Now that the Employment Relations Amendment Bill (No 2) and Holidays Amendment Bill have passed into law, employers are taking the opportunity to review their employment agreements and policies to ensure they are up-to-date. Most of the changes to the law will be effective from 1 April 2011.

The key issues for employers to consider in reviewing and amending employment agreements and policies are:

90 Day Trial Period

Currently, the 90 day trial period provisions in the Employment Relations Act 2000 only apply to employers with fewer than 20 employees. However, from 1 April 2011 all employers will be able to make use of those provisions.

In order to be enforceable, a 90 day trial period must be set out in the employee's employment agreement, and the agreement must be signed and agreed to before the employee starts work. The trial period clause also needs to state that it applies from the beginning of the employee's employment, that during the trial period the employer may dismiss the employee, and that if the employee is dismissed they are not entitled to bring a personal grievance or other legal proceedings relating to the dismissal.

Employers should also review all related policies (such as disciplinary or performance management policies) to ensure that they are consistent with any new trial period provisions introduced by the employer.


The Employment Relations Act has been amended to clarify that employers are able to communicate directly with employees during collective bargaining, provided such communications are consistent with the duty of good faith.

Going forward, employers involved in collective bargaining should bear these provisions in mind when negotiating a bargaining process agreement.

Cashing Up Annual Leave

From 1 April 2011, employees will be able to "cash up" up a portion of their annual leave. In order to do so, an employee must make a request in writing. The employer may decline any such requests without providing any reasons.

Employers should consider whether they want to allow employees to request to cash up leave. If so, employers should notify employees of the process for making a request to cash up leave, and the process the employer will follow in considering the request. This process should be set out in a policy (so that employers retain the ability to change that policy if the legislation subsequently changes).

Alternatively, if an employer does not wish to allow employees to request to cash up leave, it should notify employees that it has a policy preventing this. This policy may apply to the whole or part of an employer's business.

Proof of Sickness or Injury

A welcome change for many employers is that they will have much broader rights to require employees to provide proof of sickness. From 1 April 2011, employers can request proof of sickness at any time, provided they meet the employee's reasonable costs in obtaining that proof.

Employers should review their existing employment agreements and policies to ensure that these broader rights are incorporated.

Transferring Public Holidays

Employers and employees will be able to agree (in writing) to transfer the observance of a public holiday to another working day. This change may be significant for employers with shift work and/or 24/7 operations, and for employees who wish to transfer public holidays for personal reasons (for example, to observe different religious holidays).

If an employer and employee agree to transfer a public holiday, then this agreement must be recorded in writing (either in the employee's employment agreement or in a separate agreement). The agreement should clearly set out the 24 hour period that is going to be treated as the public holiday.

As with requests to cash up annual leave, employers may adopt a policy that they will not consider requests to transfer public holidays.

Average Daily Pay

The Holidays Act has been amended to include a new "average daily pay" formula for calculating pay for public holidays, alternative holidays, sick leave and bereavement leave. This formula will apply when it is not possible or practicable to determine the employee's relevant daily pay, or if an employee's daily pay varies in the period the holiday or leave falls due.

Employers should review their existing employment agreements to ensure that they do not require the employer to pay for public holidays, alternative holidays, sick or bereavement leave on the basis of an employee's relevant daily pay only.

Alternative Holidays

Where alternative holiday entitlements arise after 1 April, if parties are unable to agree on when the alternative holiday is to be taken, the employer (not the employee) may determine the timing. Again, employers should review all employment agreements to ensure that they do not state that the employee can determine the timing of alternative holidays.

Holiday and Leave Records

Employers will need to ensure that, going forward, leave records contain information on any annual leave paid out, and any public holidays transferred to other days.

Written Agreement

In addition to these changes, from 1 July 2011 employers will be required to provide employees with a copy of a signed employment agreement, or where it has not been signed, an unsigned copy of that agreement. Where the parties have clearly not agreed on one or more of the terms and conditions of employment, an unsigned employment agreement will not comprise an employee's terms and conditions.