Crown entities as employers

Crown entity boards will usually employ a chief executive and will delegate to them responsibility for the management of the entity and the employment of other staff. Entities have obligations as employers; these are set out in the CEA and other legislation, and in government statements. 

Chief executive employment 

The employment of a chief executive is one of the most important things that a board does. The board should ensure that a robust process is followed in preparing the position description, seeking suitable candidates and selecting the chief executive. 

Under s117(2A) of the CEA, an entity board that employs a chief executive must obtain the written consent of the Public Service Commissioner before finalising or subsequently amending the terms and conditions of employment, including remuneration. 

The Public Service Commission has model agreements which contain the standard terms and conditions for chief executives of Crown entities. Use of these model agreements is not mandatory but their use, at least as a starting point, is recommended because they incorporate good legal practice, manage risk, and are likely to make the consultation process smoother. The model agreements can be tailored to the requirements of the particular entity.  

Chief executive performance management 

Good practice in relation to chief executive performance management includes: 

• the board defining the performance expectations of the chief executive (including stretch targets), and the criteria against which the chief executive’s performance will be measured 
• ongoing and constructive discussions between the chair and the chief executive 
• addressing problems early, for instance by the chair communicating and discussing non-performance concerns 
• a formal performance evaluation process, managed by the board chair. 

Employer responsibilities 

The chief executive of statutory Crown entities should employ all other staff of an entity on behalf of the board and would then be responsible for directing their work. Boards need to delegate the appropriate level of authority to the chief executive to manage all operational matters (see the section on Delegations). The board has overall responsibility for the entity meeting its employment obligations. 

Good employer 

If a Crown entity employs staff, s118 of the CEA requires it to operate a personnel policy that complies with the principle of being a good employer. These principles include provisions requiring: 

• good and safe working conditions 
• an equal employment opportunities programme 
• impartial selection of suitably qualified people for appointment 
• recognition of the aims and aspirations of Māori, and of the employment requirements of Māori, women and people with disabilities. 

The Equal Employment Opportunities Commissioner at the Human Rights Commission has responsibility for issuing good employer and EEO guidance to Crown entities. That advice can be found at: www.neon.org.nz/crownentitiesadvice/. 

Other legislation may prescribe additional employment codes, for example s100D (5) of the Employment Relations Act has a code of practice that applies to the staff of the New Zealand Blood Service as well as other entities in the public health sector. 

Standards of integrity and conduct 

The Standards of Integrity and Conduct (the Code) was issued by the then State Services Commissioner under section 57, of the former State Sector Act 1988. The Code continues to have effect under the Public Service Act 2020. It applies to all employees of the organisations defined in s17(2) of the Act. The code has been applied to all staff (but not board members) of statutory Crown entities and Crown entity companies, and to board members and staff of some subsidiaries of Crown entities. It must be reflected in each entity’s internal policies. The Code can be found at:   

https://www.publicservice.govt.nz/assets/DirectoryFile/Code-Standards-of-Integrity-and-Conduct.pdf, together with additional guidance on its interpretation and application. 

Pay and employment conditions expectations 

The Government’s expectations for pay and employment conditions in the public sector were revised in May 2021 with the introduction of a Government Workforce Policy Statement (Workforce Policy) issued under Part 4 of the Public Service Act 2020. In accordance with s97, it is issued for the purpose of fostering a consistent, efficient, and effective approach to the negotiation of employment agreements and effective management of employment relations across agencies.   

This Workforce Policy contributes to goals that:  

• Establish the Public Service as an exemplar to other employers in the public sector and beyond.  
• Make the Public Service an exemplar of modern, progressive employment practice and a great place to work.  
• Have a productive, unified Public Service workforce grounded in a spirit of service to the community.  
• Ensure these goals are achievable within the Government’s fiscal settings. The key priorities to deliver these goals are to employ people fairly, work collaboratively with unions and other groups, and create an inclusive environment for all workers within the fiscal context of the Government 

The expectations are set out in: Statement-Government-Workforce-Policy-Statement-on-Employment-Relations.pdf (publicservice.govt.nz)  

Responsible Ministers will require boards of Crown agents to give effect and boards of ACEs and ICEs to have regard to these expectations when establishing their pay and employment conditions. 

Summary: Crown entities as employers 

At a minimum a good governance manual should cover the provisions of the applicable legislation in respect of: 

• the processes to be followed in appointing an entity’s chief executive, setting their performance expectations and formally evaluating their performance 
• the obligation for Crown entities to operate as good employers 
• where responsibilities lie for the employment of entity staff 
• the board’s role in ensuring that the Public Service Commissioner’s code of conduct and conflict of interest model standards are promulgated within the entity
• the factors to be taken into account by Crown entities in setting pay and employment conditions.