What’s The Purpose Of An Employment Contract? (2025 Updated)

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When you hire a new employee, how important is it to have an employment agreement in place? As an employer in New Zealand, you have certain legal obligations that you need to uphold. Having a proper employment agreement is often essential to meeting these obligations—especially in 2025—and it is vital to ensure your contracts reflect the latest regulatory updates.

Who Are Your Employees & What Are Your Obligations?

Your team of employees makes your business possible. Your obligations to your employees depend on their type of employment – whether casual, part-time, or full-time – as well as a range of modern employment regulations. Not only is protecting employee entitlements a legal requirement, it is also key to maintaining a positive and productive workplace. For further insight into compliance, please refer to our updated guide on legal requirements for starting a business in New Zealand.

When Do You Need An Employment Agreement?

You should enter into an employment agreement with each of your employees when you bring them on board. This ensures clarity around roles, responsibilities, and mutual expectations right from the start.

What Should An Employment Agreement Include?

A good agreement will cover the basics such as salary, leave entitlements, and working hours, as well as other important matters including probation periods, intellectual property ownership, confidentiality obligations, and termination rights. It is essential that your agreement complies with the latest amendments to the Employment Relations Act as updated for 2025.

You may also wish to include restraint and/or non-solicitation clauses to restrict employees from leaving and immediately competing with your business, thereby safeguarding your company’s clientele and sensitive information. Remember that any restraint of trade clause must be reasonable and protect legitimate business interests under New Zealand law. If your circumstances require customised terms, it is wise to engage a lawyer to draft or review your agreements—our contract drafting services can help ensure your employment agreements are robust and compliant.

It is also important to review your employment agreement periodically to ensure that it remains aligned with both legislative changes and evolving workplace practices. In 2025, many businesses are embracing digital signing solutions to streamline processes and improve record keeping. For example, our electronic witnessing of documents service can simplify this process while ensuring compliance with current standards.

What Else Do You Need To Consider?

Alongside having a solid employment agreement, there are several additional considerations to keep in mind when hiring under the current legal framework. Ensuring that your internal policies and procedures are up-to-date with the latest guidelines is essential for compliance and for fostering a supportive work environment in 2025.

Employment Relations Act 2000 (latest amendments)
Holidays Act 2003
Minimum Wage Act 1983 (with adherence to current rates)
Kiwisaver obligations
Payslips and accurate record keeping
PAYE tax requirements
Work Health and Safety (WHS) guidelines
Workplace policies and procedures
Employment Information Statement
Remote and hybrid work policies (if applicable)

What If I’m Hiring Executive Level Employees?

If you’re considering hiring employees at an executive level, you may require a tailored Executive-Level Employment Agreement that addresses the higher stakes and specialised terms associated with such roles.

For these senior positions, extra clauses may be included to further protect your business interests, particularly if the executive requires specific conditions to be reflected in their contract. Generally, this type of employment agreement might cover:

Conflicts of interest: Clearly define acceptable external endeavours and restrict activities that could conflict with your business.
Management decisions: Specify authorities and establish clear guidelines on when an executive is empowered to make key management decisions.
Competitor Notices: Include provisions that require the disclosure of any intention to work with competitor businesses, thereby facilitating proper transition and protecting confidential information.

Need Help With An Employment Agreement?

Having a well-drafted employment agreement is crucial for protecting your business’s intellectual property, confidential information, and for ensuring compliance with your legal obligations. Up-to-date agreements can help mitigate risks associated with employment disputes in 2025 and beyond.

At Sprintlaw, we have a team of experienced lawyers ready to assist you with drafting or reviewing your employment agreements to ensure they meet current legal standards. For further legal support, you can also explore our insights on legal essentials for small businesses or visit our dedicated employment law section. Get in touch with one of our consultants for a no-obligation chat on how we can help you secure your employment agreements. Call us on 0800 002 184.

Minna Boyle

Minna is the Head of People & Culture at Sprintlaw. After completing a law degree and working in a top-tier firm, Minna moved to NewLaw and now manages the people operations across Sprintlaw.