From April this year, all individual employment agreements must comply with the new requirements regarding hours of work in the Employment Relations Act 2000.  The most significant change is that ‘zero-hour’ contracts have effectively been prohibited.  A zero hour contract is an agreement that does not guarantee an employee minimum working hours.   While not all zero hour contracts are the same, the issue with many of these contracts was the lack of mutuality of obligations:  the employer did not have to guarantee the employee work; however, the employee was expected to be available for work, and in some instances, not to work for another employer.

The Employment Relations Act now requires employment agreements to specify the number of guaranteed hours of work.  The Act refers to an ‘availability provision’ which is defined as a clause that requires an employee to be available to accept work that the employer makes available.  An availability provision may only be included in an employment agreement if:

  • There are guaranteed hours specified in the agreement;
  • The availability relates to a period that is in addition to the guaranteed hours.

Furthermore, the provision may only be included if:

  • The employer has ‘genuine reasons based on reasonable grounds for including the provision’ and
  • Reasonable compensation is payable to the employee for being available.

While the Employment Relations Act sets out relevant factors for consideration when determining if an employer has a genuine reason for including the provision and reasonable compensation, there is no doubt issues regarding these requirements will come before the Employment Relations Authority and the Employment Court.

In the recent case of Fraser v McDonald’s Restaurants (New Zealand) Limited –(Fraser-v-McDonalds-and-Doran-v-Carrick-full-Court) , the question for the Employment Court was whether an individual employment agreement contained an availability provision.  The relevant provision was in fact clauses relating to work scheduling set out in the offer of employment. Very broadly, these clauses provided that:

  • Employees had 80% security of hours up to a 32 hour weekly cap;
  • Minimum hours were based on a percentage of the hours worked in the previous quarter;
  • Employees’ minimum hours were based on the an agreed availability chart;
  • If the rostering included hours over and above the security of hours, employees could decline to work them.

The Court found that it was significant employees could nominate their own availability. It went on to hold that that the work scheduling clauses did not breach the relevant provisions of the Employment Relations Act.

Disclaimer: The above information is for information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on the information given.