Hiring someone new is a big step. You want them to understand the job, settle in well and know what you expect. A clear employment agreement helps make that happen. It records what you have agreed and gives you both something to refer to if questions arise. But what must go in the contract? What else is worth including? And how much detail belongs in a workplace policy? Here is a practical guide for New Zealand employers on what needs to be included in an individual employment agreement. Every employee must have a written employment agreement, including part-time and casual employees. If a collective agreement covers the role, check your obligations before offering individual terms. Choose an agreement that matches how the person will actually work. Calling someone ‘casual’ does not make them casual if their working arrangement is regular and ongoing. Use the correct employer name. If a company employs the person, identify that company rather than just its trading name. What legally needs to be included in an employment agreement? The Employment Relations Act 2000 sets out key requirements for individual agreements. Other legislation, including the Holidays Act 2003, adds obligations. Your agreement must cover: Who the parties are: the employer’s and employee’s names. The work: a description of what the employee will do. The workplace: an indication of where they will work. Hours: the agreed hours, or an indication of them, including relevant days, times or number of hours. Pay: the wage rate or salary and payment arrangements. Public holidays: a provision for at least time and a half for working on a public holiday. Resolving problems: a plain explanation of available help, including the usual 90-day personal grievance deadline and the 12-month deadline for sexual harassment grievances. Employee protection: for relevant employees, provisions addressing a sale, transfer or contracting out of work. Other agreed terms: including any applicable fixed-term, trial, probation or availability arrangements. A general statement that ‘employment law applies’ does not replace required clauses. Some arrangements need extra wording: Fixed-term employment A fixed term needs a genuine reason based on reasonable grounds. The agreement must explain how employment will end and why it will end that way. For example, you might employ someone to cover parental leave. Record the actual reason and the event or date that ends the employment. Do not use a fixed term simply to test whether someone suits the job. Trial or probationary periods If you want a trial period, the clause must meet strict legal requirements. It must start at the beginning of employment, last no more than 90 calendar days and contain the required wording. The employee must not have worked for you before. They must agree to the trial and sign the agreement before starting work. Trial periods are not permitted for employees on an Accredited Employer Work Visa. Probation is different and does not provide the same protection against an unjustified dismissal claim. Get advice about which arrangement is suitable. Availability and cancelled shifts If employees must remain available beyond guaranteed hours, a valid availability provision needs guaranteed hours, genuine business reasons and reasonable compensation for availability. If you may cancel shifts, include a reasonable notice period and reasonable compensation for cancellation without that notice. Missing or invalid wording can mean paying for the cancelled shift anyway. A rostering policy alone will not meet these requirements. What else should I include in my employment agreements? The legal minimum is a starting point. A useful agreement also answers the practical questions that commonly cause disagreements. Start date and employment type Record when employment begins and whether it is permanent, fixed-term or casual, and full-time or part-time. Clear pay arrangements Explain the pay cycle, overtime arrangements, allowances and any commission or bonus. If you promise a pay review, clarify whether this means a review only or a guaranteed increase. Avoid wording that promises more than you intent. Be clear about KiwiSaver treatment and check that it is lawful. Working arrangements Explain guaranteed hours, how rosters are set, expectations around extra hours and any agreed flexibility. For hybrid roles, record the agreed arrangement and where the employee is normally based. Avoid relying on a vague promise that they can 'work from home sometimes'. Leave and breaks Employees have minimum rights even if these are not written into the agreement. However, a clear summary helps everyone understand the arrangement. Record any extra leave you promise. Explain relevant public holiday expectations and any annual closedown, while making sure the wording meets legal requirements. You must also inform employees about their Holidays Act entitlements and where to get more information. NOTE NEW LEGISLATION Notice and ending employment Include notice periods and relevant arrangements for returning property and completing a handover. Make any agreed redundancy compensation clear. A notice clause does not, by itself, allow an employer to dismiss someone without meeting applicable legal requirements. Protecting your business Depending on the role, consider confidentiality, ownership of work created during employment, conflicts of interest and company equipment. Get advice before adding restraints of trade, restrictions on second jobs, deductions or training repayment clauses. These need careful wording and must be lawful and reasonable. Keep the contract relevant. A junior employee should not receive a bundle of restrictive clauses copied from a senior management agreement. What belongs in the Employment agreement and what should be in a workplace policy? A helpful approach is to put the agreed employment terms in the agreement and day-to-day processes in policies. For example, the agreement should record an employee’s extra week of annual leave. The leave policy can explain how to submit a request. Put in the agreement or an expressly incorporated schedule Usually put in a policy or procedure Pay, guaranteed allowances and agreed benefits Expense claims and approval steps Agreed hours and individual flexibility Rostering administration Extra leave entitlements Leave request process Main duties and workplace Detailed work instructions Notice and agreed redundancy compensation Handover checklist Confidentiality obligations IT security and password rules Health and safety, bullying complaints, dress standards, vehicle use and social media rules often suit policies. These documents explain expectations across the workplace without making every procedure part of each employee’s contract. Be clear about how documents fit together. A job description can sit in an attached schedule. Clearly identify it and say whether it forms part of the agreement. Make sure the employee receives it before agreeing. For workplace policies, explain which policies apply, where employees can find them and their obligation to follow lawful and reasonable requirements. Decide carefully whether policies are contractual. Incorporating a whole handbook into the agreement can make changing its contents more difficult. Policies must be consistent with the agreement and the law. A policy update cannot simply remove agreed pay, reduce guaranteed hours or take away a contractual benefit. For example, if the contract promises private use of a vehicle, a new vehicle policy should not be used to withdraw that benefit. Consult employees about policy changes as appropriate, explain what has changed and allow time for them to understand it. Give the employee time before signing Send the proposed agreement, job description and relevant documents before the start date. You must tell the employee they can seek independent advice and give them a reasonable opportunity to do so. Consider and respond to issues they raise. Resolve differences between the offer letter and contract before signing. Give the employee a final copy and retain your own records. Getting the paperwork sorted early helps avoid a rushed signature on someone’s first morning. It is especially important when using a trial period. FAQs Does every employee need their own agreement? Yes. Every employee needs a written agreement covering their employment. You can use a template, but tailor the details and check whether a collective agreement applies. Do I need to copy every employment law into the contract? No. Minimum rights apply anyway. Include the clauses the law requires, record agreed terms and explain key entitlements clearly. Avoid copying long sections of legislation that may become outdated. Can I change the contract by updating a policy? Generally, you cannot use a policy to change an agreed contractual term. Discuss the proposed change, obtain agreement where required and record the change in writing. Can I reuse an old employee’s contract? It may provide a starting point, but check every clause. Old agreements can contain outdated wording, different benefits or arrangements that do not suit the new role. Can Employer Direct check an agreement I already use? Yes. Contact Employer Direct for advice on existing agreements or help preparing a new one. A review can help identify unclear terms, missing provisions and clauses that do not match your workplace. Get the foundations right with Employer Direct You do not need to work through employment agreements on your own. Employer Direct’s contract template provides a starting point for preparing your employee agreements. It still needs to be completed and tailored to the role and your business. Whether you are hiring your first employee, updating existing contracts or introducing a different working arrangement, Employer Direct can help you understand what to include and how the documents fit together. Contact Employer Direct for its contract template or advice on your existing or new employment agreements. Employer-Direct.co.nz | 0800 612 355 Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

When sales drop and costs keep rising, wages can become a real worry. You may be wondering whether reducing your team’s hours or pay could help keep the business going. In New Zealand, this can sometimes be an option. However, a downturn does not automatically give you the right to cut agreed hours, wages or salaries. Getting the process right can help you manage costs while protecting trust with your team. When can you reduce hours or pay? When the employee agrees You can propose a temporary or permanent reduction in hours, an hourly rate or a salary. The employee must freely agree, and the change must remain lawful. For example, an employee might agree to work four days instead of five for eight weeks, with a matching reduction in weekly pay. Their hourly rate could stay the same. Reducing a salary is a separate issue. Moving a salaried employee to fewer days does not automatically allow you to reduce their salary. Clearly agree on both the hours and the pay. Be honest with your employees about why you are asking. Explain whether the aim is to cover a short quiet period or deal with a longer-term fall in work. Record any agreement in writing. When the existing agreement allows some flexibility An agreement may allow you to adjust working hours within stated limits. For example, it might guarantee 25 hours each week while allowing extra hours when needed. You may be able to stop offering those additional hours. You cannot assume this lets you go below the guaranteed minimum. A clause allowing roster changes is also different from permission to reduce total hours or pay. Check the exact wording and how the arrangement has worked in practice. Even where a clause allows changes, you must act fairly and reasonably. When employment is genuinely casual Genuine casual employees have no guarantee or expectation of regular, ongoing work. You may therefore have fewer new shifts to offer during a downturn. However, calling someone “casual” does not settle their employment status. If they work a regular, ongoing pattern, they may have become a permanent employee. Already agreed shifts also need separate consideration. Shift cancellation rules can require notice, compensation or payment for the full shift. When can’t you reduce hours or pay? You generally cannot cut agreed hours or pay simply because: there is less work available, cash flow is tight, you have given employees notice of the change, most of the team has agreed, but one employee has not, or you think a temporary cut is better than redundancy. You also cannot reduce pay for work already done at the agreed rate, or pay below the applicable minimum wage for hours worked. Minimum wage rules apply to salaried employees too. If a collective agreement applies, involve the union and follow the proper process. An individual agreement cannot override the collective agreement’s terms. Sending employees home without pay is not a simple solution either. Generally, employees who are ready, willing and able to work remain entitled to their agreed pay where you cannot provide work, unless a lawful provision applies. How should you go about proposing a reduction? Check your agreements and get advice Review guaranteed hours, pay, roster flexibility, shift cancellation terms and any workplace change requirements. Do this before announcing a decision or changing payroll. A short conversation with an Employer Direct can help you understand what options are available. Explain the business problem Prepare a clear written proposal. Set out what has changed, why savings are needed and what you are proposing. Include the proposed hours or pay, who would be affected, the start date and how long the change would last. Share relevant information that supports your reasons, while handling genuinely confidential information appropriately. Avoid vague statements such as “we need everyone to help out”. Employees need enough detail to understand the proposal and its effect on them. Give employees time to respond Meet with affected employees and invite their ideas. Allow reasonable time to consider the proposal, seek advice and respond. They should be able to involve a representative or support person. Listen to alternatives. These might include reducing optional overtime, voluntary job sharing, changes to spending or agreed unpaid leave. Good faith under the Employment Relations Act 2000 means being honest, communicating openly and keeping an open mind. Do not present a final decision as a proposal. Consider the feedback An employee may want to help but be unable to afford a pay cut. Others may suggest a workable arrangement you had not considered. Consider the feedback properly and explain your response. If you substantially change the proposal, further consultation may be needed. Put agreed changes in writing Use a written variation signed by both parties before the change starts. Include: the new hours and pay, whether the change is temporary or permanent, the start and end dates, when you will review it, and how the original terms will be restored. For a temporary change, a review date alone may leave uncertainty. Say clearly whether the original terms return automatically on a set date. Update payroll and check how the change affects leave calculations. Make sure workloads match reduced hours. What if an employee says no? Their existing terms generally continue unless another lawful basis applies. If the business genuinely cannot sustain the current roles, you may need to consider restructuring. That requires a genuine business reason and the appropriate workplace change process, including consultation and consideration of alternatives and redeployment. Redundancy must not be punishment for refusing a pay cut. Notice and any redundancy compensation depend on the employment agreement and applicable law. Get advice before taking this step. Reducing hours or pay may help your business through a downturn, but clear communication and lawful agreements matter. Employer Direct can help you review your options, prepare a proposal and manage discussions with your employees. Practical support early can help you control costs and reduce the risk of a dispute. Contact Employer Direct to day for practical advice and tools to help. Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

When a team member is often away sick, a small business feels it. Shifts need covering, deadlines move and other employees may pick up extra work. You may be wondering how to keep things running and whether you can do anything about the absence. As an employer, there are things you can do to address excessive sick leave. But first you need to understand why it is happening as different employees will need to use their sick leave for different reasons and there are a number of different ways to address it. What does “too much” sick leave mean? There is no number of sick days that automatically counts as too much under New Zealand employment law. Eligible employees generally receive 10 days of paid sick leave each year after meeting the qualifying rules. Unused days can carry over, up to a maximum entitlement of 20 days. An employee may be entitled to use sick leave when they are sick or injured, or to care for a sick or injured partner or dependant. You will need to check your agreement or policy as it may may offer more than the legal minimum. Taking all 10 days is not, by itself, a reason for a warning. Nor does a person who has run out of paid sick leave automatically become well enough to work for the rest of the year. The idea of 'too much' should be looked at as a prompt to look at the facts: How often is the person away? For how long? Can the work be covered? Is there an ongoing health concern? And s the employee following the agreed notification process? A run of short absences may need a different conversation from one long period off work. Avoid assuming a pattern proves dishonesty. You need information, not a hunch. Check your records, documents and the legislation First things first, check the employee’s leave balance, dates of absence, employment agreement and relevant policies. Make sure leave has been recorded and paid correctly. Check whether the employee gave notice as soon as practicable and followed a reasonable workplace process for reporting an absence. Be careful when reading a pattern. The records help you ask fair questions; they do not answer those questions for you. If the employee asks to use sick leave, you can request proof of sickness or injury, usually a medical certificate. For an absence of less than three calendar days, ask as soon as possible and reimburse the employee’s reasonable costs of obtaining proof. If the employee has been sick for three or more consecutive calendar days, you can ask for proof on or after the third day, and the employee generally pays the cost. Calendar days include weekends and other days they would not have worked. A certificate supporting sick leave does not necessarily tell you everything you need for a longer term return to work plan. If you need more information about work capacity, explain why and seek information relevant to the role, with the employee’s involvement. Talk to the employee about what is happening Arrange a time to speak privately. Tell the employee what you have noticed, without accusing them of abusing leave. Explain the effect on work in concrete terms and ask how you can help. For example: “You’ve had several periods away recently. We want to make sure we are supporting you and planning cover fairly. Is there anything affecting your ability to attend work that you would like us to know about?” Listen before suggesting a solution. An employee may be managing an illness, caring for a child, recovering from an injury, dealing with a workplace issue or facing a temporary problem. They may not know yet when things will improve. Useful questions include: Is this likely to be short term, or may it continue? Are there parts of the job that are difficult at present? What duties can you do safely, and are there duties you should avoid? Is anything at work contributing to the problem? What changes might help you work or return to work? When would it be useful to review the arrangement? Ask about the information needed to plan work, rather than demanding a full diagnosis or medical history. Explain who will see any health information and keep it secure. If you need medical advice about capacity or likely return dates, discuss the purpose and scope of a request with the employee first. They may decline to release medical information. You will then need to act fairly on the information available, rather than guessing what it would have said. Document what you discussed and what happens next, giving the employee a chance to correct any errors. Identify potential options and solutions The right option will depend on the employee, the medical information available and what your business can reasonably manage. You might agree on a temporary change to hours, lighter duties, a phased return, different tasks or more predictable shifts. If the employee is off work, agree on a sensible level of contact and a date to review the situation. Check whether a workplace issue needs attention as well. If the employee has used their paid sick leave, discuss what other leave may be available. Options can include annual leave by agreement, leave without pay, or extra paid sick leave if your business offers it. Do not assume you can require annual leave to be taken just because sick leave has run out. Check the applicable rules before making any decision about leave or pay. For an ACC injury, work with the employee and ACC on rehabilitation and a safe return. Specific ACC duties and payment rules can apply, so take advice before changing arrangements or considering an end to employment. Put any agreed support in writing. Set a realistic review date. This gives everyone a clear plan without pretending that recovery can be predicted to the day. What should you avoid doing? Do not punish someone simply for using an entitlement. A warning for legitimate sick leave can turn a manageable absence into an employment dispute. Do not assume a medical certificate is fake or demand a diagnosis. If there is a specific concern, put it to the employee fairly and let them respond. A certificate often confirms that a person cannot work without explaining the condition. Do not pressure an unwell employee to work or come back too soon. Consider safety, the type of work and any medical restrictions. The same care applies if the illness or injury is covered by ACC. Do not share private details with the rest of the team. Colleagues may need to know how work will be covered. They do not need the employee’s health history. Do not jump straight to dismissal. An ongoing illness requires up-to-date information, consideration of alternatives and a fair process. Frustration about rostering is not enough on its own. What if the absences continue? First, identify the issue you actually need to resolve. If the concern is how absences are reported, remind the employee of the reasonable process, check that they understand it and ask about any barriers to following it. Deal with a repeated failure to notify separately and fairly. Do not label an illness as misconduct. If the concern is whether the employee can do the job in the future, you may need medical advice about their capacity, likely time away and possible adjustments. Give the employee the information you are relying on and an opportunity to comment. Review what support or alternative work is practicable, how long the role can reasonably be held open and the effect of the absence on the business. The answer will depend on the particular job and circumstances; there is no automatic dismissal date. If it appears the employee cannot return to their role within a reasonable time, medical retirement may be discussed, but it requires both sides to agree. Dismissal for medical incapacity can be considered only after a fair process and a reasonable assessment of the evidence and alternatives. Tell the employee if their employment may be at risk, allow time for a response and consider that response before deciding. Seek tailored employment advice at this stage, particularly where a disability, ACC claim or work-related health issue is involved. The aim should be to understand the absence, support the employee where reasonably possible and make a workable plan for the business. A calm conversation early on often gives you more useful information than a strict letter sent after months of frustration. When the situation is long term or complex, good records, current medical information and a fair process matter even more. FAQs Can I give an employee a warning for using all their sick leave? Generally, you should not warn someone simply for taking sick leave they are entitled to use. If there is a separate issue, such as repeatedly failing to follow a reasonable absence reporting process without good reason, address that issue on its own facts and follow a fair process. Can I ask for a medical certificate for one day off? Yes, but only if you feel it is necessary. If the employee has been sick for less than three calendar days, you must reimburse their reasonable costs of getting it. For an absence of three or more consecutive calendar days, different cost rules apply. Can I ask what illness the employee has? Ask for information you reasonably need to manage leave, safety and the employee’s ability to work. Often you need to know how long they may be away, what work they can do and whether adjustments would help, rather than their diagnosis. Handle any health information confidentially. What if the employee has no paid sick leave left? Talk about the available options, which may include annual leave by agreement, unpaid leave or any extra leave your business offers. Running out of paid sick leave does not mean the employee must work while unwell or that you can automatically end their employment. Can I dismiss an employee who is often sick? There is no automatic threshold. Where illness or injury means an employee may no longer be able to do their job, a dismissal for medical incapacity may eventually be possible. You need reliable, current information and a fair process, including a genuine look at support and alternatives. Get advice before taking this step. Employer Direct helps small businesses handle difficult employee relations issues with clear, practical advice. If repeated sick leave is putting pressure on your team, we can help you decide what to ask, what support to consider and how to take the next step fairly. If you are considering discussing medical retirement, get in touch to discuss the best approach. Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

Good faith is one of the most important principles in New Zealand employment law. It applies throughout the employment relationship, from recruitment and workplace discussions through to performance management, restructuring and dismissal. In simple terms, good faith means dealing with employees honestly, openly and fairly. It also means communicating clearly, responding to concerns and giving employees a genuine chance to have their say before making decisions that could affect their employment. Good faith is not only about being polite or having good intentions. It is a legal duty. Employers must make sure their actions, decisions and processes meet this duty. Which law requires employers to act in good faith? The duty of good faith is set out in section 4 of the Employment Relations Act 2000. The Act requires the parties to an employment relationship to deal with each other in good faith. This includes employers, employees and unions. The duty is wider than simply requiring people not to mislead or deceive each other. Employers and employees must also be active and constructive in maintaining a productive employment relationship. This means communicating properly and making a genuine effort to resolve workplace issues. Under the Act, an employer who is considering a decision that could negatively affect an employee’s continued employment may also need to: Provide the employee with access to relevant information, Explain what is being proposed and why, Give the employee a reasonable opportunity to comment, and Consider the employee’s response before making a final decision. The exact obligations can depend on the circumstances. However, employers should generally avoid making decisions in advance and then carrying out a process simply to confirm an outcome they have already chosen. What does good faith look like in practice? Good faith affects almost every part of the employment relationship. The following are common examples of what it looks like in the workplace. Communicating honestly Employers should give employees accurate information and be honest about workplace issues. For example, if you are concerned about an employee’s performance, you should explain the specific concerns rather than suggesting that everything is fine and then unexpectedly placing the employee on a formal performance process. You should also avoid giving reasons for a decision that are incomplete, misleading or untrue. Raising concerns promptly If there is a problem with an employee’s conduct or performance, raise it within a reasonable time. Allowing concerns to build up without mentioning them can make it harder to deal with the issue fairly later. Regular feedback gives employees a chance to understand expectations and make improvements before the matter becomes serious. Responding to employee concerns Good faith is a two-way duty, but employers usually have greater resources and more control over workplace processes. If an employee raises bullying, stress, safety concerns, discrimination or another workplace problem, the employer should acknowledge the concern and respond within a reasonable time. Ignoring repeated complaints or allowing them to sit unresolved may breach good-faith obligations and create further risks. Sharing relevant information Employees need enough information to understand and respond to matters that could affect them. During a disciplinary investigation, this will usually mean giving the employee clear details of the allegations, the evidence being relied on, reasonable opportunity to prepare, the chance to provide an explanation or further evidence, and the opportunity to bring a representative or support person. Employers should disclose relevant information even when some of that information does not support the employer’s preferred outcome. Privacy or confidentiality concerns may sometimes limit what can be disclosed, but they do not automatically justify withholding everything. Keeping an open mind A fair consultation or disciplinary process must be genuine. An employer should not make a final decision before hearing from the employee. For example, a restructuring proposal should still be a proposal when it is presented to employees. The employer must listen to feedback, consider alternatives and remain willing to change the proposal if the feedback raises valid issues. Following through on commitments If you tell an employee that you will investigate a complaint, review their pay, provide training or respond by a certain date, you should follow through. If circumstances change and you cannot meet the original timeframe, explain this and provide an updated timeframe. Silence and unexplained delays can quickly damage trust. When is good faith especially important? Good faith applies every day, but it becomes particularly important during: Disciplinary investigations, Performance management, Restructuring and redundancy consultation, Changes to hours, duties or work location, Negotiations about employment agreements, Workplace complaints and investigations, Medical incapacity processes, Requests for flexible working arrangements, and Discussions about ending employment. These situations can have serious consequences for an employee. Employers should slow down, gather the relevant information and make sure the employee has a fair chance to participate. What can happen if an employer breaches good faith? An employee who believes they have been treated unfairly may raise the issue directly, request mediation or apply to the Employment Relations Authority. Depending on what occurred, the employee may also raise a personal grievance. The Authority can order remedies such as: Reimbursement for lost wages, Compensation for humiliation, loss of dignity or injury to feelings, Reinstatement, A financial penalty for breaching employment obligations, Compliance with an employment agreement or legal requirement, and/or Payment of legal or representation costs. A breach of good faith can also contribute to a finding that a dismissal or disadvantage was unjustified. Even where an employer had a genuine concern, an unfair or predetermined process may make the employer’s actions unlawful. A serious breach of good faith may attract a penalty where the conduct was deliberate, serious and sustained, or intended to undermine the employment relationship. What are the wider consequences for your business? The financial cost of an employment claim is only one part of the risk. Poor employment processes can also cause: Loss of trust between managers and employees, Lower staff morale and engagement, Increased absenteeism and staff turnover, Damage to your business’s reputation, Difficulty recruiting and retaining good employees, Disruption to managers and other staff, and Significant time spent preparing for mediation or Authority proceedings. Employees also watch how their colleagues are treated. If one employee is subjected to an unfair process, others may lose confidence in management even if they are not directly involved. How can employers support good faith? Good systems make good-faith behaviour easier. Employers should have clear policies for handling complaints, performance concerns, disciplinary matters and workplace change. Managers should also be trained to raise concerns early, keep accurate records, avoid making promises they cannot keep, separate allegations from proven facts, share relevant information with employees, listen to the employee’s response, and ask for advice before making serious decisions. If there is a risk that the employee could be warned, disadvantaged or dismissed, it is sensible to obtain HR advice before starting the process. Correcting a process after a decision has been made is much harder than getting it right from the beginning. FAQs Does good faith apply to employees as well as employers? Yes. Employees must also be honest, communicative and responsive. They should raise concerns promptly, answer reasonable questions and avoid deliberately misleading their employer. However, employers usually carry greater responsibility because they control most workplace decisions and processes. Is good faith the same as following the employment agreement? No. Following the agreement is important, but good faith is wider. An employer might technically comply with a clause while still behaving in a misleading, predetermined or unfair way. Do I have to give an employee all information before making a decision? You should provide information that is relevant to the decision and allow the employee to comment. Some information may need to be withheld or redacted for valid privacy, confidentiality or legal reasons. Employers should get advice before withholding important information. Can I make a decision if the employee refuses to respond? Usually, yes. You should provide the relevant information, allow a reasonable opportunity to respond and explain what may happen if no response is received. If the employee still chooses not to participate, you may be able to decide the matter using the information available. Does good faith stop an employer from dismissing an employee? No. An employer can still dismiss an employee where there is a lawful and justified reason and the required process has been followed. Good faith is about ensuring the employee is treated honestly and fairly throughout that process. Seek advice if you are unsure if you and your team are applying processes or practices in good faith. Employer Direct can help you assess risks, prepare correspondence and follow fair processes. Early support can prevent a manageable workplace issue from becoming an expensive employment dispute. Get in touch today for a free consultation - Employer-Direct.co.nz | 0800 612 355 Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

A toxic workplace is not always easy to recognise, especially when you are busy running the business. Problems can develop slowly. A manager’s bad behaviour may be dismissed as “just their personality”. Long hours may become normal. Employees may stop speaking up because they do not believe anything will change. By the time an employer realises something is wrong, good employees may already be leaving, productivity may have dropped, and workplace relationships may be badly damaged. A toxic culture is not simply an unpleasant place to work. It can affect employees’ physical and mental health and expose an employer to personal grievances, health and safety complaints, absenteeism and high staff turnover. What is a toxic workplace? Toxic workplace is not a specific legal term. It generally describes a workplace where harmful behaviour, poor management or unhealthy working conditions have become normal. This may include: Bullying, harassment or discrimination, Unmanageable workloads, Favouritism and inconsistent treatment, Poor communication, Blame and fear, A lack of trust, Employees being discouraged from raising concerns, Managers ignoring inappropriate behaviour, or Little support, recognition or respect. Every workplace has occasional disagreements and stressful periods. One difficult week or isolated conflict does not necessarily mean the culture is toxic. The concern is greater when problems are repeated, widespread or accepted as “the way things are around here”. Why do employers need to take workplace culture seriously? Workplace culture is not just an employee engagement issue. It can also be a health and safety and employment relations issue. Under the Health and Safety at Work Act 2015, businesses must manage risks to workers’ health and safety so far as is reasonably practicable. Health includes both physical and mental health. WorkSafe says businesses must identify, assess and manage psychosocial risks that may cause psychological or physical harm. These risks can arise from the way work is designed, managed and organised, as well as from workplace relationships and behaviour. Employers and employees must also deal with each other in good faith. This includes being open, honest, responsive and communicative. Ignoring serious employee concerns may damage the employment relationship and, in some circumstances, contribute to a personal grievance. Signs your workplace culture may be toxic 1. Employees are afraid to speak honestly Do employees stay quiet in meetings but complain privately afterwards? Do they avoid raising problems because they fear being blamed, punished or labelled as difficult? A healthy workplace allows employees to question decisions, identify mistakes and raise concerns respectfully. If people believe speaking up will harm their careers, important information may never reach the employer. Employees may also stop reporting health and safety risks, inappropriate conduct or operational problems. Silence does not necessarily mean everything is fine. It may mean employees have lost confidence that it is safe or worthwhile to speak. 2. Staff turnover is increasing People leave jobs for many reasons, but a pattern of resignations should not be ignored. Warning signs include several employees leaving the same team or manager, new employees resigning soon after starting, good performers leaving without another job to go to, employees giving vague reasons for resigning, or exit interviews repeatedly mentioning workload, management or culture. Employers should look for patterns rather than treating every resignation as an isolated event. 3. Sick leave and absence are unusually high Increasing sick leave, lateness or unexplained absences may indicate that employees are struggling. Work-related stress can contribute to fatigue and physical and mental health problems. WorkSafe identifies factors such as excessive workloads, low control, poorly designed work, bullying and harassment as psychosocial risks that businesses need to manage. Avoid assuming that employees are misusing sick leave. Look at what may be happening in their work environment. 4. Bullying or disrespect is treated as normal Comments such as “you need a thick skin to work here” can be a major warning sign. Workplace bullying generally involves repeated and unreasonable behaviour that can cause physical or mental harm. It may include humiliation, intimidation, repeated personal criticism, exclusion, threats or deliberately making it difficult for someone to do their job. Not every disagreement or reasonable management action is bullying. Managers can give feedback, set expectations and address performance. However, they must do so reasonably and respectfully. Bullying is a serious workplace issue and employers are expected to respond responsibly when concerns are raised. 5. One person is allowed to behave badly because they perform well A strong salesperson, senior manager or long-serving employee should not be given permission to intimidate other people. Employers sometimes tolerate harmful conduct because the person brings in revenue, has specialist knowledge or is considered difficult to replace. This sends a clear message that results matter more than respectful behaviour. Over time, the cost of protecting one high performer may include several resignations, stress-related absences, damaged client relationships and formal employment complaints. 6. Workloads are consistently unreasonable A busy period does not necessarily create a toxic workplace. However, constant understaffing and excessive workloads can cause harm. Signs include: Employees regularly working outside their agreed hours, Staff missing breaks, Deadlines that cannot reasonably be met, Employees doing the work of several vacant roles, Leave requests being discouraged, Messages being sent late at night with an expectation of an immediate reply, or Managers treating exhaustion as proof of commitment. Employers should examine how the work is designed instead of relying only on wellbeing activities. Providing fruit or an employee assistance programme will not fix a workload that is fundamentally unmanageable. 7. Favouritism affects workplace decisions Employees quickly notice when rules apply differently depending on who is involved. Favouritism may appear in decisions about promotions, pay increases, flexible working arrangements, leave, rosters and shifts, training opportunities, performance concerns, and disciplinary action. Different treatment may sometimes be justified, but employers should be able to explain their decisions using fair and consistent criteria. 8. Communication is poor or unreliable Employees may become anxious when changes happen without explanation, decisions are reversed without warning or information is shared with only a favoured group. Managers do not need to share every confidential business detail. However, they should communicate honestly about matters that affect employees and consult where the law or an employment agreement requires it. 9. Conflict is allowed to continue Employers do not need to investigate every minor personality clash. Employees should normally be encouraged to communicate respectfully and try to resolve everyday disagreements. However, repeated or escalating conflict should not be ignored. An employer may need to step in when the behaviour affects health, safety, performance or the wider team. Failing to act can cause both parties to believe that the employer does not care or has taken sides. 10. Managers are stressed, unsupported or poorly trained A toxic culture is not always deliberately created. Sometimes managers have been promoted because they are technically skilled but have never been taught how to lead people. Managers may avoid difficult conversations, give unclear instructions, lose their temper or handle complaints inconsistently. They may also be carrying unreasonable workloads themselves. Managers need clear expectations, practical training and access to support. Their behaviour has a significant effect on the people they supervise. Signs workplace culture may be affecting employee wellbeing Employers should pay attention when they notice: Increased sick leave or stress-related absences Employees appearing exhausted, anxious or withdrawn Frequent conflict or emotional reactions Reduced concentration and more mistakes Employees working excessive hours A drop in participation or enthusiasm Complaints about headaches, poor sleep or fatigue Employees avoiding particular people, shifts or locations More requests for transfers, flexible work or reduced hours Employees saying they feel unsafe, unsupported or unable to cope These signs do not prove that the workplace is the cause. Employers should not attempt to diagnose an employee’s health condition. However, the signs should prompt a supportive conversation and a proper review of workplace risks. What should you do if you think your workplace is toxic? Listen before defending the business. It can be uncomfortable to hear that employees are unhappy or feel unsafe. An employer’s first reaction may be to explain why a decision was made or defend a manager. Start by listening. Ask what has happened, how often it has occurred, who has been affected and what the employee believes needs to change. Thank employees for raising concerns, explain what will happen next and avoid promising complete confidentiality when an investigation may require information to be shared. Gather reliable information. Do not rely only on your own impression of the workplace. Senior leaders often experience the culture differently from junior employees. Useful sources of information may include: Confidential staff surveys Individual check-ins Exit interview themes Sick leave and turnover data Health and safety reports Complaints and grievances Workload and overtime records Feedback from health and safety representatives A workplace culture problem is rarely fixed by telling everyone to be more positive. Look at what is driving the behaviour. Possible causes include: Unclear roles and responsibilities Inadequate staffing Poorly trained managers Unrealistic targets Inconsistent policies Job insecurity A lack of accountability Leaders modelling disrespectful behaviour Complaints not being properly addressed Employees having little control over how they perform their work Consult employees when identifying psychosocial risks and deciding how those risks will be managed. Respond properly to complaints. If an employee raises bullying, harassment, discrimination or another serious concern, take it seriously. Depending on the circumstances, the response may involve informal resolution, facilitated discussion, mediation or a formal investigation. Before taking disciplinary action against an alleged wrongdoer, follow a fair process. This normally includes clearly explaining the concerns, providing the relevant information, giving the employee a reasonable opportunity to respond and genuinely considering that response before deciding what action to take. Do not reach a conclusion before the matter has been investigated. Protect employees from retaliation. Employees should not be disadvantaged because they made a genuine complaint, participated in an investigation or raised a health and safety concern. Watch for more subtle forms of retaliation, such as exclusion, reduced hours, undesirable shifts, hostile performance management or missed development opportunities. Remind everyone involved that retaliation, victimisation and attempts to interfere with the process will not be accepted. Set clear standards of behaviour. Employees need to know what respectful behaviour looks like and what conduct will not be accepted. Relevant policies may cover: Bullying and harassment Discrimination Health and safety Workplace conduct Complaints Flexible work Performance and discipline Policies must be more than documents stored in a folder. Explain them during induction, provide regular reminders and ensure managers apply them consistently. Hold leaders accountable. Culture is shaped by what leaders do and what they allow. Senior employees and high performers must be held to the same behaviour standards as everyone else. If managers contribute to the problem, coaching may help, but serious or repeated misconduct may require a formal employment process. Fix the work, not just the employee. If several employees are stressed, the answer is unlikely to be that they all need to become more resilient. Review staffing, hours, workloads, deadlines, resources, role clarity and decision-making authority. Consider whether employees have the information, equipment and support they need to perform their jobs safely. Employee assistance programmes and wellbeing initiatives can be useful, but they do not replace the employer’s responsibility to manage risks created by the work itself. Create an action plan and report back. Employees may become more cynical if they provide feedback and nothing appears to happen. Prepare an action plan that identifies: The problems to be addressed The changes that will be made Who is responsible When each step will happen How progress will be measured When the plan will be reviewed Tell employees what you learned and what you are changing, while protecting personal and confidential information. When should you get external help? Consider getting independent HR or employment relations support when: A complaint involves a senior manager or owner, There are allegations of bullying, harassment or discrimination, Several employees raise similar concerns, An employee’s health may have been affected, A formal investigation may be required, Disciplinary action is being considered, Trust between the parties has broken down, or Previous attempts to resolve the problem have failed. Independent support can help you select a fair process, manage legal risks and avoid making an already difficult situation worse. A healthy culture requires ongoing attention. Workplace culture is not fixed by a one off team building day or a new values poster. It is built through everyday decisions: how managers speak to employees, whether workloads are reasonable, how complaints are handled and whether leaders are willing to address poor behaviour. If you recognise warning signs in your workplace, act early. Listen to employees, identify the risks, address the causes and follow a fair process where individual conduct is involved. Employer Direct can help you assess workplace concerns, respond to complaints and put practical processes in place. Getting advice early can protect your employees, reduce legal risk and help rebuild a more respectful and productive workplace. If you are concerned that your workplace may be toxic, get in touch with Employer Direct today. Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

A good induction helps a new employee understand their job, the workplace and what is expected of them. It also gives them the knowledge and confidence they need to work safely and perform well. When induction is rushed, delayed or missed altogether, small misunderstandings can quickly become expensive employment problems. The employee may make avoidable mistakes, feel unsupported or believe they are being treated unfairly. In some cases, poor training can contribute to a personal grievance or a health and safety complaint. Starting a new job can be overwhelming. Even an experienced employee will not automatically know your systems, customers, policies or preferred ways of working. An effective induction should introduce the employee to: Their duties and performance expectations, Their manager and other team members, Workplace policies and procedures, Health and safety risks and emergency processes, The equipment, technology and systems they will use, Hours, breaks, leave and reporting requirements, Who to ask when they need help, and How and when their performance will be reviewed Induction is more than showing someone where the bathroom is and giving them a login. It should give the employee a realistic foundation for doing their job. What can go wrong if an employee is not properly inducted? The employee makes preventable mistakes Without clear instructions, employees often fill in the gaps themselves. They may use the wrong process, give incorrect information to a customer or fail to complete an important task. The employer may see this as carelessness. The employee may reasonably believe they were never shown what to do. This creates frustration on both sides. It can also make performance management much more difficult. Productivity suffers A poorly trained employee may take longer to become productive. They may repeatedly ask colleagues for help or spend time correcting mistakes. This can affect the whole team. Experienced employees may become frustrated because they are informally training the new person while also trying to complete their own work. Investing time at the beginning usually saves much more time later. Health and safety risks increase Employers have a duty to provide the information, training, instruction and supervision needed to protect people from workplace risks, so far as is reasonably practicable. The level of training required will depend on the job. Someone operating machinery, handling hazardous substances, working at height or dealing with aggressive customers may need detailed training and close supervision before working independently. WorkSafe says employers should consider the employee’s experience, the complexity of the work and the level of risk when deciding what training and supervision are required. Simply asking an employee to sign an induction form may not be enough. The employer should check that the employee has understood the information and can perform the work safely. The employee loses confidence New employees usually want to make a good impression. If they are left without guidance, they may become anxious about asking questions or making mistakes. They may also feel that the employer does not care whether they succeed. This can damage trust early in the employment relationship and lead to disengagement, absence or resignation. Good employees leave A new employee who feels ignored or unsupported may quickly start looking for another job. This leaves the employer facing another recruitment process and the cost of replacing them. A thoughtful induction helps people feel welcome and shows them that the business is organised and invested in their success. Could poor induction lead to a personal grievance? A missing or inadequate induction does not automatically give an employee a personal grievance. There generally needs to be an unjustified action by the employer that disadvantages the employee, an unjustified dismissal or another recognised grievance ground. However, poor training can become an important part of a grievance. Unjustified disadvantage An employee might claim unjustified disadvantage if the employer’s actions unfairly affect their employment or working conditions. For example, an employee may have an arguable complaint if they are: Given a warning for breaching a process they were never taught, Removed from duties or shifts because they cannot use a system they were not trained to use, Denied a pay increase or promotion because of performance problems caused by missing training, Placed on a performance improvement plan without first being given clear expectations, support and reasonable training, or Blamed for errors caused by unclear or conflicting instructions. Under the Employment Relations Act 2000, an unjustified disadvantage can arise when an employer unjustifiably affects an employee’s employment or conditions to their disadvantage. Whether the action was justified depends on what a fair and reasonable employer could have done in the circumstances. Unjustified dismissal Poor induction can also be relevant if an employee is dismissed for poor performance or misconduct. Before disciplining or dismissing someone for performance concerns, an employer should be able to show that the employee knew what was expected of them, received suitable training and resources, was told where they were falling short, had a reasonable opportunity and support to improve, and was treated through a fair process. It is risky to dismiss an employee for failing to meet a standard that was never properly explained. A valid 90 day trial period may limit an employee’s ability to raise a personal grievance for dismissal. However, a trial period does not remove the employer’s health and safety duties or allow discrimination, harassment or other unlawful treatment. Discrimination Employers should also be consistent about training opportunities. An employee may raise concerns if they receive less training because of their age, sex, disability, ethnicity or another prohibited ground. The Employment Relations Act recognises that discrimination can include failing to offer an employee the same training opportunities provided to comparable employees. Employers may also need to adjust how training is delivered for an employee with a disability, language need or other reasonable requirement. How to avoid induction and training problems Seven tips to help you avoid problems with inducting and training new staff. Prepare before the employee starts Have the employment agreement, workspace, equipment, system access and induction schedule ready. Tell the employee where to go, who will meet them and what their first day will involve. Use an induction checklist A checklist creates consistency and helps prevent important topics from being missed. It also gives the employer a record of what was covered. However, do not treat the checklist as a tick-box exercise. Allow time for explanations, demonstrations and questions. Spread training over a reasonable period Trying to deliver everything on the first day can overload the employee. Cover urgent information first, especially health and safety matters, then schedule further training over the first few weeks. Some tasks should not be performed without direct supervision until the employee has shown that they can complete them safely and correctly. Assign a clear point of contact Give the employee one person they can approach with questions. This may be their manager, supervisor or an experienced colleague. Make it clear that asking questions is expected. New employees should not feel embarrassed about seeking clarification. Check understanding Do not assume that providing information means it was understood. Ask the employee to explain a process back to you, demonstrate a task or complete supervised practice. Training should be presented in a way the employee can reasonably understand. Schedule regular check-ins Meet with the employee after their first day, first week and during their first few months. Discuss what is going well, what remains unclear and whether further training is required. Keep brief records of training, feedback and agreed actions. Address problems early and fairly If performance concerns arise, first ask whether the employee understood the standard and received the necessary training, equipment and support. Where training has been missing, provide it before moving into formal performance management. This is fairer to the employee and puts the employer in a much stronger position if problems continue. When should an employer get help? Consider getting HR or employment relations support if: An employee claims they were not properly trained, You are considering a warning or performance improvement plan, A mistake has created a serious safety or financial risk, The employee alleges bullying, discrimination or unfair treatment, You are considering dismissal during or after a trial or probationary period, or The employment relationship is already breaking down. FAQs Is employee induction legally required? There is no single employment rule requiring every employer to use a particular induction programme. However, employers must provide the information, training, instruction and supervision needed to protect people from health and safety risks. Other training may also be necessary for an employee to perform their role fairly and competently. How soon should induction take place? Essential information should be provided before the employee begins relevant work. This includes emergency procedures, workplace hazards and instructions for high-risk tasks. Other induction topics can be delivered in stages, but they should not be delayed so long that the employee is expected to work without the information they need. Is a signed induction checklist enough? Not necessarily. A checklist is useful evidence, but it does not prove that the training was suitable or understood. Employers should keep records of practical training, supervision, questions, competency checks and follow-up support where appropriate. Can I give a warning if a new employee makes a mistake? Possibly, but first consider why the mistake happened. If the employee was not given clear instructions or proper training, a warning may be premature and potentially unjustified. Provide the missing training and clarify expectations before deciding whether disciplinary action is appropriate. Who should deliver the induction? The person should understand the workplace, the employee’s role and the relevant safety requirements. Different parts may be delivered by a manager, health and safety representative, systems specialist or experienced team member. One person should remain responsible for making sure the whole process is completed. How long should induction last? There is no standard length. A simple office role may require a shorter formal induction followed by regular check-ins. A complex or hazardous role may require several weeks of supervised training. The process should reflect the duties, risks and employee’s experience. Employer Direct can help you create a practical induction process, manage performance concerns and follow a fair process before the situation develops into a personal grievance. Employer Direct also offers resources including an induction checklist and manual if you are looking at creating or updating your induction process. Get in touch today for a free consultation and see how we can help. Employer-Direct.co.nz | 0800 612 355 Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

New Zealand’s leave rules are about to undergo their biggest change in more than 20 years. The Employment Leave Bill has now received its Royal assent and become the Employment Leave Act 2026, replacing the Holidays Act 2003. The new system will not start immediately and most changes will take on 6 August 2028. Until then, employers must continue to follow the Holidays Act 2003. Although employers have two years to prepare, the changes will affect payroll systems, employment agreements, leave policies, rosters and pay statements. It is worth starting early, especially if you have casual employees, variable hours, overtime or commission payments. Why is the Holidays Act being replaced? The Holidays Act has caused problems for employers and employees for years. It can be difficult to determine: What an employee’s “week” looks like, Whether a day is an otherwise working day, How much annual leave an employee has, What rate should be used to pay leave, and How leave should be handled when hours change. The new legislation is intended to create a clearer, hours-based system. Annual and sick leave will generally accrue in hours rather than being provided in weeks or days. A common hourly payment method will also apply across the main forms of leave. The Government says this should give employers greater confidence that their payroll calculations are correct. However, moving to the new system will still require careful planning. What will change under the Employment Leave Act 2026? There are a number of important changes to how leave is recorded, accrued and paid which employers will need to know. Annual leave will accrue in hours The most important change is that employees will progressively accrue annual leave. At present, most employees become entitled to four weeks’ annual holidays after 12 months of continuous employment. Under the new system, employees will accrue annual leave from their first day of work. Annual leave will accrue at a minimum rate of 0.0769 hours for every standard hour. This is roughly equal to four weeks of leave over a full year. For example, an employee who works 40 standard hours a week will generally accrue about 3.08 hours of annual leave each week. This means employers will no longer wait for an employee’s anniversary before adding a full four-week entitlement. The employee’s available balance will build up throughout the year. Employers will need payroll systems that can: Identify an employee’s standard hours, Accrue leave during each pay period, Display balances in hours, Adjust correctly when standard hours change, and Separate standard, additional and casual hours The new law separates working time into three categories. Standard hours are the hours an employee is required to work under their employment agreement. Annual and sick leave will normally accrue on these hours. Additional hours are hours worked on top of the employee’s standard hours which they cannot usually be required to work. Casual hours apply where there is no continuing expectation that work will be offered or accepted. This distinction will be important. Employers cannot simply label hours as casual or additional to avoid leave accrual. The written agreement and the real working arrangement will both matter. Employment agreements should clearly state the employee’s standard hours or include a reliable method for identifying them. Additional and casual hours will receive a 12.5% payment Annual and sick leave will not normally accrue on additional or casual hours. Instead, the employer will pay a 12.5% Leave Compensation Payment, or LCP, for those hours. The LCP will be paid on top of the employee’s ordinary pay for each relevant hour. For example, if an employee’s ordinary hourly rate is $30, the LCP would generally be $3.75 for each additional or casual hour worked. The 12.5% payment is intended to compensate for annual leave, sick leave and other leave-related benefits that do not accrue on those hours. It is higher than the 8% holiday pay that some employees currently receive. This will be a significant payroll and budgeting change for businesses that use casual staff or regular overtime. Employers will need to make sure the LCP is: Calculated using the correct ordinary hourly rate, Paid in addition to wages, Clearly identified in payroll records and pay statements, and Applied only to hours that legally qualify as casual or additional. Sick leave will also accrue in hours The current system generally gives eligible employees 10 days of sick leave after six months. This can result in employees with very different hours receiving the same number of days. Under the new law, sick leave will accrue from the first day of employment at a minimum rate of 0.0385 hours for each standard hour. For a person working 40 standard hours a week, this works out at about 80 hours of sick leave each year. A part-time employee will accrue a proportionate amount. The standard maximum balance will be 160 hours, unless the employer agrees to provide more. This change will remove the six-month waiting period, but a new employee may have only a small sick leave balance at first. Employers will still be able to allow sick leave in advance. Leave will be available from the first day Annual leave and sick leave will begin accruing immediately. Bereavement leave and family violence leave will also become available from the first day of employment. Employers will therefore need to remove policies or agreement terms that say an employee must complete six months of employment before becoming eligible for these types of leave. This does not mean that a new employee will receive a full annual or sick leave allowance on day one. Annual and sick leave will build up as the employee works standard hours. Employees will take leave in hours Under the new system, employees will generally take annual and sick leave against the hours they would otherwise have worked. If an employee was due to work eight standard hours, taking the whole day as annual leave would usually reduce their balance by eight hours. This should make part-days easier to manage. It will also reduce arguments about whether a “day” means four hours, eight hours or something else. The employer will need reliable information about when the employee would otherwise have worked. This may come from the employment agreement, a work roster, or a notional roster agreed between the employer and employee. A notional roster may be needed where the agreement provides standard hours but does not clearly state when those hours are worked. It must be recorded in writing and kept up to date. Annual leave requests will still require agreement Employers and employees will still be expected to make reasonable efforts to agree on when annual leave is taken. An employer must not unreasonably refuse an employee’s request. Employees with enough accrued leave may request dates that give them at least 14 consecutive days away from work. The period can include weekends and other days they would not normally work. If the parties cannot agree, an employer may be able to direct the employee to take annual leave. At least 14 days’ written notice will generally be required. Employers should continue to manage leave balances actively. An hours-based system does not remove the need to encourage employees to take genuine breaks from work. Employees may ask to cash up more leave The new law will allow an employee to request payment for up to 25% of their annual leave balance each year. This is more flexible than the current rule, which generally allows an employee to ask to cash up one week of their four-week entitlement. The request must come from the employee. An employer cannot pressure an employee to cash up leave or make it a condition of employment. Employers will be able to decline requests and may adopt a policy preventing annual leave cash-ups. Businesses should decide whether they will consider these requests and put a consistent policy in place. A single hourly rate will be used to pay leave The Act introduces a common leave payment method for annual leave, sick leave, alternative leave, bereavement leave, family violence leave and unworked public holidays that are otherwise working days. Each relevant hour will be paid using the employee’s applicable leave payment rate. The rules take account of the employee’s pay arrangement and certain variable payments. Fixed allowances that remain payable during leave must also continue to be paid. This will replace several calculations used under the Holidays Act, including ordinary weekly pay, average weekly earnings, relevant daily pay and average daily pay. The method should be simpler once payroll systems are configured, but employers must still supply accurate information about wages, salary, commission, piece rates and allowances. Public holidays and alternative leave The Act introduces a clearer otherwise working day test. Where a day is not clearly a working day under the employee’s agreement or roster, the employer may need to consider whether the employee worked, or was on leave, on the corresponding day in at least 50% of the previous 13 weeks. Alternative leave for working a public holiday will accrue in hours. This is a change from the current approach, where an alternative holiday is usually treated as a whole day. Employers with variable rosters will need to ensure their systems hold enough work-pattern information to apply the new test. Pay statements will become compulsory Employers will be required to provide employees with an itemised pay statement for each pay period. It will need to show prescribed information about pay, hours and leave. Family violence leave information must be protected and cannot be openly identified on the statement. Businesses that do not currently provide payslips will need to introduce them. Those that already provide payslips should check whether their system can display the new leave balances and payments correctly. What happens to existing leave balances? Existing annual holiday, sick leave and alternative holiday balances will not simply disappear. Employers will need to convert applicable balances into hours under the transitional rules. This is likely to be one of the most important parts of implementation. Poor data or an incorrect conversion could create underpayments, overstated balances or employee disputes. Before conversion, employers should check: Current annual holiday and sick leave balances, Employees’ normal and variable working patterns, Outstanding alternative holidays, Any annual holiday pay recorded separately from entitled leave, and Whether previous Holidays Act calculations have been correct. Keep a clear record of how every balance was converted. When do employers need to make the changes? The new Act will come into effect on 6 August 2028. Employers will then have a further year to update affected leave wording in existing employment agreements. However, the new minimum entitlements will apply from the commencement date even if an old agreement has not yet been updated. Until commencement, employers must continue applying the Holidays Act 2003. Do not start using the new accrual rates or LCP early unless an existing lawful agreement independently provides those benefits. What should employers do now? Employers do not need to change employees’ balances immediately, but they should begin preparing. Start by speaking with your payroll provider. Ask when its updated system will be available and how it will handle conversion, LCP payments, notional rosters and pay statements. You should also: Audit your leave and payroll data. Identify employees with unclear or variable hours. Review casual and overtime arrangements. Check that employment agreements accurately describe working hours. Budget for the 12.5% LCP on additional and casual hours. Plan updates to leave policies and employment agreements. Explain the changes to managers and employees before implementation. Keep following the Holidays Act until the new law begins. The two-year transition period may sound generous, but payroll changes often take longer than expected. Early preparation will make the final conversion much safer. FAQs Is the Employment Leave Act 2026 already in force? The Act has now received royal assent and will come into effect on 6 August 2028. Employers must follow the Holidays Act 2003 until then. Will employees still receive four weeks of annual leave? The minimum value remains broadly equivalent to four weeks, but leave will accrue in hours at 0.0769 hours for each standard hour rather than becoming due as four weeks after 12 months. Will all employees get 10 sick days? No. Sick leave will accrue in hours based on standard hours worked. A full-time employee working 40 hours a week will accrue about 80 hours a year. Part-time employees will accrue proportionately less. Can employees use sick leave immediately? Sick leave starts accruing from the first day. Employees can use the hours they have accrued. An employer may also agree to sick leave in advance. What happens to casual employees? Genuine casual hours will generally attract a 12.5% LCP instead of annual and sick leave accrual. Employers must still make sure that the arrangement is genuinely casual in practice. Do employment agreements need to be changed now? Not immediately. However, employers should review them now and plan updates. Affected leave terms in existing agreements must generally be updated within one year after the new Act commences. Do employers have to provide payslips? Under the new system, itemised pay statements will be compulsory. Payroll processes will need to be ready by the commencement date. Where can employers get help? Employers should also work with their payroll provider and seek HR or employment-relations advice where hours, balances or agreements are complex. If you have concerns about how leave is currently being recorded and managed in your organisation, or need help planning for the changes to the employment leave legislation, get in touch with Employer Direct today. Employer-Direct.co.nz | 0800 612 355 Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

Many employers believe they must give an employee three warnings before dismissal. Others assume that calling conduct ‘serious misconduct’ allows them to dismiss the employee immediately. And neither view is quite right. New Zealand employment law does not set a fixed number of warnings that must be given before an employee can be dismissed. Depending on the circumstances, an employer may give an informal caution, a first warning, a final warning, or no warning before dismissal. However, every disciplinary decision must be supported by a good reason and reached through a fair process. Do I have to give three warnings before I dimiss an employee? There is no general law requiring an employer to give three warnings before dismissing an employee. The ‘three warnings’ idea may come from old workplace practices or an employer’s own disciplinary policy. If your employment documents promise staged warnings, you will usually need to follow that process. If there is no agreed warning system, the number and type of warnings will depend on the facts. Employment New Zealand confirms that there is no set number of warnings required before dismissal. The employer’s response must instead be fair, reasonable and proportionate. What is the difference between misconduct and serious misconduct? Misconduct is unacceptable behaviour that may justify disciplinary action but will not usually justify dismissal for a first incident. Examples might include repeated lateness, inappropriate language, misuse of the internet, or a minor failure to follow a reasonable instruction. Serious misconduct is behaviour serious enough to undermine or destroy the employer’s trust and confidence in the employee and affect their ability to do the job. Possible examples include theft, fraud, violence, serious harassment, major dishonesty, deliberate serious safety breaches or attending work under the influence of illegal drugs. When should an employee be given a warning? A warning will often be appropriate where misconduct is proven but dismissal would be too severe. For a first incident of ordinary misconduct, an employer might give: an informal caution for a minor, one-off issue; a formal written warning where the matter requires a clear disciplinary response; or a final written warning where the misconduct is serious, but not serious enough to justify dismissal. A final warning may sometimes be appropriate without an earlier warning where the behaviour is serious but dismissal would be too harsh. Consider the harm, intention, service record, remorse, disciplinary history and how similar cases have been handled. When can an employee be dismissed after a warning? An employee may be dismissed if they commit further misconduct while a relevant final warning is active. In some cases, repeated similar misconduct following an ordinary warning may justify a final warning or dismissal. Take care before relying on an earlier warning. Check that it: was issued through a fair process, clearly identified the concern and required change, warned the employee about the possible consequences of repetition, is still current, and relates to the new conduct closely enough to be relevant. A warning for lateness will not normally support dismissal for an unrelated minor dress code breach. An expired warning may also carry little or no weight. Warnings should state how long they remain active. Six or twelve months is common, depending on the circumstances, but there is no automatic period that suits every case. Do not treat a final warning as an automatic right to dismiss. Investigate the new allegation, consider the employee’s response and decide whether dismissal is reasonable. When can an employee be dismissed without a prior warning? An employer may be able to dismiss an employee without any earlier warning where serious misconduct is proven and dismissal is a fair and reasonable response. This is sometimes called summary or instant dismissal. It usually means dismissal without notice. The word ‘instant’ can be misleading because it does not mean you can dismiss the employee on the spot. You must still investigate, disclose the concerns and relevant information, meet with the employee, hear their explanation, and genuinely consider alternatives before reaching a final decision. What is the correct process for giving a warning? A warning is disciplinary action. It should only be imposed after a fair process, not handed out during an angry conversation. Check the agreement and policies Read the employee’s employment agreement and the relevant disciplinary, conduct, safety or workplace policies. Follow any agreed process. Confirm whether the alleged behaviour may amount to misconduct or serious misconduct, but keep an open mind. Investigate the concern Gather the relevant facts, which may include documents, system records or witness accounts. The investigation should be balanced and as confidential as possible. Put the allegations to the employee in writing Clearly explain the alleged conduct, when it happened and why it may breach a rule or standard. Provide the relevant evidence. State the possible outcomes, give reasonable notice of the meeting and confirm the right to bring a representative or support person. Hold the disciplinary meeting Give the employee a genuine opportunity to respond and ask fair, open questions. If they raise significant new information, investigate it and let them comment on any new evidence. Decide whether the allegation is proven Consider all the information, the employee’s explanation and any mitigating circumstances. The decision-maker should be impartial. Propose an outcome If misconduct is established, decide what outcome you are proposing. The response must be proportionate. Possible outcomes include no action, an informal caution, a written warning, a final warning or dismissal. Tell the employee the preliminary decision and reasons, then give them a reasonable chance to comment before making it final. Confirm the final warning in writing After considering the employee’s feedback with an open mind, communicate the final decision and provide it in writing. The warning letter should: state that it is a formal warning or final warning; identify the misconduct that has been established; explain why the conduct was unacceptable; state the behaviour or standard expected in future; explain what may happen if the behaviour is repeated; state how long the warning will remain active; and record any support, training or follow-up arrangements. FAQs Do I legally have to give three warnings before dismissal? New Zealand law does not have a general three-warning rule. Your employment agreement or policy may require certain stages, but otherwise the appropriate number of warnings depends on the facts and the seriousness of the conduct. Can I dismiss an employee after one warning? Possibly. Dismissal may be justified if the employee commits further relevant misconduct while on a valid final warning, or if the new conduct is serious misconduct. You must still complete a fair process for the new allegation. Can I give a final warning without giving a first warning? Yes, in some circumstances. A final warning may be proportionate where the misconduct is serious but does not justify dismissal. Follow a fair process and explain why a final warning is the reasonable outcome. Can I dismiss an employee immediately for serious misconduct? You may be able to dismiss without notice after serious misconduct is proven. You cannot safely dismiss on the spot without a fair investigation and disciplinary process. “Summary dismissal” removes the notice period; it does not remove the employee’s right to fair treatment. How long should a warning stay active? There is no fixed legal period. The warning should state a reasonable expiry period based on the conduct and your policies. Six or twelve months is common. Be cautious about relying on warnings that are old, expired or unrelated. Can I use an old warning for a different type of misconduct? Usually not. A prior warning should be relevant to the new concern. If you intend to rely on any earlier warning, tell the employee and give them a chance to respond to its relevance and validity. Under section 103A of the Employment Relations Act 2000, a dismissal or disciplinary action is assessed by asking what a fair and reasonable employer could have done in all the circumstances. The employer must have sufficiently investigated, raised its concerns, given the employee a reasonable opportunity to respond, and genuinely considered that response. Following a sound process helps you make a better decision and creates a clear record if the outcome is challenged. Get in touch with Employer Direct today. They can help plan an investigation, prepare correspondence, attend meetings and assess a fair outcome. Early advice is easier and less costly than repairing a flawed process. Employer-Direct.co.nz | 0800 612 355 Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

Casual employees can give your business valuable flexibility. They may help cover unexpected absences, busy periods or work that cannot be planned in advance. However, calling someone ‘casual’ does not automatically make them casual. What matters is how the employment relationship works in practice. If a casual employee begins working regular shifts or is expected to remain available for work, they may have become a permanent part-time employee. This can create problems with holiday pay, leave entitlements, guaranteed hours and the way their employment can be ended. What is a casual employee? New Zealand employment legislation does not provide one complete definition of casual employment. Generally, a genuine casual employee: has no guaranteed hours, does not have a regular pattern of work, has no ongoing expectation of being offered work, is offered work as and when it becomes available, and can accept or decline each offer of work. The arrangement should provide flexibility to both parties. You do not have to offer the employee work, and the employee does not have to accept it. For example, a restaurant might contact a casual employee when a large function is booked or another employee calls in sick. The casual employee can decide whether they want to work that shift. A person who works every Friday and Saturday, week after week, is less likely to be genuinely casual. Their employment may be permanent part-time, even if their agreement and payslips describe them as casual. When should you use a casual employment agreement? Casual employment may be appropriate when your need for additional workers is genuinely unpredictable or intermittent. Examples may include: covering an employee who is unexpectedly absent, helping with occasional events, responding to sudden increases in customer demand, completing work that arises irregularly, providing additional cover during uncertain busy periods, or maintaining a pool of workers who are free to accept or decline individual shifts. Casual employment should not be used simply because the employer does not want to guarantee hours or provide normal employment entitlements. If you know you need someone for 15 hours every week, a permanent part-time agreement will usually be more appropriate. If you need someone for a defined temporary reason, such as covering parental leave, a fixed-term agreement may be appropriate instead. A fixed term must have a genuine reason based on reasonable grounds, which must be recorded in the agreement. Choosing the wrong agreement can expose the business to claims for unpaid entitlements or an unjustified disadvantage or dismissal. Do casual employees need an employment agreement? Every employee must have a written employment agreement, including casual employees. A casual employment agreement should clearly explain: that there are no guaranteed hours of work, how the employer will offer work, that each offer is a separate opportunity to work, that the employee is free to accept or decline an offer, how and when the employee will be paid, the employee’s duties, the place or possible places of work, how holiday pay will be handled, what happens once a shift has been accepted, and the usual clauses required in an individual employment agreement. The agreement should match the real arrangement. A well-written casual clause will not protect an employer if the employee actually works a predictable, ongoing roster. The parties must also deal with each other in good faith. This includes being honest and communicative about how work will be offered and any changes to the relationship. Should I manage casual employees differently from other employees? Casual employees have many of the same minimum rights as permanent employees, including minimum wage rights, rest and meal breaks, protection from discrimination and a safe workplace. The main difference concerns the offer and acceptance of work. Offering shifts You should make it clear that you are offering a shift, rather than directing the employee to work it. The offer should identify the date, hours and place of work. Keep a record of the offer and the employee’s response. A roster, scheduling system, email or text message may provide this record.Once the employee accepts the shift, an employment commitment has been made. The employee is expected to attend, and the employer is expected to provide and pay for the agreed work. Declining work A genuine casual employee should normally be able to decline an offered shift. You should not punish them simply for exercising that choice. If you require an employee to remain available for work, the arrangement may not be genuinely casual. It may also raise issues under the availability provisions in the Employment Relations Act 2000. An availability clause must meet legal requirements, including having agreed guaranteed hours and providing reasonable compensation for the employee’s availability. A clause that simply requires a casual employee to be available whenever the business calls is unlikely to provide the flexibility that genuine casual employment requires. Ending an accepted shift Do not assume that you can cancel an accepted shift without consequences. Check the employment agreement, any shift-cancellation clause and the circumstances of the cancellation. If the employee has accepted the work, cancelling it at short notice may require payment. It could also breach the agreement or the employer’s duty of good faith. When does a casual employment contract stop being casual? There is no single number of shifts or length of service that automatically changes a casual employee’s status. Instead, you need to look at the overall relationship. Warning signs include: the employee works the same days or hours each week; the employee is placed on a regular roster; there is an ongoing expectation that work will be offered; the employer expects the employee to accept shifts; the employee must obtain permission to be unavailable; the business relies on the employee as part of its normal staffing; the hours are reasonably predictable; or the arrangement continues without meaningful breaks. A gradual change can be enough. An employee might begin by covering occasional absences but, several months later, be working every Monday, Wednesday and Friday. At that point, the reality may be permanent part-time employment. Continuing to call the person casual will not prevent the Employment Relations Authority or Employment Court from looking at how the relationship actually operates. What should you do when the work becomes regular? Review casual arrangements regularly. For active casual employees, a review every three to six months is sensible. If the employee’s work has become regular and ongoing: Discuss the change with the employee. Confirm their normal days and hours. Offer a permanent part-time or full-time agreement, as appropriate. Record the agreed change in writing. Review their annual holiday and other leave entitlements. Stop pay-as-you-go holiday payments if they no longer qualify. Check whether any previous payments or leave balances need to be corrected. Take payroll advice if you are unsure how to move from pay-as-you-go holiday pay to annual holiday entitlements. Errors can become expensive if they continue for several years. Can you simply stop offering a casual employee work? Where employment is genuinely casual, there may be no obligation to offer another engagement after an agreed shift or period of work ends. However, simply removing someone from the roster can be risky if: their work has become regular and ongoing, they had already accepted future shifts, they reasonably expected the employment to continue, the decision is connected to a complaint, leave request or protected characteristic, the employer is responding to alleged misconduct or poor performance, or the agreement requires notice. If the employee has effectively become permanent, stopping their shifts may amount to a dismissal. The employer would then need a substantively justified reason and a fair process. Even with a genuine casual employee, do not stop offering work for an unlawful or discriminatory reason. Seek advice before using non-allocation of work to deal with performance, attendance or conduct concerns. Common mistakes employers make with casual employees The most common casual employment mistakes include: using a casual agreement for regular weekly work, believing casual employees have no leave rights, adding 8% holiday pay without separately identifying it, requiring employees to accept every offered shift, cancelling accepted shifts without checking the agreement, treating “casual” as meaning the employee can be dismissed at any time, failing to monitor whether the work pattern has changed, and relying on the contract label instead of the real working arrangement. These risks can usually be reduced through appropriate agreements, accurate payroll systems and regular reviews. FAQs Is a casual employee the same as a part-time employee? No. A part-time employee normally has ongoing employment and agreed or predictable hours. A genuine casual employee has no guaranteed work and can accept or decline individual offers. Can a casual employee refuse a shift? Usually, yes. The ability to refuse offered work is an important feature of genuine casual employment. Once a shift is accepted, the employee is expected to work it unless they are sick or another valid reason applies. Can we require a casual employee to be available? Be careful. Requiring availability may be inconsistent with casual employment and may trigger the availability-provision requirements in the Employment Relations Act. Get advice before including this type of clause. How many hours can a casual employee work before becoming permanent? There is no fixed limit. The issue is whether the pattern has become regular and whether there is an ongoing expectation of work. Can we stop giving a casual employee shifts because of poor performance? This can be risky. If the employment has become regular, removing the employee from the roster could be a dismissal. Even in a genuinely casual relationship, employers must not act for discriminatory, retaliatory or otherwise unlawful reasons. How often should casual arrangements be reviewed? Review them every three to six months, and sooner if the employee begins working regular hours. Compare the agreement with actual rosters, payroll records and the expectations of both parties. Casual employment can work well when it is genuinely flexible and properly documented. Problems usually arise when the written agreement no longer matches what happens in practice. Employer Direct can help you choose the right type of employment agreement, review casual working arrangements and correct potential problems before they become employment disputes. If you would like help reviewing your casual employment contracts or addressing a dispute with a casual employee, get in touch today. Employer-Direct.co.nz | 0800 612 355 Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.

Employment problems can take up a great deal of time and energy. They can also damage working relationships, affect the wider team and expose a business to significant costs. Mediation gives employers and employees a confidential way to resolve employment problems with the help of an independent mediator. It can be used while an employee is still working for the business or after their employment has ended. For many employers, mediation is a practical alternative to defending a claim in the Employment Relations Authority. However, good preparation and the right representation can make a major difference to the outcome. What is employment mediation? Mediation is a structured discussion between the people involved in an employment problem. An independent mediator helps them identify the issues, understand each other’s positions and explore possible solutions. The mediator does not represent the employer or employee. Their role is to manage the process and help the parties see whether an agreement can be reached. Employment Mediation Services is provided by the Ministry of Business, Innovation and Employment, commonly known as MBIE. The service is free and is available to employers, employees, unions and others involved in employment relationships. Mediation is normally voluntary. Both parties must be willing to take part. However, the Employment Relations Authority can direct parties to attend mediation in some cases. Attending mediation does not mean that you accept you have done anything wrong. It shows that you are prepared to take the issue seriously and look for a practical solution. When might mediation be necessary? Not every workplace disagreement requires formal mediation. Minor problems can often be resolved through an early conversation, an internal complaints process or a facilitated meeting. Mediation may be appropriate when the parties have tried to resolve the problem but remain unable to agree. It may also be helpful where communication has broken down or the legal and financial risks are increasing. Common issues taken to mediation include: personal grievances; alleged unjustified dismissal; claims of unjustified disadvantage; bullying or harassment complaints; disputes about disciplinary or performance processes; unpaid wages or holiday pay; redundancy disputes; allegations of discrimination; disputes about medical incapacity; breakdowns in working relationships; disagreements about changes to duties, hours or location; and negotiations about an employee leaving the business. An employee does not need to file a claim in the Employment Relations Authority before requesting mediation. Mediation can be used at an early stage, after a personal grievance has been raised or after proceedings have begun. Why should an employer consider mediation? Even where an employer believes it has a strong case, there may be good reasons to mediate. It can save time and money Employment disputes can become expensive. Managers may spend hours gathering documents, preparing statements and responding to allegations. If the matter reaches the Authority or Employment Court, the business may also face representation costs and significant disruption. Mediation may allow the problem to be resolved in one day, although preparation and follow-up work will still be required. The parties control the outcome At mediation, the parties decide whether to settle and what the settlement will contain. If the case goes to the Authority, the outcome is placed in the hands of an Authority member. Mediation can also produce solutions that the Authority may not order. These might include: an agreed reference; an apology; changes to reporting lines; a return-to-work plan; agreed communication; training or coaching; correction of employment records; withdrawal of warnings; an agreed end to employment; or a financial payment. It is confidential What is said during mediation is generally confidential and cannot normally be used later in the Employment Relations Authority or Employment Court. Confidentiality gives both sides room to discuss risk, make offers and consider compromises without admitting liability. The parties must still comply with any confidentiality terms agreed as part of a settlement. It can preserve the employment relationship Mediation does not always result in an employee leaving. In some cases, the best outcome is to repair the working relationship and create a clear plan for moving forward. A mediator may help the parties discuss matters that have become too difficult to address without assistance. It provides certainty A negotiated settlement removes much of the uncertainty of litigation. It can allow the business to manage costs, protect key relationships and move forward. What happens before mediation? Either party can apply to Employment Mediation Services. The service will contact the other party, gather basic information and arrange a suitable date. Before mediation, an employer should identify: what the dispute is about; what the employee is claiming; what happened and when; what documents support the employer’s position; whether the employer followed its own policies; what legal or procedural risks exist; what outcome the business wants; and what outcomes may be acceptable. Relevant documents might include the employment agreement, workplace policies, correspondence, meeting notes, investigation material, wage records, medical information and restructuring documents. Only relevant information should be provided. Employers must continue to meet their privacy obligations and should take care when documents contain confidential information about other employees. It is useful to prepare a short written summary setting out the key facts, the employer’s response to the claim and the preferred outcome. A representative can help ensure this summary is clear, accurate and focused on the issues that matter. The person attending for the employer must have authority to make decisions and enter into a settlement. If further approval from an owner, board or insurer is needed, this should be arranged before mediation. What happens on the day? Mediations may take place in person, by phone or through a video meeting. The mediator will normally begin by explaining: their independent role; how the meeting will run; the confidential nature of mediation; expectations about respectful behaviour; and how any agreement can be recorded. Each party is then given an opportunity to explain its view of the problem. This is not the same as giving evidence at a hearing. The process is usually less formal, but it is still important to give an accurate and organised account. The parties may begin in the same room. The mediator may then meet with each side privately. These private discussions allow the mediator to test each party’s position, identify risks and explore settlement options. The mediator may move between the parties with questions, proposals or offers. This is sometimes called shuttle mediation. Anything said privately to the mediator will not normally be shared with the other side unless permission is given. Does the mediator decide who is right? The mediator does not normally decide the case. Their main role is to help the parties reach their own agreement. A mediator may ask difficult questions or point out possible weaknesses. This does not mean they have taken the other party’s side. It is part of helping each party make an informed decision. In some circumstances, the parties may jointly ask the mediator to make a recommendation. They can agree in advance whether the recommendation will become binding if it is not rejected within an agreed period. The parties may also agree to ask the mediator to make a binding decision. This should not be done without understanding the consequences and getting advice. What happens if an agreement is reached? If the parties agree, the terms will usually be written into a record of settlement. A mediator can sign the settlement under section 149 of the Employment Relations Act 2000. Once signed, the settlement is final, binding and enforceable. It cannot be cancelled simply because one party later regrets the agreement. The mediator will check that the parties understand the effect of the agreement and that it does not unlawfully remove minimum employment entitlements. A settlement may cover: payments and payment dates; the end of employment; notice and holiday pay; return of company property; an employment reference; an agreed statement about why employment ended; confidentiality; non-disparagement; withdrawal of claims; tax treatment; future communication; and what happens if a party breaches the agreement. Payment terms should be carefully drafted. Different payments may have different tax consequences. Employers should not assume that describing a payment in a certain way automatically makes it tax-free. What if mediation does not resolve the problem? If no agreement is reached, the employment relationship continues unless it has already ended. Either party may take further steps, which could include applying to the Employment Relations Authority. The discussions, offers and concessions made during mediation generally remain confidential. They cannot usually be disclosed in later proceedings. Even if full settlement is not reached, mediation may narrow the issues or help the parties understand what information is still needed. Why might an employer want representation? Employers are not required to have a representative at mediation. However, representation can be valuable, especially where the dispute involves dismissal, substantial financial claims, complex facts or serious allegations. An experienced employment representative can: assess the strengths and weaknesses of the case; identify procedural or legal risks; help gather the right documents; prepare the employer’s written summary; explain likely Authority outcomes; develop a negotiation strategy; speak for the employer when appropriate; help evaluate settlement offers; keep discussions calm and focused; and draft settlement terms that protect the business. Mediation can be emotionally demanding. A manager who was personally involved in the events may find it difficult to hear criticism, answer unexpected allegations and make commercial decisions at the same time. A representative can provide some distance and help the employer distinguish between what feels fair and what represents a sensible business outcome. Representation does not mean taking an aggressive approach. Effective mediation usually requires a combination of preparation, careful listening and realistic negotiation. FAQs Is employment mediation compulsory? Mediation is normally voluntary. However, the Employment Relations Authority can direct parties to attend. Refusing a reasonable request for mediation may also make a dispute harder and more expensive to resolve. Is MBIE mediation free? Yes. Employment Mediation Services is a free government service. However, each party is responsible for the cost of its own advocate, lawyer or other representative. Can an employer bring a support person? Yes. An employer may attend with an advocate, lawyer, HR adviser, employer organisation representative or another suitable support person. The mediator should be told in advance who will attend. Does attending mediation mean we admit fault? No. Attending mediation is not an admission that the business acted unlawfully. It is an attempt to resolve the problem. Are mediation discussions confidential? Yes, mediation communications are generally confidential. There are limited legal exceptions, and the final settlement may include its own confidentiality obligations. Can the employee remain employed after mediation? Yes. Possible outcomes include returning to work, changing duties, agreeing on expectations, repairing relationships or restarting a workplace process fairly. Can mediation end employment? Yes. The parties may agree that employment will end on negotiated terms. The wording, payments, reference and public explanation should all be recorded clearly. Can we refuse an employee’s settlement demand? Yes. No party is normally required to accept an offer. Employers should assess the demand against the legal risk, likely costs, disruption and value of certainty. What if we settle before the mediation date? The parties can prepare a written agreement and submit it to Employment Mediation Services for certification. Once properly signed by an authorised mediator, it becomes final and enforceable. How long does mediation take? Many mediations are scheduled for half a day or a full day. Complex cases may take longer or require follow-up discussions. Should a small business have representation? Representation can be particularly helpful for small businesses that do not have an internal HR team. A representative can help the employer understand the law, prepare properly and avoid agreeing to unclear or risky terms. Mediation can be one of the fastest and most practical ways to resolve an employment dispute. However, it works best when the employer understands the risks, prepares carefully and has a clear settlement strategy. Employer Direct supports employers before and during mediation. We can assess the problem, prepare your response, represent your business and help negotiate an outcome that is practical, lawful and commercially sensible. Getting advice early can stop a manageable employment problem from becoming a lengthy and expensive dispute. If you have a dispute and need some advice or support, get in touch with Employer Direct today. Employer-Direct.co.nz | 0800 612 355 Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.