First-time employer - Rights, Responsibilities & Employment Agreements
Welcome to the second installment of our first-time employers guide. In our last blog, we covered getting the basics sorted, which you can read here. In this one, we’ll cover what you and your employees are entitled to, and how to set up an employment relationship that’s fair and works for everyone.
Your rights and responsibilities as an employer
Let’s start with you, the employer. The main law that sets out the legalities for employment relationships in New Zealand is the Employment Relations Act 2000. While you don’t need to know this front to back, you should be familiar with the minimum entitlements and rights it covers.
When you hire an employee, you can create your own terms and conditions of employment to be agreed, but these can never fall below the minimum entitlements that we’ll cover below.
What can you do as an employer
As an employer, you have rights that are designed to protect your business. These should always be used fairly, reasonably, and lawfully.
You can:
- Run your business your way: You decide how to run your business, including what you pay your employees, who does what, and how.
- Direct your employees fairly: Assign work and manage performance in ways that are lawful and reasonable (we’ll cover performance management in a later edition).
- Expect loyalty and trust: Employees are expected to act in the best interests of the business, and keep sensitive information confidential - during and after employment.
- Address performance and conduct issues: When work isn’t meeting the standards set, you can take appropriate action, including formal disciplinary processes, if needed. These are important to get right, so we’ll dive into these in more detail in a later edition.
- Create workplace policies and procedures: These outline how things get done and why. While you set the tone, it’s good to get input from employees too where appropriate.
Policies & Procedures
Documenting what’s expected at work helps everyone understand expectations and keeps everybody accountable.
The amount, and type of policies and procedures your business has, depends on what you do, but typically cover things like:
- Holidays and leave
- Health and safety
- Code of conduct (acceptable and unacceptable behaviour at work)
- Privacy, conflicts of interest, and information security
- Performance, training and development
You only need to include what’s applicable to your business. For example, if your team won’t be operating heavy machinery, then you probably don’t need detailed machinery safety protocols.
What's the difference?
Policies: explain the rules, what’s expected and why.
Procedures: explain how to do something.
Making your policies work
It’s easy to create policies, but it’s even easier for them to end up sitting in the background collecting dust or for employees to not even be aware of them. Make sure your employees are given the opportunity to understand them:
- Give new employees time to read your policies and procedures before they start work, or in their first few days.
- Communicate any new or updated policies so everybody knows what’s expected and is on the same page.
- Keep your policies somewhere easily accessible whether that’s on an internal database, shared drive, or printed copies somewhere appropriate in the workplace.
- Update them as your business evolves.
If you’re not sure where to start, the Workplace Policy builder tool is a great resource for first-time employers.
Employee rights and your responsibilities
When you hire an employee, you’ll need to provide certain minimum requirements by law. You can always offer more than these, but can never offer less.
Employment Agreements
Provide a written employment agreement (contract) to each employee. Send this before their first day so they have the time to read it, ask questions, and seek professional advice if they need to. More on these below.
Pay & Wages
All employees should be paid at least the minimum wage for all the hours they’ve worked. No deductions should be made from their pay unless the law allows it (like student loan repayments or tax), or you have both agreed in writing (keep in mind this should be legal and reasonable).
Rest & Meal Breaks
Employees are entitled to regular rest and meal breaks, the number and duration depending on the hours worked.
Rest breaks are generally paid and must be a minimum of 10 minutes each. Meal breaks are unpaid, and at least 30 minutes each.
For example, an employee working an 8 hour shift would be entitled to two 10 minute paid rest breaks, and one 30 minute unpaid meal break. A full breakdown on the amount and duration of breaks for different shift lengths can be found here.
Flexible working
The world of work has changed, and people have different needs. Employees have a right to request flexible working arrangements, or have someone make that request on their behalf. You have the responsibility to respond to requests ideally as soon as possible, but this can not be later than one month. You should consider all requests fairly and, if it's not possible on genuine grounds, such as the inability to reorganise work, provide a clear reason and explore alternative arrangements that might work instead. In some situations, it can be a good idea to try out a flexible working arrangement on a trial period, and reassess when an agreed period of time has passed. Make sure to get this agreement documented in writing!
If a proper process isn’t followed, employees can raise a complaint with a Labour Inspector, and if it is unable to be resolved, may progress further and even result in a penalty for you.
A safe, fair, and inclusive workplace.
Every employee has the right to a workplace that is:
- Safe and healthy: this is both a legal requirement and a moral one.
- Fair and without discrimination: this isn’t something to do just because it’s the right thing to do, it’s unlawful to treat anyone differently because of their race, age, disability, sex, or any other prohibited ground..
- Operating under good faith: good faith is something we’ll cover in more detail in a later blog, but you and your employees must not act in misleading ways, be responsive and communicative, and before making any decisions that could affect an employee’s employment, you must give those employees the information they need to understand and provide input.
You should keep records relating to an employee's employment with you like personal information, employment agreements, hours worked, pay history, leave records. How to keep records and how long varies, so we recommend this page for clear guidance.
Leave entitlements
Leave can be tricky, so check out the links below for each type to understand the minimum entitlements:
- Annual holidays: at least 4 weeks of paid annual holidays (annual leave) after they’ve worked with you for 12 months.
- Public holidays: at least 12 paid public holidays per year, if they fall on a day they would usually work. If they work on a public holiday, they get a paid alternative holiday (also called a day in lieu).
- Sick leave: at least 10 days of paid sick leave after they’ve worked with you for 6 months continuously.
- Bereavement leave: at least 3 days per bereavement for immediate family and 1 day per bereavement for other deaths (subject to certain criteria).
- Family violence leave: up to 10 days of paid leave each year, if the employee (or a child with them), experiences family violence.
Leave should be taken at a mutually agreed time. It’s reasonable to manage timings based on business needs, but always consider requests fairly. When employees become eligible for leave can vary, but you can agree to taking leave in advance, for example taking annual leave within the first 12 months of employment.
Employment Agreements
Once you’ve got an understanding of the rights and responsibilities, the next thing to do is capture them all in an employment agreement. Employment agreements capture all the terms and conditions of employment, and every employee must have one. You and your employee can negotiate the terms and conditions set, but they must at least be given the minimum employment rights mentioned above. Keep a copy of the employment agreement somewhere safe and handy, and share this with the employee too.
There are mandatory clauses that are required to be in all employment agreements. You must ensure these are covered!
If you’re new to employment agreements, this page has great information to get you started, and the employment agreement builder is a great tool to help you cover everything you need. It’ll help you understand which clauses are mandatory and which ones are optional, and what you can configure based on what’s best for your business.
Next Steps
Now we’ve got that covered, we’re ready to move to the next stage in bringing on your first employee. In the next blog, we’ll cover how to hire effectively (and correctly!).
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