{"id":221800,"date":"2023-03-21T19:20:18","date_gmt":"2023-03-21T06:20:18","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=221800"},"modified":"2026-01-20T15:46:38","modified_gmt":"2026-01-20T02:46:38","slug":"bonding-agreement","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/employment\/bonding-agreement\/","title":{"rendered":"What is an Employment Bonding Agreement in New Zealand?"},"content":{"rendered":"\n<p>Your business may want to fund the training or education of an employee as a form of upskilling. If this is the case, bonding agreements can be a useful tool for employers looking to retain employees for a certain period and recoup the costs incurred in staff training. These could be costs incurred for certain training courses or apprenticeships required for a particular role. This article will explain bonding agreements and how they can benefit your business.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are Bonding Agreements?<\/h2>\n\n\n\n<p>Bonding agreements are an agreement between an employee and employer, where the employer agrees to pay for a portion or all of the costs related to training for a particular role. In exchange, the employee must continue to work for the employer for a certain amount of time. Typically, bonding agreements are for one to two years after the training period is complete.&nbsp;<\/p>\n\n\n\n<p>Key terms to insert include the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the length of time you wish to bond with your employee;<\/li>\n\n\n\n<li>what the training cost that is being bonded; and&nbsp;<\/li>\n\n\n\n<li>what the training is for.<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--idea\">\n    <p>This agreement is useful where your business pays for an employee to undergo training, and you do not want the employee to leave your business shortly after. Bonding agreements should be beneficial to both parties and not just made to benefit the employer.<\/p>\n<\/div>\n\n\n\n<p>There are a few types of common bonding agreements:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Standard: <\/strong>A standard agreement is when a business funds training, where the employee is bonded for a certain period of time, with a prorated repayment;&nbsp;<\/li>\n\n\n\n<li><strong>Industry: <\/strong>An agreement generally used for a longer course, such as university training or apprenticeships. Often, businesses can fund the entire cost or have an employee pay for their own costs, but pay them time to undertake the studies; and<\/li>\n\n\n\n<li><strong>Relocation: <\/strong>Sometimes, employees may need to relocate for a position, and you may wish to fund a portion of these costs.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">How Can You Use a Bonding Agreement?<\/h2>\n\n\n\n<p>You can set out the terms of the bonding agreement within an <a href=\"https:\/\/legalvision.co.nz\/employment\/employment-agreement\/\">employment agreement<\/a>. Alternatively, they can be in a separate document that parties sign as a variation to the employment agreement. If you are giving an employee additional training that will likely improve their employability elsewhere, it is good practice to have a bonding agreement in place.&nbsp;<\/p>\n\n\n\n<p>When drafting a bonding agreement, it is essential to ensure transparency and fairness for both parties. The agreement should clearly outline:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>what training costs are covered;&nbsp;<\/li>\n\n\n\n<li>the bonding period; and&nbsp;<\/li>\n\n\n\n<li>the repayment terms if the employee leaves early.&nbsp;<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>It is also important to provide the employee with reasonable notice of the bonding terms before they commence training, and ensure they have the opportunity to seek independent advice. This transparency helps prevent future disputes and ensures the agreement is enforceable under New Zealand employment law.<\/p>\n<\/div>\n\n\n\n<p>The bonding agreement should also be for a period that is reasonable. There have been various cases where a bond agreement has been used for hiring and onboarding costs, training and uniform costs. These costs are the basic employment necessities and are there to ensure that an employee can perform their job. They are not extra bonuses that the employer will need to offer.<\/p>\n\n\n\n<div  class=\"box box--icon box--star\">\n    <p>Where you have a valid bonding agreement, and an employee leaves the position earlier than the bonded term, you are able to pro-rata the repayable amount of the training costs.<\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">An Example<\/h3>\n\n\n\n<p>Suppose there is a 2-year bonded period, and the training is for $6,000. In this case, you may pro-rata this according to how long the employee remains working in the company.<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Timeframes<\/strong><\/td><td><strong>Costs<\/strong><\/td><\/tr><tr><td>Leaves within 0-6 months<\/td><td>$6,000<\/td><\/tr><tr><td>Leaves after 6 months to 1 year<\/td><td>$4,500<\/td><\/tr><tr><td>Leaves after 1 year to 1.5 years<\/td><td>$3,000<\/td><\/tr><tr><td>Leaves after 1.5 years<\/td><td>$1,500<\/td><\/tr><tr><td>Leaves after 2 years<\/td><td>$0<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2022\/09\/23172253\/how-to-hire-and-inspire-560x792-1.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">NZ How to Hire and Inspire<\/div>\n            <div class=\"body-text\">\n                <p>Hiring new employees for your NZ business can be complicated. 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This is where employees pay a premium in exchange for a promise of residency. Employers who are found to be exploiting migrant workers can be imprisoned for up to seven years or have a fine of up to $100,000.<\/p>\n\n\n\n<p>Another area where bonding agreements are incorrectly used is the beauty and massage industry. This often involves a bonding agreement covering in-house training courses, otherwise, sham training courses. However, there are no issues with having a bonding arrangement if there is a proper qualification, which is usually hosted by a third party, for which the employer is paying for the employee to attend.<\/p>\n\n\n\n<p>Although bonding agreements are very useful for ensuring that staff training is put to use, when they are improperly used and enforced, they are a breach of the <em>Wages Protection Act 1983<\/em>. As an employer, it is important that you do not seek or receive a premium for employing someone.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>For example, if you seek to recoup recruitment costs, this would be considered benefitting yourself and not the employee, and would make the bonding agreement unenforceable.<\/p>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>If you want to upskill and send your employees to training programmes, consider entering a bonding agreement. This will ensure that the training opportunities that you offer them are utilised in the workplace for a certain period of time.&nbsp;<\/p>\n\n\n\n<p>LegalVision provides ongoing legal support for New Zealand businesses through our fixed-fee legal membership. Our experienced lawyers help businesses manage contracts, employment law, disputes, intellectual property and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision\u2019s legal membership, call <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or <a href=\"https:\/\/legalvision.co.nz\/membership\/\">visit our membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1679378979918\"><strong class=\"schema-faq-question\"><strong>Can I use a bonding agreement to cover the training for apprentices?<\/strong><\/strong> <p class=\"schema-faq-answer\">You can use a bonding agreement to cover any training supplied by a third party, including training for apprentices.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1679378994753\"><strong class=\"schema-faq-question\"><strong>What if my employee leaves before their bonding agreement finishes?<\/strong><\/strong> <p class=\"schema-faq-answer\">Before you enter into a bonding agreement, ensure that you have a prorated clause in place to make sure you can get a portion of your costs back.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"d2c2fab9ad\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/221800\" \/>            <input value=\"https:\/\/legalvision.co.nz\/employment\/bonding-agreement\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"What is an Employment Bonding Agreement in New Zealand?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Your business may want to fund the training or education of an employee as a form of upskilling. If this is the case, bonding agreements can be a useful tool for employers looking to retain employees for a certain period and recoup the costs incurred in staff training. These could be costs incurred for certain<a href=\"https:\/\/legalvision.co.nz\/employment\/bonding-agreement\/\">Continue reading <span class=\"sr-only\">&#8220;What is an Employment Bonding Agreement in New Zealand?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13387,"featured_media":215601,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"205730,1337,216635,221242,208363,209481","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[5],"tags":[25,54,577,1833,1834],"class_list":["post-221800","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment","tag-small-business","tag-medium-business","tag-employment-agreement","tag-bonding-agreement","tag-training"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is a Bonding Agreement in New Zealand? | LegalVision NZ<\/title>\n<meta name=\"description\" content=\"This article will explain bonding agreements in New Zealand and how they can benefit your business. 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