Recent Employment Law changes – FAQs on hours of work, shift cancellation, secondary employment and deductions
General / 25 January 2016
Changes to various pieces of employment legislation came into effect on 1 April 2016. We wrote about the changes here https://www.copelandashcroft.co.nz/news/zero-hour-contract-restrictions; https://www.copelandashcroft.co.nz/news/employment-standards-legislation-bill-passes
All employers need to understand the new law and update their employment agreements to ensure they comply with it. We’ve compiled the FAQs below to help with that. For specific advice about how the changes apply to your business and what you need to do to comply, please contact one of our team.
Hours of work
Q I don’t guarantee any hours of work – will I now have to offer guaranteed hours of work?
A No, you and your employee can agree not to guarantee any hours of work in the individual employment agreement. However, this means that all hours of work will be by agreement, so that the employee can decline to perform work at any time.
Q What happens if I want my employee’s to be able to do work when I need them?
A If you want to make sure that an employee is able for work when you need them, you need to offer them a guaranteed number of hours per week/fortnight. Provided that your business needs justify requiring employees to be available to do extra hours, you may also use an availability provision.
Q What should be in hours of work clause?
A You will need to include any or all of the following in your hours of work clause:
The number of guaranteed hours of work- these can be specified over a week or fortnight depending on your roster patternThe days of the week on which the work is to be performed;
The start and finish times of work;
If you require your employee to be flexible on the days of the week they will work and/or their start and finish times.
Q What is an availability provision?
A It specifies the additional period (outside of the guaranteed hours of work) where an employer requires an employee to make themselves available for work if required, eg for a certain number of hours or for a more general period such as weekends, evening etc. Where you use an availability provision, the employee is required to make themselves available during this period of time if they are needed. An employer must have a genuine business reason to use an availability provision, and must also pay an employee reasonable compensation for making themselves available.
Q Why would you have an availability provision?
A If it is impractical for you to meet your business demands without having employee’s available to work on short notice then you may use an availability provision.
Q What is reasonable compensation for availability?
A The legislation is not specific about this, but lists a number of factors to take into account in setting compensation. You will need advice specific for your circumstances, but as an example, we have clients using a number of solutions, including:
an additional sum of money added to an employee’s regular pay per week;
half the hourly rate for each hour they agree to be available;
minimum wage rate for each hour they agree to be available; or
an additional paid day off each week.
Q I pay my employee a salary – do I also need to pay reasonable compensation for expecting my employee to be available outside guaranteed hours of work?
A This will depend on the way your hours of work clause is drafted. You may not need to pay additional compensation provided you are not breaching the Minimum Wage Act 1983.
Q What happens if I don’t have an availability provision in my employment agreement?
A You will not be able to require an employee to work additional hours without their agreement.
Q We have guaranteed hours in the employment agreement already and have an agreement with our employees that they can work extra hours if work is available. Do we have to change our employment agreements?
A Not necessarily. If both parties are ok to continue with the current arrangement, then your employment agreement does not need to change. An availability provision is only needed where an employer has to have employees available at certain times to respond to business demands.
Q I have an employee who refuses to work outside of their guaranteed hours – is there anything I can do?
A If you are finding that your business demands have changed and you need someone to be available for certain periods of time during the week, then you may wish to consider introducing an availability provision to your individual employment agreements. Otherwise, you cannot force an employee to be available outside their work hours. The new legislation also states that you cannot treat that employee adversely just because they refuse to work extra hours, if there is no availability provision.
Q To meet business demands we often need to cancel shifts if required, can we still do this?
A Yes, provided you give your employee reasonable notice of the shift being cancelled. The amount of notice you are required to give should be specified in your employment agreements. Specific advice should be sought about what this will mean for your circumstances, but as a guide, in order to determine what reasonable notice would be, you need to consider:
what effect the cancelled shift will have on the employee;
the nature of the business, including whether you can control or foresee the circumstances that would prevent a shift from happening;
whether you have any agreed or guaranteed hours of work in the agreement
Q What happens if we don’t give the correct amount of notice before cancelling a shift?
A You will be required to pay your employee reasonable compensation. The amount of compensation should be specified in the employment agreement. If you don’t have a clause in your agreement that specifies what will be paid to the employee for cancelling a shift, then you need to pay the employee their usual relevant or average daily pay.
Q I heard that I need to have an employee’s written permission before I make deductions from their pays – is that correct?
A Yes, you need to have an employee’s written permission to make deductions from their pay; this has not changed. A clause in the employment agreement which states that you are entitled to make reasonable deductions will be sufficient written permission, unless it is revoked by the employee. However, you now need to consult with the employee before you make a deduction from their pay, even if you have their written permission. You should seek advice about what consultation is required, but in many cases this may be a simple email to the employee advising that you will be deducting $x amount from their pay this week/fortnight/month and the reason for that, inviting their comment within a set timeframe, before the deduction is made.
Q Can I still refuse to allow my employees to take on another job?
A It depends, the Employment Relations Act 2000 now states that an employer cannot restrict an employee from taking secondary employment unless there is a genuine reason and this is set out in the employment agreement. A genuine reason may include, for example:
Protecting an employer’s commercially sensitive information;
Protecting an employer’s intellectual property rights;
Protecting an employer’s commercial reputation;
Preventing a conflict of interest.
Q There are a lot of changes I will need to make to my employment agreements and it is already May 2016 – am I in breach of the legislation?
A No, there is a transitional period for all existing employees and you have until 1 April 2017 to ensure all employment agreements are adhering to the new legislation. However, all new employee’s employment agreements must reflect the new changes.
Disclaimer: We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek guidance from your employment lawyer for any questions specific to your workplace.