Creating Employment Agreements: A Helpful Guide for Small Businesses

Every employee must have a written employment agreement. While required by law, it’s important for both the employer and the employee to have clear understanding of what to expect from the start. Employee agreements outline key details like the employee’s role and responsibilities, what they’ll be paid, and their rights and obligations within your workplace. It’s a practical tool that helps both you and your employee understand what to expect, making things smoother for everyone.

Why Employment Agreements Matter

An employment agreement helps set the tone for a positive working relationship. Before an employee joins your team, they should be comfortable with the terms. Encourage them to ask questions and allow them time to review the agreement and seek independent advice.

Some employees might wish to negotiate specific conditions, and that’s where open, honest communication comes in. Whether it’s a collective agreement in a unionised setting or an individual contract for other employees, the key is to build an agreement that works for everyone involved and to follow the principles of negotiating in good faith

Even if certain details aren’t included in the agreement, there are minimum employment rights that apply to all employees, such as receiving at least the minimum wage for all the hours worked, having rest and meal breaks, receiving paid holidays and sick leave.

What to Include in an Employment Agreement

An employment agreement is required by law to include:
The position title
The names of both parties,
The type of employment agreement (Permanent, Fixed Term or Casual)
Public holiday information
Resolving employment relationship problems
Employee protection provision
Where the work will be done (Office, Hybrid, Remote etc.)
Work hours,
Pay rates, and how payments will be made.
A job description

Should you wish to add a trial period provision, ensure that you are aware of the strict rules that apply to this use of this provision.

Getting Help with Employment Agreements

If you’re not sure where to start or want to make sure you have covered everything, there are some great tools available. For instance, business.govt.nz offers an Employment Agreement Builder. It’s written in plain language and designed to walk you through the process step by step, making sure all the essentials are included while avoiding common pitfalls. Once you’ve completed the agreement online the result is emailed to you, together with other useful documents such as a suggested offer letter and employment checklist.

An employment agreement is a valuable tool for creating clarity and setting the right expectations in the workplace. With easy-to-use resources like the Employment Agreement Builder, getting it right doesn’t have to be complicated.