Collective and individual employment agreements

A potential employer must give you either a collective employment agreement or an individual employment agreement.

Collective employment agreement

A collective employment agreement is an agreement between an employer and a registered union that covers employees, who are members of the union, within the employer’s workplace.

If you are a member of a union, you will be employed under a collective employment contract, if there is one. This means that your union negotiates the terms of your employment on your behalf, including things like pay scales, leave and other benefits of employment.

If you're covered by a collective agreement, you can also have additional individual terms. These should be set out in writing and signed by you and the employer.

New employees have collective agreement terms for the first 30 days

For the first 30 days, new employees must be employed under terms consistent with the collective agreement, if there is one. You can agree on additional terms that are more favourable than the terms specified in the collective agreement with your employer.

If an employee does not become a member of the union, after the 30 days ends, they can negotiate and agree on different terms and conditions in an individual employment agreement.

If there’s a relevant collective agreement:

1. Within the first 10 days of the employee starting their new job you must give them a copy of the form that allows them to let you know if they intend to join a union.
2. For the first 30 days, new employees must be employed under terms consistent with the collective agreement. You can agree on additional terms that are more favourable than the terms specified in the collective agreement with the employee.
3. After the 30-day period ends, if the employee has not become a member of the union, you can negotiate and agree on different terms and conditions in an individual employment agreement.

Individual employment agreement

Individual employment agreements are negotiated between an employer and an employee and define the terms and conditions of your employment. Your individual employment agreement applies only to you.

Some things (like 4 weeks’ annual holidays) do not need to be in the employment agreement, but the employer must still provide them by law. If you agree better terms and conditions than the minimum rights, your employer should record these in the employment agreement.

Your employer must also inform you of your entitlements under the Holidays Act 2003, and that you can get further information about your holiday entitlements from a union (if applicable) or by contacting us. You are entitled to minimum employment rights and your employer cannot give you less than what is in the law even if you’ve agreed.

The agreement can include other clauses, like the notice period required for resignation and termination, a trial period provision, or an annual closedown.

The individual employment agreement must include:

• the names of the employer and the employee (to make clear who are the parties to the agreement)
• a description of the work to be performed (to make clear what the employee is expected to do)
• an indication of the place of work
• the agreed hours or an indication of the hours that the employee will work; this includes agreement on any or all of the following:
  • the number of hours
  • the start and finish times
  • or the days of the week the employee will work.
  • the wage rate or salary payable (must be equal or greater than the relevant minimum wage) and how it will be paid (if the employee will not be paid in cash, this should be in the employment agreement or must be agreed in writing somewhere else)
  • a statement that the employee will get (at least) time-and-a-half payment for working on a public holiday
  • for relevant employees, an employment protection provision to apply if the employer’s business is sold or transferred, or if the employee’s work is contracted out
  • any other matters agreed on, such as trial periods, probationary arrangements, or availability provisions
  • the nature of the employment if the employment is fixed term
  • a clear and plain explanation of how to get help to resolve employment relationship problems including:
    • a statement that most personal grievances must be raised within 90 days and,
    • a statement that sexual harassment personal grievances must be raised within 12 months.

    Some things (like 4 weeks’ annual holidays) do not need to be in the employment agreement, but the employer must still provide them by law. It is advisable to have the time of the breaks in the employment contract.

    If an employee and employer agree to better terms and conditions than minimum rights contained in the Act, these should be recorded in the employment agreement.

    For the first 30 days, the individual employment agreement must contain terms consistent with the collective agreement, where there is a collective agreement in place.

    An employment agreement can contain any other terms and conditions that the employee and employer have agreed to, for example, the notice period required for resignation and termination, a trial period provision, an availability provision, whether the employee can be made to work on a public holiday or an annual closedown.

    Employers need to think carefully about the needs of the business before they draft an employment agreement. For example, if there’s a possibility that they may need to cancel an employee’s shift, then the reasonable compensation and period of notice for this needs to be in the employment agreement.

    The employment agreement builder can provide you with information on mandatory and optional clauses.