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employment

Individual vs. Collective Employment Agreements

Key Takeaway

New Zealand employment law establishes two main types of agreements: Individual Employment Agreements (IEAs) and Collective Employment Agreements (CEAs). Both outline terms and conditions, but CEAs are negotiated by unions on behalf of multiple employees, while IEAs are between an employer and an individual. All agreements must adhere to minimum statutory entitlements and the principle of good faith.

Understanding Employment Agreements in New Zealand

New Zealand employment law primarily distinguishes between two types of employment agreements: Individual Employment Agreements (IEAs) and Collective Employment Agreements (CEAs). Both serve as the foundation for the employment relationship, outlining the terms and conditions of employment, and are governed by the Employment Relations Act 2000 (the Act) and other related legislation.

Individual Employment Agreements (IEAs)

An Individual Employment Agreement (IEA) is a direct contract between an employer and an individual employee. It sets out the specific terms and conditions of that employee's employment.

Employers are legally required to provide a prospective employee with a written employment agreement that clearly outlines the terms and conditions of employment [Source: Employment Relations Act 2000, s 63(1)(b)]. This written agreement must be entered into within 30 days of the employee starting work [Source: Employment Relations Act 2000, s 63(1)].

Key aspects of an IEA typically include:

  • Parties to the agreement: The employer and the employee.
  • Job description: A clear outline of the employee's duties and responsibilities.
  • Hours of work: Expected working hours, including any provisions for overtime.
  • Remuneration: The rate of pay, how it will be calculated, and when it will be paid [Source: Employment Relations Act 2000, s 65(1)(a)].
  • Location of work: Where the employee will primarily perform their duties.
  • Leave entitlements: Information on annual leave, sick leave, public holidays, and other types of leave, which must comply with the Holidays Act 2003 [Source: Employment Relations Act 2000, s 65(1)(b)].
  • Termination provisions: Procedures for ending the employment relationship, including notice periods [Source: Employment Relations Act 2000, s 65(1)(d)].
  • Resolution of employment relationship problems: A plain language explanation of the services available for resolving disputes [Source: Employment Relations Act 2000, s 65(2)].

Before an employee signs an IEA, they must be given a reasonable opportunity to seek independent advice on the agreement's terms and conditions [Source: Employment Relations Act 2000, s 63A(1)].

Collective Employment Agreements (CEAs)

A Collective Employment Agreement (CEA) is a written contract between one or more employers (or employers' organisations) and one or more unions, covering the terms and conditions of employment for a group of employees who are members of the union(s) [Source: Employment Relations Act 2000, s 54].

CEAs are the result of collective bargaining, where a union negotiates with an employer on behalf of its members. The process of bargaining for a CEA, as well as the employment relationship itself, is underpinned by the principle of good faith [Source: Employment Relations Act 2000, s 4], which requires parties to be active and constructive in their dealings and to genuinely attempt to reach an agreement.

Key features of CEAs include:

  • Union representation: Employees covered by a CEA are typically members of the union that negotiated the agreement.
  • Coverage: The CEA specifies the group of employees to whom it applies [Source: Employment Relations Act 2000, s 54(1)].
  • Opting in: An employee who is a union member will automatically be bound by the CEA if it covers their work [Source: Employment Relations Act 2000, s 58].
  • Non-union employees: A non-union employee performing work covered by a CEA may, with the employer's agreement, sign an IEA that incorporates some or all of the CEA's terms [Source: Employment Relations Act 2000, s 60(1)(a)]. If a non-union employee does not sign an IEA, they are employed on the terms of the CEA for the first 30 days of their employment, after which they are employed on an IEA with terms that are consistent with the employer's obligations of good faith [Source: Employment Relations Act 2000, s 60(3)].

Overarching Principles

Regardless of whether an employment agreement is individual or collective, it must comply with all minimum statutory entitlements set out in New Zealand law. These include:

  • Minimum wage: As specified by the Minimum Wage Act 1983.
  • Holidays and leave: As specified by the Holidays Act 2003.
  • Health and safety: As specified by the Health and Safety at Work Act 2015.

The principle of good faith is fundamental to all employment relationships in New Zealand, whether governed by an IEA or a CEA. It requires employers, employees, and unions to deal with each other openly, honestly, and without misleading or deceiving [Source: Employment Relations Act 2000, s 4].

Key Differences and Similarities

Feature Individual Employment Agreement (IEA) Collective Employment Agreement (CEA)
Parties Employer and individual employee Employer(s) and union(s) on behalf of union members
Negotiation Individually between employer and employee Collectively between employer(s) and union(s)
Coverage One employee A group of employees who are union members, and potentially non-union employees for a limited time
Flexibility Potentially more flexible, tailored to individual terms Standardised terms for a group, promotes consistency
Bargaining power Employee bargains individually Union bargains on behalf of members, potentially stronger bargaining power
Statutory Minimums Must meet all statutory minimums Must meet all statutory minimums
Good Faith Governed by good faith obligations Governed by good faith obligations

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights and obligations under an employment agreement, or those facing an employment relationship problem, are encouraged to seek independent legal advice. The Ministry of Business, Innovation and Employment (MBIE) provides comprehensive information, and Community Law Centres across New Zealand offer free legal assistance to those who qualify. Additionally, unions can provide advice and representation to their members.

Key Resources