Letter of Offer (New Zealand)

A Letter of Offer in New Zealand sets out a party's intentions and the proposed terms for a transaction before a binding agreement is entered, consistent with the Employment Relations Act 2000.

The Employment Relations Act 2000 is the primary legislation governing employment relationships in New Zealand. It requires that every employee must have a written employment agreement (section 65) and that the agreement must be provided before the employee starts work (section 64A, as amended effective 6 May 2024). The ERA also requires that employees be given the opportunity to seek independent legal advice about the proposed agreement before signing (section 63A). These requirements make the process of issuing a letter of offer and IEA before commencement a legal necessity, not merely established standards.

A letter of offer is distinct from the IEA itself, although both form part of the written record of the employment relationship. The letter of offer typically sets out the key commercial terms — job title, salary, start date, trial period, and key leave entitlements — in a more readable format, allowing the candidate to quickly understand the main terms before reviewing the more detailed IEA. Once both documents are signed, they together constitute the written employment agreement for the purposes of the ERA.

New Zealand's employment framework includes several distinctive features that must be reflected in a letter of offer. The good faith obligation under section 4 of the ERA applies from the moment the offer is made and requires the employer to be transparent about all aspects of the proposed employment, including any 90-day trial period. The Holidays Act 2003 sets minimum leave entitlements that apply from the commencement of employment. The KiwiSaver Act 2006 requires employers to make compulsory contributions of at least 3% of gross salary for enrolled employees. And the Accident Compensation Act 2001 means that New Zealand employees cannot sue for personal injury damages — they are covered by the ACC scheme instead — which is an important contextual difference from employment in other common law jurisdictions.

A Letter of Offer is needed every time a New Zealand employer wishes to offer a candidate a position of employment, whether full-time, part-time, or fixed-term. Under section 64A of the Employment Relations Act 2000 (as strengthened from 6 May 2024), employers must provide a written employment agreement before the employee starts work. Issuing a letter of offer followed by an Individual Employment Agreement (IEA) is the standard and recommended approach to satisfying this requirement.

The most important practical reason for issuing a letter of offer before commencement is the requirement to include any 90-day trial period clause in a written agreement that is signed before the employee starts work. Under section 67A of the ERA, the trial period is only valid if the clause is in a written employment agreement agreed to before commencement. If the employer wishes to include a trial period — which removes the employee's right to bring a personal grievance for unjustified dismissal during the first 90 days — the letter of offer is the appropriate vehicle for communicating and agreeing to this term before the employee's first day.

A letter of offer is also important for managing candidate expectations during the period between verbal offer and formal commencement. Candidates who have accepted an offer but not yet started may receive counter-offers or other opportunities. A signed letter of offer provides legal certainty about the agreed terms and gives both parties a clear record of the agreement.

For employers who wish to make the offer conditional on pre-employment checks — such as a New Zealand Police Vetting check, right-to-work verification, or satisfactory references — the letter of offer is the appropriate document in which to set out those conditions. If conditions are not satisfied, the offer may be withdrawn, and the letter provides a clear record of the conditionality.

From the employee's perspective, the letter of offer provides important information they need before resigning from their current role — salary, start date, role details, and notice period — so they can make an informed decision. Under section 63A of the ERA, employers must advise candidates that they can seek independent legal advice about the terms of the proposed agreement, and the letter of offer process provides a natural opportunity to give this advice.

A thorough New Zealand Letter of Offer should contain the following key elements, each grounded in specific legislative requirements.

The employer and applicant identification section must set out the full legal names and addresses of the employer and the applicant. Including the employer's NZBN (New Zealand Business Number) assists with accurate identification. The date of the offer establishes the start of the acceptance period and the point from which any conditions must be satisfied.

The position details must specify the job title, department, employment type (full-time, part-time, or fixed-term), reporting line, and primary work location, as required by section 65(2)(a)(ii) and (iii) of the ERA.

The commencement date and trial period section is critical. The proposed start date triggers the requirement to provide a signed IEA before that date under section 64A of the ERA. If a 90-day trial period is to be included, it must be in this letter (or in the IEA) and must be agreed to in writing before the employee starts work, as required by section 67A of the ERA.

The remuneration section must specify the annual salary or hourly rate in NZD (gross, before PAYE) and the pay frequency. It must also address KiwiSaver: the employer's contribution rate (minimum 3% under the KiwiSaver Act 2006), automatic enrolment for new employees aged 18-64 who are NZ citizens or permanent residents, and employee contribution rate options. The employee's obligation to provide their IRD number and complete a Tax Code Declaration (IR330) should also be mentioned.

The leave entitlements section must reflect the statutory minimums under the Holidays Act 2003: 4 weeks annual leave after 12 months (section 16), 10 days sick leave after 6 months (section 65, maximum accumulation 20 days), bereavement leave (sections 69-70), family violence leave (sections 72A-72H), 11 public holidays plus applicable regional anniversary day (section 44), and parental leave under the Parental Leave and Employment Protection Act 1987.

The notice period should state the agreed notice required by either party to terminate the employment. There is no statutory minimum notice period in New Zealand, so the agreed period (typically 2-8 weeks for most roles, 1-3 months for senior roles) should be clearly stated.

The conditions section should list any pre-employment conditions, such as police vetting, right-to-work verification, and reference checks. The offer should state clearly that it is conditional on those requirements being met.

The acceptance mechanism should specify the number of business days within which the candidate must accept or decline, note the candidate's right to seek independent legal advice (section 63A ERA), and provide clear signing instructions. The forms-legal.com Letter of Offer (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.