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The Employment Relations Authority (Authority) recently escalated the first determination on the new hours of work legislation to the Employment Court (Court) for decision and we have been eagerly awaiting the outcome in the hope it would give us all some guidance particularly in the area of compensation.  Unfortunately we will have to wait a little longer for direction as the Court instead determined there was no availability provision within the Applicant’s employment agreement and therefore compensation was not payable in this instance.

The Case
Applications were lodged by two workers employed in two different McDonalds restaurants. Both employees sought to resolve concerns relating to availability provisions in their individual employment agreements (IEAs), and the requirements of section 67D of the Employment Relations Act 2000 (Act), which was introduced to regulate against so-called “zero hour contracts”.

The Decision
The Plaintiffs submitted that the sole question before the Court was whether the employment agreements contained an availability provision, but the Court refused to consider this question within a “vacuum”, instead preferring to consider this in light of the parties’ approach to their employment relationship.

The Court determined the IEAs did not include an availability provision.  This was because the employees, when applying for a position, indicated when they could be available to work.  Shifts were rostered only within these times.  The IEAs provided for guaranteed hours within the periods of pre-indicated availability (as indicated by the employee not the employer) and any extra hours to be worked by mutual agreement.  It was noted that this approach worked well for not only the employer but also for the employees, many of whom had maximum hours thresholds due to studying or work visas.

In the absence of an availability provision the Court did not need to consider the question of remedies.

What this means for you
It has been confirmed by the Court that while the existence of an availability provision requires guaranteed hours, a guarantee of hours in itself does not necessarily require an availability provision.

What is adequate compensation for waged workers’ availability remains to be determined, but for now, employers should ensure that advice is sought regarding their specific work needs, with compensation to be assessed against the following factors:

The number of hours the employee is required to be available;
The proportion of those hours to the agreed hours;
Any restrictions that arise from the availability provision;
The rate of pay for work available for; and
If paid by a salary, the amount of the salary.
If you’re unsure how to manage your obligations regarding availability, please contact us.  You can read more about changes to the law regarding hours of work here:

https://www.copelandashcroft.co.nz/news/have-you-updated-your-employment-agreements-yet

https://www.copelandashcroft.co.nz/news/recent-employment-law-changes-faqs-hours-work-shift-cancellation-secondary-employment-and

https://www.copelandashcroft.co.nz/news/zero-hour-contract-restrictions

https://www.copelandashcroft.co.nz/news/employment-standards-legislation-bill-passes

Disclaimer: We remind you that while this article provides commentary on employment law and health and safety topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.

August 2017