Fixed Term Employment Agreement requirements where the employment is longer than 12 months
7 September 2021
In these unusual times, where RSE and other workers are in New Zealand and employed for longer than their normal pre-Covid 12 months, employers must comply with the Holidays Act (Section 16) and provide workers with annual holiday entitlements.
- You must issue a new employment agreement each time a new visa is issued or extended. The agreement needs to be for the same fixed term date of the workers current visa and include a clause stating that holiday pay is accrued
- Once a worker has been in the country and collectively employed for more than 12 months, you can no longer pay holiday pay, “pay as you go” (PAYG)
- Holiday pay should be accrued each week not paid out – refer to the MBIE website for information on accrual of holiday pay
- The workers can request and use their annual leave entitlement in accordance with the Holidays Act
- You can pay out any balance of annual leave on the workers departure back to their home country, or the end of their fixed term period in the case of a joint ATR
- In addition, please make sure workers are entitled to 10 days sick leave at the commencement of the new agreement, without a six month stand down period.
If you do not comply with these rules regarding issuing new fixed term agreements and accrual of annual leave, you will place yourself in the position of having to provide the worker/s with four weeks annual leave, despite the holiday payments already being made in their regular earnings. That equates to paying twice for annual leave.
To avoid any risk to becoming non-compliant, please review all your workers’ employment agreements, particularly RSE workers, to ensure any worker who is likely to be in the country in excess of 12 months complies with the Holidays Act, by applying the above advice.
Lastly, you will need to advise the Labour Inspectorate if you change the terms and conditions of the existing agreements for RSE workers (cease paying holiday pay with wages).