The law as it applies to employers

Some employers are not aware of their basic employment obligations, based on responses to our December article on holiday pay entitlements (available at www.pkffa.co.nz).

Written employment agreements must be prepared for all employees, full- or part-time, casual or fixed term, and must be signed by both parties. Agreements can be collective — negotiated by a registered union — or individual.

Individual agreements are meant to be negotiated between both parties, but in practice the prospective employee is normally provided with a standard agreement used for other employees in the organisation. A draft, or ‘intended’ agreement, must be provided to the prospective employee when offering a job, to provide a reasonable opportunity to get independent advice. Any points of difference can be negotiated before the final agreement is signed.

The agreement must include the names of employer and employee, a description of work to be performed, an indication of place and hours of work, the wage rate or salary, an explanation of available resolution services, a clause confirming at least time and a half payment for working a public holiday, a clause defining employment protection for relevant employees should the business be sold, a note that personal grievances must be lodged within 90 days of the incident concerned, and other matters agreed upon such as trial periods or probationary arrangements.

The employer must retain the signed agreement, with a copy given to the employee on request. The ‘intended agreement’ must also be retained, even if not signed by the employee.

Minimum entitlements are provided by legislation and cannot be contracted out of, but more generous entitlements can be provided in the agreement. The minimums are:

■ Minimum pay rate — currently $16.50 per hour, rising to $17.70 per hour from April 1. There are different starting-out and training minimum wages with special rules.

■ Reasonable rest (paid) and meal breaks (unpaid).

■ Annual leave of four weeks at the end of each year of employment for full- and parttime workers. An employee terminating before completing the year is entitled to holiday pay calculated at 8 per cent of their gross wage.

■ Casual and fixed-term employees (less than a 12-month contract) can receive holiday pay on a ‘pay as you go’ basis.

■ The employer must fairly consider cashing up one week’s holiday pay per year on the employee’s written request, but may decline.

■ Sick leave of five days after six months’ employment, and a further five days for each subsequent year. Note that regardless of whether the employee works five days a week or fewer, they are still entitled to five days’ sick leave.

■ Bereavement leave of three days for close family and one day for other bereavements.

■ The job must be kept open for an employee on parental leave, if the criteria are met.

■ Flexible working arrangement requests must be considered as per the legislation.

Other obligations include providing a safe work environment, keeping complete and accurate employment records, and deducting and accounting for PAYE and Kiwisaver contributions.

Further information can be found at www.employment.govt.nz, and most accountants can assist employers to interpret their legal requirements.