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Collective employment agreements are between employers and unions and they may cover employees in your workplace. Further, collective agreements include similar provisions to individual employment agreements. However, instead of being between you as the employer, and the employee, they are between you and a union representing a group of employees. If your employee is a union member and there is an agreement between their union and you, then they will likely be covered by the collective agreement’s terms and conditions. 

This article will explore:

  • who collective agreements cover;
  • the process, including collective bargaining;
  • mandatory terms to include in the agreement; and
  • optional terms to include in the agreement. 


A collective agreement is between at least one employer and one registered union and must cover at least two employees. The agreement can cover permanent full-time or part-time, fixed-term and casual employees. However, it will not necessarily cover all employees in the workplace, as some employees may not be union members. 

Non-union member employees can agree on an individual employment agreement with you. Additionally, you can offer non-union member employees the same or very similar terms and conditions as the collective agreement. You must also bargain in good faith with your individual employees.

The Collective Bargaining Process 

An employer or union can initiate the bargaining process. Many stages occur in the collective bargaining process, and both sides must uphold the duty of good faith towards one another.

The stages can include:

  • making the preliminary decisions about bargaining – for example, who will be involved, when it will occur, what will occur and how;
  • deciding on proposed coverage – which employees will the agreement cover;
  • meeting to present, consider and respond to bargaining claims;
  • dealing with representatives;
  • communicating during bargaining;
  • requesting and disclosing information;
  • using independent reviewers for information that may be confidential; and
  • resolving problems.

You and the union must both agree on the terms of the agreement. Then it must be ratified and signed to become a collective employment agreement. After finalising the agreement, you and the union need to each keep a signed copy of the terms and then provide a copy to new employees that are covered by the agreement as specified in the coverage clause.

Non-union member employees can bargain with you,  however, it will not result in a collective employment agreement but rather an individual employment agreement with similar terms.

Mandatory Terms

Employment law outlines the criteria for establishing a binding collective agreement, and states that the agreement must:

  • be in writing;
  • be signed by employers and unions that are parties to the agreement;
  • have a coverage clause outlining, for example, the type of employees and type of jobs that are covered; and
  • include a plain language explanation of how any employment disputes can be resolved, including the 90-day period for bringing a personal grievance.

The agreement must also include:

  • a clause stating how the agreement can be changed;
  • an end date or state an event when the agreement expires;
  • a provision that complies with the Holidays Act 2003 requirement for employees to be paid at least time and a half for work on public holidays;
  • a provision stating how employees will be protected if the business is sold, transferred or contracted out;
  • the rates, wages or salary to be paid to employees; and 
  • how the rates, wages or salary may increase during the term of the agreement.

Optional Terms

There are additional terms that may help to protect your business and ensure the relationship with your employees is clearly defined. The agreement may also include provisions on the following:

  • an application clause clarifying the relationship between the agreement; and any previous or current terms and conditions of employment;
  • a subsequent parties clause allowing other unions and employers to join the collective agreement after it has come into force;
  • intention of the parties, for example to act in good faith;
  • complying with policies and procedures;
  • overtime, penal rates and allowances;
  • reimbursement of expenses;
  • superannuation; 
  • additional leave;
  • long service leave;
  • obligations of employees, for example duties, confidentiality and intellectual property; and
  • termination of employment.

Key Takeaways

If you are thinking of entering into a collective agreement with a union, you should consider:

  • who the agreement will cover;
  • the bargaining process with the union and who will lead the process;
  • the mandatory terms  you must include in the agreement; and
  • further terms to protect your business.

It can be quite a complex process to navigate so please get in touch today to speak with one of LegalVision’s New Zealand employment lawyers who can assist with the process. Contact us on 0800 005 570 or complete the form on this page.


What is a collective employment agreement?

A collective employment agreement is an agreement between an employer and a union. Collective employment agreements include similar provisions to individual employment agreements. The main difference is that the agreement is between you, as the employer, and a union representing a group of employees. 

What types of employees will the agreement cover?

A collective agreement can cover permanent full-time or part-time, fixed-term and casual employees. The agreement will not cover employees who are not union members. 

Who can initiate the collective bargaining process?

The bargaining process can be initiated by an employer or a union. The collective bargaining process has many stages, and both sides must act in good faith towards one another.

What are the mandatory terms of a binding collective agreement? 

It includes conditions such as that the agreement must be in writing, it must be signed by employers and unions that are parties to the agreement, and it must have a coverage clause. 

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