Recruitment Agreement (New Zealand)

Recruitment agency fees in New Zealand vary significantly depending on the type of placement, the seniority of the role, and the recruitment agency. For permanent placements, the most common fee structure is a percentage of the candidate's first year total remuneration package (salary plus employer KiwiSaver contributions and any other remuneration elements). The typical range is 15% to 25% of the candidate's annual salary, with executive search and specialist technical roles at the higher end. Some agencies charge a flat fixed fee regardless of salary. For temporary and contract placements, agencies typically charge an hourly or daily 'on-cost' rate (also called a 'mark-up') on top of the worker's pay rate. This on-cost rate covers the agency's margin, the employer's ACC levies, KiwiSaver contributions, and other on-costs. Rates vary but are typically 20% to 40% above the worker's pay rate. Retained search arrangements — where the agency is paid a retainer upfront to conduct an executive search — may involve a fixed fee paid in instalments, with the final instalment due on successful placement. The recruitment agreement should specify the fee structure clearly, including how 'remuneration' is defined, whether GST is included or excluded, and when the fee becomes payable.

A replacement guarantee is a standard feature of New Zealand permanent placement recruitment agreements. It provides that if the placed candidate leaves the employer's employment (or is dismissed) within a specified period after placement, the agency will either find a replacement candidate at no additional fee or provide a partial or full refund of the placement fee. The replacement guarantee terms should address: (a) the guarantee period — typically 3 to 6 months from the candidate's start date, though this varies; (b) the trigger events — which events activate the guarantee (e.g., the candidate resigns, the employer dismisses the candidate for performance reasons, or both); (c) the remedy — whether the guarantee is a free replacement search, a fee credit, or a pro rata refund; (d) the employer's obligations — what the employer must do to maintain the guarantee (e.g., provide a reasonable induction and support period, not change the role significantly, notify the agency within a specified period of the candidate's departure); (e) exclusions from the guarantee — circumstances in which the guarantee does not apply (e.g., redundancy, relocation, changes to the role, the employer's failure to follow recommended practices); and (f) the timeframe within which the replacement search must be completed. The guarantee terms should be clearly documented in the recruitment agreement to avoid disputes.

Recruitment agencies in New Zealand are agencies under the Privacy Act 2020 and must comply with the 13 Information Privacy Principles (IPPs) when handling candidate personal information. This is particularly important given the volume and sensitivity of personal information collected in the recruitment process, including CVs, referees' contact details, reference check reports, background check results, salary history, and personal contact details. Key obligations include: (IPP 1) collecting personal information only by lawful means and only if necessary for the recruitment process; (IPP 2) collecting information directly from the individual where reasonably practicable; (IPP 3) informing candidates at or before collection of: the agency's identity, the purpose of collection, the intended recipients, whether collection is voluntary or mandatory, and the right of access to and correction of their information; (IPP 5) keeping personal information secure against loss and unauthorised access or disclosure; (IPP 6 and 7) allowing candidates to access and request correction of their personal information; (IPP 10 and 11) using and disclosing personal information only for the purpose for which it was collected or for a directly related purpose. The recruitment agreement between the agency and the employer should address how candidate information is shared and used, and should require both parties to comply with the Privacy Act 2020. The agency must also notify the Privacy Commissioner of any notifiable privacy breach.

Anti-poaching provisions in a New Zealand recruitment agreement protect the recruitment agency from the employer 'poaching' a candidate directly — engaging the candidate without paying the agency's fee — or from directly soliciting the agency's staff. Similarly, provisions may protect the employer from the agency approaching their placed candidates for other opportunities. Key anti-poaching provisions in a New Zealand recruitment agreement should include: (a) a prohibition on the employer approaching, engaging, or employing directly any candidate introduced by the agency during the agreement term and for a specified period after (typically 12 to 24 months from the introduction); (b) a 'direct introduction fee' provision specifying that if the employer engages a candidate introduced by the agency without paying the placement fee, the employer owes the full placement fee; (c) a prohibition on the employer soliciting or approaching the agency's own staff with a view to engagement; and (d) a prohibition on the agency approaching candidates placed by the agency with the employer for other opportunities for a specified period. These provisions are subject to New Zealand common law restraint of trade principles — they must be reasonable in scope and duration to be enforceable under the Contract and Commercial Law Act 2017. Courts will consider whether the provisions go no further than necessary to protect the legitimate interests of the party seeking enforcement.

A Recruitment Agreement (New Zealand) does not legally require a lawyer in New Zealand, and individuals and businesses may draft and execute the document independently. The Employment Relations Act 2000 does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified New Zealand lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The High Court of New Zealand has jurisdiction over disputes arising from this type of document, and Companies Office may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.