirements in the Act. In the case of individual agreements, the exemption lasts until 1 April 2007. In the case of collective agreements, it lasts until 1 April 2007 or until a new collective agreements comes into force, whichever is earlier.

From 1 April 2004 all new employment agreements must include a provision confirming your right to be paid either time and a half or penal rates contained in the agreement, whichever is more, if you work a public holiday. Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005 (except that in the case of the temporary exemption explained in the last paragraph, the agreements don't have to be amended until that exemption ends).

When will I get paid for the public holiday?

You must be paid for it in the pay that covers the pay period in which the holiday falls.

Special rules for Christmas and New Year

In addition to these general rules, the HOLIDAYS ACT 2003 has special provisions that apply when Christmas or New Year's Day falls on a Friday, Saturday or Sunday.

What if I'm sick or have a bereavement on a public holiday?

If you're required or have agreed to work a public holiday, but you don't in fact work that day because you're sick or injured or have a bereavement, the day will still be treated as a public holiday, rather than as sick leave or bereavement leave. However, you're entitled only to your normal pay, not time-and-a-half, and you're not entitled to an alternative day's holiday.

Annual leave

How much annual leave am I entitled to?

As of April 1 2007, you are entitled to at least four weeks' paid holiday leave each year. This becomes due at the end of each year of continuous employment with your employer. A 12-month period of employment is still "continuous" even if it includes periods of parental leave, time on ACC, or unpaid leave of any kind.

If you work part-time you'll be entitled to three of your normal working weeks – for example, if you work 20 hours a week you'll be entitled to three 20-hour weeks off work and on pay. If you and your employer can't agree on what is a genuine working week for you, a Labour Inspector can decide the issue.

Public holidays that fall during your annual leave are treated as public holidays, not annual leave.

The minimum of three weeks' annual leave will increase to four weeks on 1 April 2007.

How is my annual holiday pay calculated?

Your holiday pay must be at the rate of:

  • your ordinary weekly pay as at the start of the holiday, or
  • your average weekly earnings for the 12 months immediately before the last pay period before the holiday,

whichever is more.

When must my annual holiday pay be paid?

Your employer must pay you your holiday pay before you take your holiday, unless you agree that you will be paid in the pay that covers the period in which your holiday falls.

Who decides when I can take my annual leave?

Your employer must allow you to take your three weeks of leave within 12 months after you became entitled to them. The employer must also allow you to take at least two uninterrupted weeks of leave if you choose this.

Aside from those requirements, the issue of when annual leave is taken is a matter to be negotiated between you. But your employer cannot unreasonably refuse to allow you to take annual leave.

Your employer can require you to take your annual leave at a particular time if you cannot agree on when to take them. But the employer must give you at least 14 days' notice of this.

You and your employer can agree to you taking annual leave in advance – that is, before they become due at the end of a year of employment.

What happens when I leave my job?

If you leave your job during the first year, as of April 1 2007 you're entitled to be paid 8 percent of your gross earnings since you started the job. (This increases to 8 percent on 1 April 2007.)

If you leave your job after the first year, you're entitled:

  • to have any unused annual leave paid out in holiday pay, and
  • to be paid 8 percent of your gross earnings since you last became entitled to annual leave (increasing to 8 percent in 2007)

Closedown periods

Your employer may require you to take annual holidays during a closedown period, but must give you at least 14 days' notice. If you don't have enough leave owing to cover the whole closedown, you and the employer can agree that you will take some of the closedown as leave in advance.

If you haven't accrued any annual leave by the closedown, the employer can require you not to work during the closedown. You will be paid 6 percent of your gross earnings since you started the job (if you've worked there less than a year) or since you last became entitled to annual leave (if more than a year).

Employers can have only one closedown period a year. They can have different closedown periods for different parts of the business.

Sick leave

When do I become entitled to sick leave?

After you've worked for your employer for six months, you become entitled to five days' paid sick leave for each year you work after that. Over those six months you must have either:

  • worked continuously for the employer, or
  • worked an average of 10 hours a week, and not less than one hour a week or 40 hours a month

You and your employer can agree that you can take sick leave in advance, with the amount taken in advance being deducted from your entitlement when it becomes due.

In what situations can I take sick leave?

You can take sick leave if:

  • you're sick or injured
  • your spouse or partner is sick or injured, or
  • someone who depends on you to care for them (such as a child or elderly parent) is sick or injured

Can I carry over sick leave?

Yes, you can carry over unused sick leave to the following year. You can carry over up to 15 days, so that in any year you can have a maximum of 20 days current entitlement to sick leave. Your employer can also allow you to carry over more than this.

When you leave your job you are not entitled to be paid out for unused sick leave.

Do I have to provide a doctor's certificate?

Your employer can require you to produce a doctor's certificate or other proof that you are sick or injured if the sickness or injury is for more than three consecutive days. This applies whether or not any of those consecutive days would normally be working days for you. So if, for example, an illness lasts from Friday to Monday inclusive, the employer is entitled to require a doctor's certificate.

Your employer can also require you to provide proof within the three consecutive days if they have reasonable grounds to suspect that your sick leave isn't genuine. The employer must tell you, as soon as possible after forming this suspicion, that they require proof. They must agree to meet your reasonable costs for getting the proof (for example, pay for your visit to your GP).

Your employer doesn't have the right to tell you which doctor or other health professional you must go to to obtain proof.

Payment of sick leave

You must be paid sick leave in the pay that covers the pay period in which you took the leave.

But if you fail, without a reasonable excuse, to provide proof of sickness or injury when required (see above), your employer doesn't have to pay you until you provide that proof.

Bereavement leave

When do I become entitled to bereavement leave?

You become entitled to bereavement leave after you've worked for your employer for six months. Over those six months you must have either:

  • worked continuously for the employer, or
  • worked an average of 10 hours a week and not less than one hour a week or 40 hours a month

You and your employer can agree to you taking bereavement leave in advance – that is, before you have worked for the employer for six months.

In what situations can I take bereavement leave?

You are allowed to take three days bereavement leave if any of the following people die:

  • your spouse or partner (including a same-sex partner)
  • your parent
  • your child
  • your brother or sister
  • your grandparent
  • your grandchild
  • your spouse's or partner's parent

If someone other than one of those people dies, you are allowed to take one day's bereavement leave if the employer accepts that you've suffered a bereavement, taking into account relevant factors such as:

  • how close you were
  • whether you have significant responsibilities for organising the ceremonies relating to the death
  • any cultural responsibilities that you have in relation to the death

There is no maximum total number of days of bereavement leave that you can take in any one year.

Payment of bereavement leave

You must be paid bereavement leave in the pay that covers the pay period in which you took the leave.

Enforcing your rights under the Holidays Act

What can I do to recover unpaid holiday pay?

You can recover unpaid holiday pay by taking your employer to the Employment Relations Authority. Your union or a Labour Inspector can also take your employer to the Authority on your behalf.

A Labour Inspector can also take a penalty action to the Authority against your employer for breaches of your rights under the HOLIDAYS ACT 2003. A penalty can be up to $5,000 if the employer is an individual, and up to $10,000 if it's a company or other type of incorporated body.

Cautionary notes
  • Not all employers understand their obligations under the Holidays Act. Any employer or employee who is in doubt about their obligations and rights under the Act should consult a lawyer.

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How to recover wages owing to you

In what situations can I take action to recover wages?

You have the right to recover any wages owed to you if:

  • you have been paid below the minimum wage
  • you have been paid below the wages required under your employment contract
  • your employer has attempted to pay you with company products instead of money
  • your employer has failed to pay you overtime rates or holiday pay required under your contract
  • your employer has docked your pay for an unfair reason

First discuss the matter with your employer

Before you consider taking legal action to recover your wages, it is recommended that you first discuss the problem with your employer. You may be able to resolve the problem at that point, and this will avoid the pressure that legal action would bring to your relationship with your employer.

You can also obtain information and assistance from the Department of Labour's Employment Relations Service, including mediation services. Contact them on 0800 800 863.

Taking a grievance to the Employment Relations Authority

If discussing the matter with your employer does not resolve the problem, you are entitled to take the dispute to the Employment Relations Authority to recover the money.

Once the matter has been brought to the Authority, you can pursue the unpaid wages on the basis that they are owed to you under contractual obligations that the employer has not fulfilled.

Your right to pursue the wages through the Authority is not affected by you accepting any payment at a lower rate or any express or implied agreement to the contrary.

The Authority can order the employer to pay the money owed to you by instalments, but only if the employer's financial position makes this necessary.

What if my employer has gone out of business?

If the company you worked for has gone out of business, you may need to bring liquidation (winding up) proceedings (see How to recover a debt from a company and How to liquidate a company).

When a company is liquidated, employees that are owed wages (this includes holiday pay) are very high on the list of creditors to be paid. The costs of liquidating the company will be paid first, followed probably by certain payments to the Inland Revenue Department; then those owed wages will be paid out of any money recovered from liquidating the company.

Employer must keep wages and time record

Employers must keep a record for each employee, called a "wages and time record", that shows, among other things:

  • the kind of work on which the employee is usually employed
  • the hours between which the employee is employed on each day, and the days of the employee's employment during each pay period
  • the wages paid to the employee each pay period and the method of calculation

The employer must provide you or your representative with access to this record or a copy of it if you request it.

If the employer fails to keep this record or fails to allow you access to it, the Employment Relations Authority can impose a penalty on the employer.

Cautionary notes
  • If the matter is likely to go to the Authority, it is advisable that you obtain legal assistance from someone who is skilled in advocacy and familiar with this area of law and the processes involved.

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How to know your rights in applying or being interviewed for a job

Discrimination in the advertising of job positions

Employers advertising job positions must comply with the anti-discrimination laws contained in the HUMAN RIGHTS ACT 1993. These restrict an employer from discriminating on the grounds of:

  • sex
  • disability
  • marital status
  • age
  • religious belief
  • political opinion
  • ethical belief
  • employment status
  • colour
  • family status
  • race
  • sexual orientation
  • ethnic or national origins

In addition to those grounds, it is illegal to impose height or weight restrictions without good reason.

The anti-discrimination rules in the Act apply also to employment agencies, as well as employers.

Discrimination at the interview stage

If you get to the interview stage, again the grounds of discrimination prohibited under the HUMAN RIGHTS ACT 1993 mean that there are certain private issues about which you need not answer questions. These include:

  • your place of birth
  • your race or national origin
  • the origin of your surname
  • your marital status or any plans to marry
  • how many children you have and what childcare arrangements are required for them
  • your religious beliefs and the holidays that you observe
  • with whom you live
  • which political party you support

In an interview an employer does have the right to ask about any arrests or convictions that you may have, and is legally entitled to have this information.

What can I do if I believe I have been discriminated against?

If you believe that your rights under the HUMAN RIGHTS ACT 1993 have been breached at any stage of applying or being interviewed for a job, you may complain to the Human Rights Commission: see How to complain about discrimination to the Human Rights Commission.

References

If a former supervisor or employer gives you a poor reference that is untrue, you may have an action for damages against that person. You may also have an action in defamation if you believe a poor reference was given for malicious reasons.

Former employers are entitled to not give references at all or to give references in confidence. Therefore a poor reference that is given in confidence and that results in you not getting a job need not be divulged to you.

The employment contract

If you get the job, the next step is then to enter into an employment contract: see How to enter into an employment contract with an employer.

Cautionary notes
  • In advertising for a job that requires a particular sex – for example, male actors – it is legal not to employ women.
  • Jobs in private households may also specify a certain sex.

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How to: Parental leave

Introduction

Parents who have been working for their employer for at least a year are entitled to take up to 12 months parental leave. Parents who have worked for their employer for only six months have some entitlements to parental leave, but generally less than for parents who have worked at least a year.

Parental leave is unpaid by the employer. But parents who qualify for parental leave are entitled to have 14 weeks of this leave on pay. From 1 July 2006, self-employed people are also entitled to 14 weeks paid parental leave, paid for by the Government.

Employees qualify for parental leave not only if they are birth parents, but also if they're adopting a child under six years old.

To get more information about parental leave, visit the Employment Relations Service's website at www.ers.dol.govt.nz.

History of the parental leave laws

The right to 12 months unpaid parental leave was established by the PARENTAL LEAVE AND EMPLOYMENT PROTECTION ACT 1987. The Act was amended from 1 July 2002 to provide for a new state-funded scheme of 12 weeks paid leave. It was amended again on 1 December 2004 to increase this paid entitlement to 13 weeks, and to provide for some entitlements for those who have worked the previous six months. On 1 December 2005, paid leave was increased further to 14 weeks.

Check your employment agreement

As well as being aware of their minimum rights to parental leave under the Act, employees should also check their particular employment agreement, as it may explicitly provide for parental leave.

Qualifying for parental leave

Employees

To qualify for the full parental leave entitlements available under the Act, an employee must have worked

  • for the same employer for the 12 months immediately before the delivery or adoption, and
  • for at least an average of 10 hours a week, including
  • at least one hour in every week or at least 40 hours in every month

Parents who meet those minimum-hours requirements for the previous six months but not the previous 12 months have, since 1 December 2004, had some parental leave entitlements, but less than for employees who meet the requirements for the previous 12 months. For details, see the specific headings below.

Teachers and doctors

From 1 December 2004, teachers employed by more than one state or integrated school in a 12-month period (whether or not at the same time) have been entitled to treat these different positions as a single employment for the purposes of qualifying for parental leave.

The same applies to junior doctors required to work for more than one district health board in order to complete their training, if the different positions are consecutive.

Self-employed people and paid parental leave

From 1 July 2006, self-employed people are also entitled to paid parental leave. To qualify, you must have been self-employed for at least an average of 10 hours a week for either the six months or the 12 months before your due date or, if you are adopting, before the date on which you assume care of the child with an intention to adopt.

Paid parental leave can be shared between two spouses or partners, provided each separately qualifies for paid parental leave, whether as an employee or as a self-employed person.

For details about paid parental leave, see below, "Paid parental leave for employees and self-employed people".

Unpaid parental leave for employees

Categories of unpaid parental leave

There are three types of unpaid parental leave. Employees who qualify on the basis of 12 months employment are entitled to

  • maternity leave of 14 weeks
  • partner's / paternity leave of two weeks
  • extended leave of up to 52 weeks, which may be shared by the parents

Employees qualifying on the basis of six months employment are entitled to

  • maternity leave of 14 weeks (increased from 13 weeks on 1 December 2005)
  • partner's / paternity leave of one week
  • no extended leave

There is also an additional provision for 10 days of special leave for pregnant women.

Maternity leave

Birth and adoptive mothers who qualify for parental leave (whether on the basis of six or 12 months employment) are entitled to 14 weeks maternity leave, which they must take in one continuous period. (Before 1 December 2005, the maternity leave entitlement for those qualifying on the basis of six months employment was only 13 weeks.)

The leave begins on the "date of confinement", unless it begins earlier in one of the following ways:

  • The employee may choose to begin maternity leave up to six weeks earlier than the expected date of delivery.
  • The employee and the employer may agree that the leave will start on any date before the date of confinement.
  • The employee may provide a certificate from her doctor or midwife stating that the leave should start on a date before the date of confinement.
  • The employer can direct the employee to start the leave at an earlier date if because of her pregnancy the employee cannot perform her work safely or cannot perform it adequately.

Where the leave starts on a date set by a medical certificate or as directed by the employer (as explained above), the employee is entitled to at least eight weeks maternity leave after the date of delivery, even if this means the total period of maternity leave is more than the 14-week maximum. Any maternity leave over that maximum is not taken into account in determining how much "extended" parental leave (see below) is available.

Partner's / paternity leave

The spouse or partner of a pregnant woman (or adoptive mother) can take unpaid "partner's / paternity leave" in one continuous period of

  • up to two weeks, if he or she qualifies on the basis of 12 months employment, or
  • up to one week, if he or she qualifies on the basis of six months employment

The leave begins on the date of confinement of the mother, unless it begins earlier in one of the following ways:

  • The employee taking partner's / paternity leave can choose to begin the leave at any time between the 21st day before the expected date of delivery and the 21st day after the actual date of delivery.
  • The employee and the employer can agree that the leave will start on any date.

Partner's / paternity leave covers husbands, and civil union and de facto partners of both sexes. Before 1 July 2002, it covered only men, and was referred to as "paternity leave".

Extended leave

Employees qualifying for parental leave on the basis of 12 months employment may extend the period of leave to a combined total of 52 weeks in one continuous period.

This period of entitlement is reduced by the total maternity leave taken (but in certain cases maternity leave of more than the 14-week maximum is not taken into account for this purpose: see "Maternity leave" above).

The extended leave can be taken by one of the two spouses or partners, or it can be shared between them. It is not an entitlement that each has separately. But any employee taking extended leave must himself or herself qualify for parental leave – it's not enough that that employee's spouse or partner qualifies.

Parents who qualify for parental leave on the basis of only six months employment are not entitled to extended leave.

Special leave for pregnant women

A pregnant employee is entitled to take up to 10 days of special leave before she begins maternity leave, for reasons connected to the pregnancy. This is unpaid. Any special leave taken does not reduce the period of entitlement for maternity or extended leave: it is in addition to the 52-week maximum for combined maternity and extended leave.

When can parental leave be taken?

Parental leave can be taken within 12 months of either a birth or adoption.

Paid parental leave for employees and self-employed people

Paid parental leave for employees

If you qualify for parental leave as an employee (whether on the basis of a 12-month or six-month period of previous employment), you're entitled to have 14 weeks of your parental leave on pay, up to a set maximum amount, if

  • the expected or actual date of delivery of your child is on or after 1 December 2005, or
  • on or after 1 December 2005 you assume care of a child under six whom you have adopted or intend to adopt

(Before 1 December 2005, there was a 13-week entitlement to paid parental leave. Before 1 December 2004 and after 1 July 2002, it was 12 weeks.)

You can transfer some or all of your entitlement to your spouse or partner if they are also eligible for paid parental leave as an employee or self-employed person (see below). Payments can therefore be taken by one parent or shared between two spouses or partners, if both qualify. But if the mother doesn't work and the spouse or partner does, the spouse or partner won't qualify for paid leave.

The weeks for which the payments are made must be continuous. If the maximum period is shared between the two spouses or partners, the two periods must each be continuous (but it seems that the second period does not have to follow immediately after the first).

It makes no difference that you don't return to work after your leave, because your rights are based on your previous employment.

To get parental leave payments, employees must apply to the Inland Revenue Department: see below, "How do I get my parental leave payments?".

To find out the current maximum weekly payment for paid parent leave, visit www.ers.dol.govt.nz. This maximum amount is adjusted on 1 July each year on the basis of any movement in average ordinary time weekly earnings.

Paid parental leave for self-employed people

You're eligible for 14 weeks paid parental leave if you've been self-employed for at least an average of 10 hours a week for either the six months or the 12 months before the due date of the birth or, if you are adopting, before the date on which you assume care of the child with an intention to adopt.

You must be taking leave from your business in order to qualify for parental leave payments. However, you can still continue some level of oversight over your business and do occasional administrative tasks.

You can transfer some or all of your entitlement to your spouse or partner if they are also eligible for paid parental leave either as an employee (see above) or as a self-employed person. Payments can therefore be taken by one parent or shared between two spouses or partners, if both qualify. But if the mother doesn't work, whether as an employee or a self-employed person, and the spouse or partner does, the spouse or partner won't qualify for paid leave.

To come within the definition of a "self-employed" person, you must do one or more of the following things:

  • provide goods or services for hire or reward as an independent contractor
  • carry on a business, including a profession, trade, manufacture or undertaking carried on for profit, and including in partnership with someone else
  • work for a trust in a business (as defined above) carried on by the trust

The changes to the law allowing paid parental level for self-employed people take effect from 1 July 2006. You can get paid parental leave only if

  • the expected or actual date of delivery of your child is on or after 1 July 2006, or
  • if you're adopting, the date on which you or your spouse or partner assumes care of the child is on or after 1 July 2006

How do I get my parental leave payments?

You'll need to apply to the Inland Revenue Department. You can get a copy of an application form from

  • your midwife or doctor
  • your union
  • the Employment Relations Service Infoline, 0800 800 863, or
  • the ERS website at www.ers.dol.govt.nz

The application form must be completed by the mother or, if you're adopting, by the primary caregiver. (Two spouses or partners who are adopting jointly need to nominate who is the primary caregiver for parental leave purposes.)

If you're an employee, you'll need to first give notice to your employer that you want to take parental leave (see below). If your employer approves this, both you and your employer will need to complete an application form.

You'll need to send the completed form to IRD. They will then tell you how much your payments will be and when they'll start. It normally takes IRD up to 10 working days to reply to your application. The payments will be paid into a NZ bank account that you specify.

If you're an employee you must apply

  • before your parental leave ends, or
  • before you return to work or resign, or
  • within 12 months of starting your parental leave,

whichever is earliest.

If you're self-employed, you must apply before you return to work or stop being self-employed.

Paid leave and the Parental Tax Credit

You cannot receive both paid parental leave and the Parental Tax Credit. (The Parental Tax Credit is a form of family assistance paid by IRD to parents, calculated on the basis of the number of children and the family's income.)

The process for taking parental leave

What do employees have to do if they want to take parental leave?

An employee must notify the employer in writing that he or she intends to exercise the right to parental leave. This written notice must be given at least three months before the expected date of delivery.

The notice must be accompanied by a medical certificate verifying the pregnancy and stating the expected date of delivery. If the employee is the spouse or partner of a pregnant woman, the employee must provide, in addition to the medical certificate, a written assurance from the mother that the employee is her spouse or partner, and that the employee intends to assume care of the child.

If the employee wishes to take extended leave, the notice must state this and provide other information as required.

A female employee who wishes to begin maternity leave earlier than originally stated in the required notice must give her employer at least 21 days' notice in writing.

However, if an employee fails to comply with these formal requirements, the employer cannot unreasonably refuse to allow them the relevant parental leave benefits. If there is a dispute about this, the employer or the employee can apply to the Employment Relations Authority.

The employer's response to the employee's notice

After receiving the employee's notice the employer has 21 days in which to reply. Their reply must state

  • whether the employee is entitled to take parental leave
  • if the employee is not entitled to the leave, the reasons why not
  • whether the employee's position will be left open for the duration of the leave
  • that an employee has the right to dispute an employer's statement that a position cannot be left open

What do self-employed people have to do if they want to take paid parental leave?

Before you apply for parental leave payments, you will need to decide the dates when you will be taking leave from your business. Consider this carefully, because it's not easy to change your dates once you've applied.

You will then need to complete an application form and send it to Inland Revenue (see above, "How do I get my parental leave payments?").

Going back to work

Will my job be kept open?

If the continuous period of parental leave is not more than four weeks, there is a presumption that the employee's position can be kept open (assuming the notice requirements have been met), unless the employer can show that the position has become redundant.

If the period of leave is more than four weeks, there is a presumption that the employee's position can be kept open, unless the employer can show:

  • that a temporary replacement is not reasonably practicable because the employee's job is a key position, or
  • the position has become redundant

Determining whether the position is a "key" one will involve considering the size of the business, the training and skills held by the employee and the training and skills required by the job. The Labour Department advises that, in practice, employers will only rarely be able to show that a position is a "key" one.

If the job is a key position and cannot be left open, the employer must give the employee preference over other applicants for any vacant position for 26 weeks after the parental leave ends.

Other issues

What about people who are both employees and self-employed?

Their rights to parental leave, both paid and unpaid, are determined by considering their employment and self-employment separately.

What if I have twins or triplets?

If you have a multiple birth, this doesn't change how much leave you're entitled to, nor how much your paid leave payments will be. (But if you have triplets it may be better to apply for the Parental Tax Credit than parental leave payments: contact IRD about this.)

Complaints concerning parental leave

You may have grounds to complain about a decision or action of your employer to do with your rights to parental leave – for example, if without good reason your employer fails to keep your job open or requires you to start your leave early. If the matter can't be resolved through discussing it with your employer, you can take your complaint to the Employment Relations Authority.

For information about bringing a complaint, call the Labour Department's free Employment Relations Service Infoline, 0800 800 863.

Cautionary notes
  • You should always check your employment agreement carefully to see whether it provides for parental leave. It may include provisions that are more favourable than your rights under the Act or that are in other ways different. If you do not understand the terms of the contract, you should consult a lawyer.

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How to: Union rights

Introduction

The EMPLOYMENT RELATIONS ACT 2000 came into force on 1 October 2000, making substantial changes to the legal status and functions of unions. The Act promotes collective bargaining by unions as a means to offset the inherent inequality in power between employers and employees.

Under the Act only a union can negotiate a collective agreement with an employer, and only union members can be covered by a collective agreement (although a collective agreement can provide for non-members to get the terms and conditions in the agreement if they pay the union a "bargaining fee"). Unions must, however, be registered with the Department of Labour to have the benefit of these new advantages.

For more information on negotiating employment agreements (including bargaining fees), see How to enter into an employment agreement as an employee.

Registration of unions

In order to enjoy the monopoly of collective bargaining under the new Act, unions must be registered with the Registrar of Unions in the Department of Labour. If they are not registered they have no status under the Act.

A union is entitled to be registered if:

  • the union's object (or one of them) is to promote its members' collective employment interests; and
  • the union is incorporated under the Incorporated Societies Act 1908; and
  • its rules are democratic, not unreasonable, not unfairly discriminatory or prejudicial, and not contrary to law; and
  • the union is independent of and operates at arm's length from any employer

Is union membership voluntary?

Yes, employees cannot be required to join a union. No contract or arrangement may require an employee to be or not be a union member, and no person can put undue influence, directly or indirectly, on another person to be or not be a union member.

However, only union members will be covered by a collective agreement in force in their workplace. Non-members must negotiate their own individual agreements with their employer (although in certain cases they can pay the union a "bargaining fee" and get the benefit of the terms and conditions in the collective agreement: see How to enter into an employment agreement as an employee).

Discrimination on the basis of union membership

If an employer discriminates against employees on the basis of their union activities or subjects them to duress because of their union membership, the employees can take a personal grievance to the Employment Relations Authority: see How to bring a personal grievance against your employer.

Although employers can't give preferential treatment or conditions based on being or not being a union member, this doesn't prevent collective agreements including a term intended to recognise the benefits of collective agreements (such as an additional payment or other additional benefits).

What rights of access do unions have to the workplace?

Under the Act, unions have wider access to workplaces than previously. Under the previous Act unions could enter only for the purposes of contract negotiations; but now unions can enter for any purpose relating to their members' employment or relating to union business. This includes:

  • participating in bargaining for a collective agreement
  • dealing with health and safety matters
  • monitoring whether a collective agreement is being complied with and, if it is not, seeking compliance with it
  • monitoring whether the Act and other employment-related Acts are being complied with in relation to union members and, if they are not, seeking compliance
  • dealing with individual employment agreements or an individual's terms and conditions
  • discussing union business with members
  • recruiting new union members
  • providing information on the union to employees

Union representatives can enter the premises only at reasonable times, and must do so in a reasonable way, having regard to normal business operations in the workplace. They must also comply with any reasonable existing procedures relating to health and safety or security.

Discussions with employees must take no longer than is reasonable.

Employers can be penalised for denying or obstructing union access to the workplace. They cannot dock employees' wages for time spent in discussions with union representatives.

Union meetings

Employers must allow employees who are union members to attend two union meetings each year on ordinary pay. Each meeting may be up to two hours long. The union must tell the employer which union members attended and how long the meeting lasted.

This right to hold union meetings is quite separate from the right of union officials to enter the workplace as necessary to discuss union business with employees (see above).

Do employers have to collect union fees?

Whether or not there's a collective agreement in the workplace, employers are required to collect union fees from each union member (if he or she consents) and then pass them on to the union, as arranged with the union.

However, this requirement can be cancelled or modified by a collective agreement or, if there's no collective agreement, by the employee's individual agreement.

Cautionary notes
  • For more detailed information on the changes made to union rights and other areas by the EMPLOYMENT RELATIONS ACT 2000, you may wish to consult a lawyer. Information and assistance is also available from the Department of Labour's Employment Relations Service, which can be contacted on 0800 800 863.

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A complete employment contract suitable for all staff below director level in an organisation of any type or size. The contract provides strong protection for the employer organisation. The employee may be full time, part time or temporary.

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