A recent ruling in the Employment Court has clarified whether employers can require their employees to work extra hours or overtime above their standard work times, without paying them for remaining ‘available’ to work.
The case of Postal Workers Union of Aotearoa Inc v New Zealand Post Limited concerned NZ Post’s delivery agents (more commonly known as your local ‘Postie’) who were employed under a collective agreement with a clause expressing that they “may be required to work reasonable overtime in excess of their standard hours… provided that work is voluntary on days which are otherwise non-rostered days for an individual employee”. The posties were paid for any additional overtime they did, but the issue for the Court was whether NZ Post must also compensate the Posties for making themselves available.
Employers must have genuine reasons based on reasonable grounds for requiring an employee to make themselves available to work over and above their guaranteed hours and they must receive reasonable compensation for remaining available.
In this case, NZ Post, with the support of Business NZ, unsuccessfully argued that the payment of reasonable compensation under section 67D should be applied only to ‘zero hour contracts’ (e.g. where employees have no guaranteed hours but are required to make themselves available). Instead, the full bench of the Court held that the purpose of the availability provisions was to ensure that ANY employee who agrees to be available for work over and above their guaranteed hours should be compensated for their availability. The Court expressed a strong view that employee availability has an opportunity cost – making themselves available for work means that employees are forgoing opportunities in their private life and for this reason they should be reasonably compensated for making themselves available to “unnecessary incursion”. The judgement also notes, somewhat scornfully, that it should not be a novel proposition for an employee’s time to be viewed as a commodity which has value.
This decision clarifies the purpose of section 67D of the Employment Relations Act 2000 and what employers must do when they require employees to make themselves available.
While we often think of availability provisions as relating to waged employees, the Court held that just because an employee is on salary does not mean that their salary sufficiently compensates them for their availability. It must be agreed upon between the parties that compensation for employee availability has been included in the salary, or an on-call allowance should be introduced in order to ensure the availability provision is compliant. For employers with staff on low salaries who work long hours, it is also worth ensuring that no inadvertent breach of the Minimum Wage Act 1983 is occurring. As a guide, if an employer pays a salary of $45,000 gross per annum and the employee works 49 hours or more per week, the employer is likely to be in breach of the minimum wage entitlements.
Workplace Law team
If you have any queries in respect of the above, or any other Workplace Law issues, please contact a member of Lane Neave’s Workplace Law team:
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