Employment Relations Act Compliance Checklist

Yes, if you're hiring staff in New Zealand, the Employment Relations Act 2000 needs to be built into your hiring documents and everyday people processes from day one.

The more nuanced part is that Employment Relations Act NZ compliance isn't just one document you sign and file away. It affects how you classify workers, what you put in employment agreements, how you consult on changes, how you manage performance, and what records you keep.

If you're a startup hiring your first employee, this can feel like a lot. The good news is that once you set up the right documents and habits early, employment law compliance becomes much easier to manage as your team grows.

What Does The Employment Relations Act Require Before You Hire?

The Employment Relations Act 2000 requires you to deal with employees in good faith and use proper written employment agreements before work starts.

In practice, this means you shouldn't treat hiring as a casual handshake, even if the role is flexible or part time. You need to be clear about the job, pay, hours, leave, notice, confidentiality, workplace rules, and how problems will be handled.

Your first hiring checklist should cover:

• Work out the role properly: write down the duties, reporting line, work location, hours and pay before you advertise.
• Choose the correct worker type: employee, fixed term employee, casual employee or independent contractor.
• Prepare the right agreement: use an individual employment agreement for employees, not a contractor agreement.
• Give the person time to review it: they should have a reasonable opportunity to get independent advice before signing.
• Get it signed before work starts: this matters especially if you want to use a 90 day trial period.
• Set up payroll and records: wages, time, leave and holidays records need to be accurate from the first pay run.

You also need to factor in other key laws that sit alongside the Employment Relations Act, including the Holidays Act 2003, Minimum Wage Act 1983, Wages Protection Act 1983, Human Rights Act 1993, Health and Safety at Work Act 2015 and Privacy Act 2020.

That might sound like a long list, but your practical starting point is simple: get the contract, policies, payroll and record keeping right before the person begins.

What Employment Agreement Documents Do You Need?

You need a written employment agreement for every employee, and it should match how the role will actually work in your business.

Under New Zealand employment law, every employee must have a written employment agreement. You must keep a copy, even if the employee hasn't signed it. If a Labour Inspector asks to see it, you need to be able to produce it.

Your agreement should cover the basics clearly, but it also needs clauses that protect your startup. Templates often miss the details that matter for your business model, so it's worth having the document tailored before you use it.

Employment Agreement Outline

As a starting outline, your employment agreement should include:

1. Parties: your company name, NZBN if relevant, and the employee's full name.
2. Position And Duties: the role title, key responsibilities and who the employee reports to.
3. Location: where the employee will work, including any remote or hybrid work arrangements.
4. Hours Of Work: ordinary hours, roster rules, availability requirements and any flexibility you need.
5. Pay And Benefits: wage or salary, pay cycle, KiwiSaver treatment and any bonuses, commissions or commission plan rules.
6. Leave And Holidays: annual holidays, sick leave, public holidays and other leave under the Holidays Act 2003.
7. Trial Or Probation Period: any 90 day trial period or probation process, drafted correctly before work starts.
8. Confidentiality And IP: how business information, code, content, designs and inventions are protected.
9. Policies: which workplace policies apply and how they can be updated.
10. Restructuring Protection: the employee protection provision required if work is affected by restructuring.
11. Problems And Termination: notice periods, misconduct process and services available for employment relationship problems.

This outline isn't a finished legal document. A lawyer should tailor it before it's used, especially if you have a commission plan, remote work, shift work, software development, sales targets or confidential client data.

You should also have a signed offer letter, tax and KiwiSaver onboarding forms, a privacy collection notice, and role specific policies ready before the employee's first day.

Are Your Workers Employees Or Contractors?

It depends on how the relationship works in practice, not just what you call it in the contract.

This is one of the biggest issues for startups. It's common to bring someone on as a contractor because you're moving fast, managing cash flow, or testing a new role. But if the person is really working like an employee, you may still have employer obligations for wages, leave, tax related payroll processes and fair treatment.

From 21 February 2026, the Employment Relations Amendment Act changes include a contractor gateway test. The gateway test isn't retrospective, so arrangements from before 21 February 2026 need separate consideration. You shouldn't assume the gateway fixes past classification risk or earlier periods of work.

Broadly, if your arrangement meets the gateway criteria, the worker is treated as a contractor for Employment Relations Act purposes. The criteria focus on things like:

• Written terms: there's a written agreement that says the person is an independent contractor.
• Independent Advice: the contractor had a reasonable chance to get independent advice before signing the arrangement.
• Freedom To Work Elsewhere: you don't stop them working for other businesses, including competitors.
• Control Over Availability: you don't require them to be available at set times or for minimum hours, or they can subcontract the work.
• Freedom To Decline Work: you don't penalise or end the arrangement just because they don't accept extra tasks.

If you don't meet the gateway, the usual employment status tests can still apply. Those tests look at the real substance of the relationship, including control, integration into the business, economic dependence and whether the person is genuinely running their own business.

Example: The Developer Who Looks Like An Employee

Say Hana runs a SaaS startup in Wellington and engages Liam as a contractor for 30 hours a week at $70 per hour. Liam works only for Hana's company, attends daily team meetings, uses the company laptop, needs approval for leave, and can't send someone else to do the work.

Even if Liam's agreement says contractor, the practical reality looks much closer to employment. Hana should get tailored advice before continuing the arrangement, because misclassification can create back pay, leave, tax and compliance headaches.

A good contractor agreement helps, but it won't fix a relationship that operates like employment day to day.

What Employer Policies Should Your Startup Put In Place?

You should put core policies in place once you have employees, even if your team is only two or three people.

Policies help you set expectations without making your employment agreement too long. They also give you a fair and consistent process to point to if something goes wrong.

Your first policy pack should usually include:

• Code Of Conduct: expected behaviour, honesty, conflicts of interest, client interactions and workplace standards.
• Bullying, Harassment And Discrimination Policy: what isn't acceptable and how concerns are raised internally.
• Health And Safety Policy: how you manage workplace risks under the Health and Safety at Work Act 2015.
• Privacy Policy For Staff: what employee personal information you collect, why you collect it, who you share it with and how it's stored.
• IT, Device And Cybersecurity Policy: passwords, software, AI tools, personal devices, security incidents and acceptable use.
• Remote And Hybrid Work Policy: work location, availability, equipment, expenses, confidentiality and safety checks.
• Leave And Flexible Work Policy: how employees apply for leave and how you assess flexible working requests.
• Social Media Policy: how employees can refer to your business, clients, products and confidential information online.

Under the Privacy Act 2020, employee information is personal information. You should only collect what you need, tell employees why you're collecting it, keep it secure, and have a process for access or correction requests. If a serious privacy breach occurs, you may need to notify the Privacy Commissioner and affected people.

Keep your policies separate from the employment agreement where possible. That gives you more flexibility to update them as your startup grows, provided changes are reasonable and you consult where needed.

How Should You Handle Performance, Misconduct And Restructures?

For most employees, you need to use a fair process before making decisions that negatively affect them.

This is where many startups get caught. You might know a role isn't working out, or your runway has changed and you need to reshape the team. Even then, the Employment Relations Act usually expects good faith, proper process and genuine consideration before you make a final decision.

From 21 February 2026, different dismissal rules apply for employees who earn $200,000 or more a year, unless they have opted back in to unjustified dismissal protections, and for employees on a valid 90 day trial period. In those situations, the usual good reason and fair process obligations don't apply in the same way. These exceptions are technical, so it's still worth getting tailored advice before you rely on them.

Performance Or Misconduct Process

For performance concerns or misconduct, your process should usually be:

1. Identify The Issue: be specific about what happened, when it happened and why it matters.
2. Check The Evidence: gather emails, records, manager notes, customer feedback or system logs before the meeting.
3. Invite The Employee To Respond: tell them the concern, give enough detail, and let them bring a support person.
4. Hold A Fair Meeting: listen with an open mind and ask questions before reaching a view.
5. Consider The Response: look at whether training, support, a warning or another outcome is suitable.
6. Confirm The Outcome In Writing: record the decision, reasons and next steps.

If you skip the process where it applies, you increase the risk of a personal grievance. Employees generally have 90 days to raise a personal grievance, while sexual harassment personal grievances can be raised within 12 months.

Restructure Process

For restructures, you usually need a genuine business reason and a consultation process before confirming changes. That means giving affected employees a proposal, relevant information, a chance to comment, and genuine consideration of their feedback.

You should also consider alternatives such as reduced hours, redeployment, changing reporting lines, or leaving a vacancy unfilled. If redundancies may happen, check the employment agreement for notice periods and any redundancy compensation terms.

If the situation is sensitive or high risk, get advice before you send the first letter. The wording and timing can make a real difference.

What Employment Records Do You Need To Keep?

You need to keep accurate employment, wage, time, holiday and leave records for each employee.

Good records aren't just admin. They help you prove what was agreed, what was paid, what hours were worked, what leave was taken, and how decisions were made. If you can't show this clearly, it becomes much harder to deal with questions from employees, payroll providers or Labour Inspectors.

As a practical minimum, keep:

• Employment Agreements: signed copies and any later variations.
• Wage And Time Records: hours worked, pay rates, deductions, gross pay and net pay.
• Holiday And Leave Records: annual holidays, sick leave, bereavement leave, public holidays and other leave balances.
• Rosters And Timesheets: especially for hourly, shift, casual or variable hours employees.
• Onboarding Records: tax, KiwiSaver, right to work checks where relevant, policy acknowledgements and training records.
• Performance And Conduct Records: meeting notes, warnings, improvement plans and outcome letters.
• Health And Safety Records: incident reports, risk assessments and training logs.
• Privacy And Security Records: access permissions, equipment returns and any privacy incidents.

Employment, wage, time, holiday and leave records should generally be kept for at least 6 years. Your payroll system should support this, but don't assume the software is enough. You still need someone in the business checking that the data is accurate.

If you use cloud HR tools, check where employee data is stored and who can access it. The Privacy Act 2020 applies whether your employee files sit in a filing cabinet, Google Drive or an HR platform.

Key Takeaways

• The Employment Relations Act 2000 affects your hiring documents, worker classification, consultation processes and day to day people management.
• Every employee needs a written employment agreement, and it should be signed before work starts, especially if you want a 90 day trial period.
• Contractor arrangements need careful setup under the contractor gateway test, which applies from 21 February 2026, isn't retrospective, and includes giving the contractor a reasonable chance to get independent advice.
• Clear workplace policies help you manage privacy, health and safety, conduct, remote work, IT use and leave consistently.
• Performance issues, misconduct and restructures usually need a fair process, but from 21 February 2026 different dismissal rules apply for employees earning $200,000 or more unless they have opted back in, and for valid 90 day trial periods.
• Keep employment, wage, time, holiday and leave records for at least 6 years so you can show what happened if questions come up later.

If you'd like help with employment agreements, contractor arrangements, workplace policies or restructure processes, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.