Employment agreements: what NZ law requires

She’d been with the company for over a decade. In that time, her role had changed, her position title had changed, her hours had changed, and her days had changed. Not once. Multiple times across a decade.

None of it was put in writing.

She was told company only have master agreement and remains valid throughout her employment, no variations needed. - One document, signed years ago, for a role she no longer did, on hours she no longer worked, at a rate that had shifted along the way.

Later while she was away on an approved parental leave, the company did not contact her to confirm can she come back as per the agreed plan, instead told her that her role had been disestablished, when she contacted her manager.

Think about that for a moment. Years of loyalty, and she’s told there’s no job waiting for her. No consultation. No proper process. Just a phone call and a closed door.

So what happened? A personal grievance was raised. And because nothing had been documented properly, everything came back to the paper trail of proof. Her pay slips. Her actual hours. The work she’d been performing day in, day out. If she’d been working 40 hours a week, even though her original agreement said 24 to 30, those 40 hours became her implied terms. The employer was liable for all of it, going back years.

One employment agreement, never updated, never varied in writing, and it exposed the business to a claim that could have been avoided entirely with a bit of paperwork and a proper conversation.

Everything comes back to your employment agreement. When something goes wrong, and eventually something always does, it's the first document everyone reaches for.

Here’s what you need to know to get yours right.

What must be included?

New Zealand law is specific about what an employment agreement needs to contain. This isn’t optional and it isn’t a nice-to-have. Every employment agreement must include the names of the employer and employee, a description of the work to be performed, the place of work, the agreed hours, and the remuneration.

Beyond those basics, there are several clauses that protect both you and your employee. You need a variation clause that sets out how changes to the agreement will be handled and confirms that consultation will happen before any changes are made. You need a clear section on wage deductions, because deducting anything from an employee’s pay without consultation and written permission, even if the money is rightfully yours, can land you in serious trouble. You need an employment dispute resolution process that spells out exactly disagreements will be handled.

And if you’re using a trial period or probationary period, that needs to be in there too, with the right wording, because not every employee is eligible and getting this wrong invalidates the entire clause.

If your employment agreement doesn’t cover these things, you’ve got gaps. And gaps are where personal grievances find their footing.

Can I use the same template for everyone?

You can, with a caveat. The template needs to match the type of employment. If you have wage workers and salaried employees, those are different arrangements and they need different agreements. Hours, leave entitlements, overtime, and pay calculations all work differently depending on the employment type.

So yes, you can use a standard template for employees in similar roles and on similar terms. But don’t try to squeeze a salaried employee and a casual wage worker into the same document. It won’t cover what it needs to for either of them.

What if someone starts work before they’ve signed?

You’re in breach. It’s that simple.

If an employee starts working before the employment agreement is signed, you’ve failed to meet your legal obligation. More importantly, if you’ve included a trial period clause, it’s now invalid. For a trial period to hold up, the agreement must be signed before the employee’s first day, and the employee must have been given sufficient time to seek independent legal advice and inform them about trial period inclusion in the agreement. Whether they actually seek that advice is their choice, but they need at least two to three working days to do so.

Without a signed agreement, the employment relationship still exists. The employee has been doing work for you, and you’re obligated to pay them for it. But you’ve lost the protections that a properly executed agreement gives you. And if things go wrong down the track, you’re starting from a much weaker position.

How do I update or change an existing agreement?

You can make changes, but you can’t just implement the change. Any change to an employment agreement requires good faith consultation. That means notifying the employee about what you want to change and why, giving them the opportunity to provide feedback, and genuinely considering how the change impacts them before you go ahead.

If you’re changing someone’s place of work, for example, that might mean a longer commute, higher transport costs, or a disruption to their childcare arrangements. You need to have that conversation and take their feedback seriously. The change might still go ahead, but the process of getting there matters.

And here’s the part that catches people out: any variation to an employment agreement must be done in writing. It’s in a mandatory requirement not nice to have. A verbal conversation and a handshake isn’t enough. If you’ve agreed to change someone’s hours, pay, role, or conditions, put it in a written variation, have both parties sign it, and keep it on file.

The employer in our opening story learned this the hard way. Multiple changes over ten years, none of them documented. When the dispute arose, the business had nothing to fall back on.

Are verbal agreements legally binding?

Yes. In New Zealand, a verbal or “handshake” agreement is legally binding. If someone can prove they’ve been doing work for you, an employment relationship exists whether there’s a signed document or not.

This is what’s known as an implied agreement. The actual terms of the employment are determined by what the employee has been doing in practice: the hours they’ve worked, the pay they’ve received, the duties they’ve performed. If there’s a gap between what was originally agreed and what’s actually been happening, the reality on the ground wins.

This is why regularly reviewing and updating your agreements matter so much. If an employee’s role has evolved over time but the paperwork hasn’t kept pace, you’ve effectively created new implied terms without realising it. And those implied terms are what you’ll be held to if a dispute arises.

How often should I review my agreements?

At minimum, once a year. In fast-moving industries where roles, hours, or conditions change frequently, you might need to do it more often.

If there are legislative changes, notify your employees about how those changes affect them. If there’s more than one or two changes stacking up, issue a formal variation rather than letting things drift. Explain the changes, give employees time to understand them, and get everything signed.

It’s not complicated. It’s just discipline. And it’s the kind of discipline that protects your business when it counts.

Where to from here?

Your employment agreements are the single most important document in your relationship with your team. When everything is going well, they sit in a drawer and nobody thinks about them. But the moment something goes sideways, they’re the first thing that gets pulled out.

If you haven’t looked at yours in a while, now is a good time. Check that they cover what they need to. Make sure they reflect what’s actually happening in your business. And if you’ve made changes to someone’s role, hours, or conditions without putting it in writing, sort that out before it becomes a problem.

Undocumented changes and master agreement can cost an employer dearly. A consultation and a signed variation letter would have changed the whole story.