How to Write an NZ Individual Employment Agreement (IEA)

Every employment relationship in New Zealand must be governed by a written employment agreement. Under Employment Relations Act 2000 (ERA 2000) s.65, this is a strict statutory requirement: not having a written agreement is itself a breach of the Act, attracting penalties under s.134. This how-to walks through the process of drafting a compliant NZ Individual Employment Agreement (IEA) — from the s.65(2) mandatory content to the optional clauses that protect both parties.

Step 1 — Confirm It’s an Employment Relationship — s.6

Before drafting an IEA, confirm the worker is an employee under ERA 2000 s.6. The “real nature of the relationship” test considers:

• Degree of control exercised by the employer
• Integration into the employer’s business
• Whether the worker is in business on their own account

The Supreme Court in Uber New Zealand v E Tū Inc (2024) reinforced that the substance of the relationship — not the contract label — determines status. Calling a worker a “contractor” does not make them one.

If the worker is a genuine independent contractor, an IEA is not appropriate — instead, prepare an independent contractor agreement (Contract for Services).

Step 2 — Provide the Draft Before Signing — s.63A

Under ERA 2000 s.63A, before the agreement is signed, the employer must:

1. Provide a copy of the intended agreement in writing
2. Inform the employee of their right to seek independent advice
3. Allow a reasonable opportunity to seek that advice
4. Consider any issues the employee raises and respond before signing

A “reasonable opportunity” is typically 3–5 working days for ordinary roles and longer for senior roles. Skipping s.63A is one of the most common bases for personal grievances, particularly because it invalidates any 90-day trial period clause.

Step 3 — Include All s.65(2) Mandatory Content

Under ERA 2000 s.65(2), every IEA must contain:

(a) Names of the parties

Full legal names of the employer and employee. For a company employer, use the registered name + company number (e.g. “Aroha Holdings Limited (Company No. 1234567)”).

(b) Description of the work

What the employee will do. Reference a job description if attached. Avoid pure title — describe duties at a sufficient level of detail.

(c) Where the work is performed

Address(es) where the employee will work. Where the work involves multiple sites or remote work, indicate the arrangement.

(d) Hours of work

Either:

• Agreed hours under s.67C (number of hours, days, start/finish times), OR
• Indication of arrangements about how times are to be determined

For employees with regular hours, specify them precisely (e.g. “Monday to Friday, 9:00am to 5:30pm, 40 hours per week”). For variable hours, an availability provision under s.67D (with reasonable compensation) may be appropriate.

(e) Wages or salary

The amount and pay frequency. State the gross hourly rate or annual salary, when paid (weekly/fortnightly/monthly), and the pay date.

(f) Plain-language explanation of dispute resolution

Under s.65(2)(f), the agreement must include a clause referring to the dispute-resolution services available, with reference to:

• The 12-month period to raise sexual harassment grievances (s.114(1) re s.103(1)(d))
• The 90-day period for any other personal grievance (s.114(1))

The standard template at https://www.employment.govt.nz/employment-agreement-builder/ includes a compliant clause.

(g) Restructuring (employee protection provision)

Required unless the employee is a “vulnerable employee” under Part 6A. The provision specifies what will happen to the employee if the employer’s business is restructured (e.g. consultation rights, redundancy treatment).

Public holiday clause (Holidays Act 2003 s.50)

Time-and-a-half (or alternative holiday) for working a public holiday — referenced via the Holidays Act, which the IEA can incorporate by reference.

Step 4 — Include Strongly Recommended Optional Clauses

90-day trial period — s.67A

A 90-day trial period clause must:

• Be in writing in the IEA (s.67A(2))
• Be signed before commencement of employment (s.67A(2)(a))
• Apply where the employee has not previously been employed by the employer (s.67A(3))
• Specify a trial period not exceeding 90 days (s.67A(2)(b))

Effect of valid trial period (s.67B): the employee cannot bring a personal grievance for unjustified dismissal during the trial period. They retain other grievance rights (e.g. discrimination, sexual harassment).

The December 2023 amendment removed the 20-employee restriction — all employers can now use 90-day trials.

Probationary period — s.67

Distinct from a trial period, a probationary period allows the employer to assess performance over a defined initial period. Personal grievance rights are preserved during probation. Typical use: senior roles or where a 90-day trial is not desired.

Notice of termination

The contract should specify the notice period for both employee resignation and employer dismissal. Typical:

• 1 month for ordinary roles
• 3 months for senior management
• Statutory minimum: “reasonable notice” (no specific minimum in the ERA 2000 — common law applies)

Restraint of trade / non-compete

Common law applies — the restraint must be reasonable in scope, area, duration. Overbroad restraints are unenforceable. Typical NZ restraint: 3–6 months, within a defined geographic area, limited to direct competition.

Confidentiality and IP assignment

The employee undertakes to keep confidential information in confidence and assigns intellectual property created in the course of employment to the employer. Standard practice for most roles.

KiwiSaver

A reference to KiwiSaver enrolment, opt-out rights, and the employer’s default 3% contribution under the KiwiSaver Act 2006.

Drug and alcohol testing

Where appropriate to the role (e.g. safety-critical), a clause permitting random or post-incident testing under reasonable conditions.

Health and safety

A reference to the employer’s duties under the Health and Safety at Work Act 2015 and the employee’s obligations to follow safe work practices.

Step 5 — Use the Employment NZ Template (Optional but Recommended)

Employment NZ provides a free Employment Agreement Builder at https://www.employment.govt.nz/employment-agreement-builder/. The Builder generates a draft IEA with all s.65(2) content automatically included. Operators can customise the template and add their own clauses.

The Builder is updated whenever the Act is amended — using it reduces the risk of a stale template missing new mandatory content.

Step 6 — Structure the Document

A typical IEA structure:

1. Parties — employer (name, address, company number); employee (name, address)
2. Position and duties — job title, description, location
3. Commencement date and probation/trial period
4. Hours of work and overtime
5. Remuneration and benefits
6. Leave entitlements — annual leave, sick leave, public holidays, parental leave (refer to Holidays Act 2003)
7. KiwiSaver
8. Confidentiality and IP
9. Restraint of trade
10. Health and safety
11. Restructuring — employee protection provision
12. Termination — notice periods, summary dismissal grounds
13. Dispute resolution — s.65(2)(f) compliant clause
14. General clauses — variation, governing law (NZ law), entire agreement
15. Signatures — employee, employer/HR, witness (optional)

Step 7 — Schedule for Specific Items

Attach as schedules:

• Job description
• Pay scale (if commission-based)
• Initial budget / KPI / performance targets
• Reference to handbook or policies

Step 8 — Sign and Retain

Both parties must sign. Best practice:

• Original signed by both parties
• Each party retains a signed copy
• Employer retains in HR file for at least 7 years

Although ERA 2000 does not specify a retention period, Holidays Act 2003 s.81 requires holiday and leave records to be kept for 6 years; combining with general payroll record best practice → 7 years.

Common IEA Errors

Updating an Existing IEA

Where the employer wants to change an existing IEA (e.g. update remuneration, change duties), the change is a variation that requires both parties’ agreement. The s.63A process applies again — provide the proposed variation in writing, allow time for advice, consider responses.

A unilateral change without agreement may amount to constructive dismissal under s.103(1)(a) or unjustifiable disadvantage under s.103(1)(b).

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Disclaimer

Legal information, not legal advice. MmowW Scrib🐮 is operated by a licensed Gyoseishoshi (行政書士) office in Japan. We are not New Zealand lawyers or licensed immigration advisers.

Sources

• Employment NZ Employment Agreement Builder: https://www.employment.govt.nz/employment-agreement-builder/
• Employment NZ employment agreements: https://www.employment.govt.nz/starting-employment/employment-agreements/
• Employment Relations Act 2000: https://www.legislation.govt.nz/act/public/2000/0024/latest/DLM58317.html
• Employment NZ: https://www.employment.govt.nz/