Forming an employment
relationship
What are the legal rules?
The Employment Relations Act 2000 sets out most of the rules for forming an employment relationship, through an employment agreement. The rules differ depending on the circumstances.
Set out below are the rules for the following situations:
When is there a "relevant collective agreement"?
There will be a relevant collective agreement when:
- an employer and a union have negotiated a collective agreement under the Employment Relations Act 2000, and
- the agreement covers the work to be performed by that employer’s new employee.
When there is no relevant collective agreement
Here, the employer and the employee negotiate an individual employment agreement which sets out the employee’s terms and conditions of employment. This agreement must not have anything in it that is less than what is required by legislation, or is inconsistent with the legislation.
Agreement MUST be in writing and the prospective employee has a right to seek independent advice. An employer must, when offering a person a job:
- give the person a copy of the intended individual employment agreement
- advise the person that he or she is entitled to seek independent advice about the intended agreement
- give the person a reasonable opportunity to get that advice
- consider any issues that the employee raises and respond to them.
The individual employment agreement must include:
- the names of the employer and the employee (to make clear who are the parties to the agreement)
- a description of the work to be performed (to make clear what the employee is expected to do)
- an indication of the place and hours of work
- the wage rate or salary payable
- a plain language explanation of services [http://ers.govt.nz/relationships/example.html] available to help resolve employment relationship problems
- a provision confirming the right to at least time-and-a-half on a public holiday
- for most employees, an employment protection provision that will apply even if the employer’s business is sold or transferred, or if the employee’s work is contracted out.
The Employment Agreement Builder [http://www.ers.govt.nz/relationships/builder/] can guide you through the development of an individual employment agreement.
Fair bargaining
The employer and employee must bargain in a fair way and act in good faith with each other. The Employment Relations Authority may order compensation or cancel or vary an individual employment agreement in any of the following situations:
- one of the parties was unable to understand what they were agreeing to by reason of diminished capacity due, for example, to age, sickness, mental or educational disability, a disability relating to communication, or emotional distress
- one of the parties relied on the other’s knowledge or skill
- one party unfairly pressured the other
- the employer did not allow the employee the opportunity to seek independent advice.
What an offer of employment might look like
See the sample letter [http://ers.govt.nz/relationships/letters.asp#1] of what an employer’s offer to an employee in this situation might look like.
Final agreement must be in writing
When the employee accepts the employer’s offer, the individual employment agreement must be in writing and contain at least the required terms and conditions of employment.
When there is a relevant collective agreement and the new employee is a member of the union that negotiated it
When there is a collective agreement negotiated by the employee’s union covering their work, the employee’s minimum terms and conditions of employment must be those set out in the collective agreement. The employer and the employee may agree to other terms that are additional to, or better than, the collective agreement so long as those other terms can comfortably sit alongside those in the collective agreement.
What an offer of employment might look like
We provide you with an example [http://ers.govt.nz/relationships/letters.asp#2] of what an employer’s offer to an employee in this situation might look like.
When there is a relevant collective agreement and the new employee is not a union member
When the employee is not a union member but there is a collective agreement covering their work, the employer and the employee have an individual employment agreement based on the collective agreement.
Details are as follows:
- For the first 30 days, the employee’s individual employment agreement consists of the terms and conditions of employment in the collective agreement. The employer and the employee may also agree to other terms that are additional to, or better than, the collective agreement so long as those other terms can comfortably sit alongside those in the collective agreement.
- After that 30-day period, the employee’s terms and conditions of employment can be varied by agreement. In other words, after (but not before) the end of the 30 days, the employer and employee can agree to vary (upwards or downwards) the terms taken from the collective agreement. The original individual employment agreement cannot provide for the terms and conditions of employment to change automatically at the end of the 30-day period.
Required process
When offering the employee the job, the employer must inform the employee:
- that there is a collective agreement covering the employee’s work
- of the employee’s right to join the union and how to contact the union
- that, if the employee joins the union, the collective agreement will bind the employee
- that if the employee does not join the union, the employee’s terms and conditions are those in the collective agreement for the first 30 days along with any agreed additional or better terms.
The employer must also:
- give the employee a copy of the collective agreement
- if the employee agrees, promptly inform the union that the employee has commenced work.
Fair bargaining
The employer and employee must bargain in a fair way and act in good faith with each other. The Employment Relations Authority may order compensation or cancel or vary an employment agreement in any of the following situations:
- one of the parties was unable to understand what they were agreeing to by reason of diminished capacity due, for example, to age, sickness, mental or educational disability, a disability relating to communication, or emotional distress
- one of the parties relied on the other’s knowledge or skill
- one party unfairly pressured the other
- the employer did not allow the employee the opportunity to seek independent advice.
What an offer of employment might look like
We provide you with an example [http://ers.govt.nz/relationships/letters.asp#3] of what an employer’s offer to an employee in this situation might look like.
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