As a general rule, senior officials in New Zealand are employed under the same employment law as all others in the labour force. There is no separate law to determine the conditions of employment for public servants, and no more security of tenure than in any other job. Any grievances are considered in the same employment court that hears private-sector employment cases.
The employer of state servants is generally the chief executive of the department or agency concerned. Conditions of employment are negotiated between the individual or union on the one hand and the department or agency on the other.
Schools are an exception to this rule. Though individual school boards appoint and employ principals, teachers and support staff, pay and conditions are negotiated centrally between the education-sector unions and the Ministry of Education.
Heads of ministries and departments
Chief executives of core public service departments are employed by the public service commissioner on terms determined by the commissioner. Heads of other departments, including the public service commissioner and the heads of the police, the armed services, the intelligence agencies and Crown Law, are appointed by the government. Most hold offices created by statute, so are not employees.
State-sector chief executives were seldom controversial figures, but William Sutch was an exception. Early in Sutch's career, the government of the day found his left-wing political activities incompatible with work as an economist in the public service. His social history of New Zealand, commissioned for the centenary in 1940, was rejected as too radical. As head of the Department of Industries and Commerce, Sutch was generally admired by manufacturers, but distrusted and sometimes loathed by farmers. A government with strong farming interests forced him to retire in 1965.
Their salaries are set by the Remuneration Authority, which sets salaries for members of Parliament, judges, statutory positions such as public service commissioner, and local-authority representatives. Other conditions are set by the public service commissioner. The commissioner’s conditions of employment are set by the prime minister.
Heads of most Crown entities (such as statutory bodies, and Crown-owned companies) are employed by their boards, on terms set by their board. The boards are required to consult with the public service commissioner whenever pay or conditions are reviewed. When the commissioner and the board cannot agree on a rate for the job, their disagreement is brought to ministers for a decision.
The various boards of public sector agencies are responsible for monitoring the performance of their chief executives. Until 2018 the contracts of most chief executives (but not office-holders) include provision for performance payments (bonuses), which were determined by the employer (not the minister). The dismissal of chief executives is the responsibility of the relevant board, generally in consultation with the public service commissioner.