Are Zero Hour Contracts Legal In Nz

Brent Mccoy
• Saturday, 31 October, 2020
• 7 min read

The aim is to allow flexibility when you and your staff both agree to it, and to give employees some certainty about what they can and cannot expect from their employer. Review your employees’ contracts to make sure they include hours of work.

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(Source: www.newshub.co.nz)


Any guaranteed hours of work start and finish times days of the week. The rules changed back in April 2016 and all employers must comply with the much tighter laws on these clauses.

However, we have noticed that several employers are still failing to comply with the changed requirements for zerohourcontracts ”. This article sets out some changed rules about zerohourcontracts and some potential pitfalls to avoid.

Guaranteed hours; Days of the week on which work is to be performed; Start and finish times; and Any flexibility in any of these factors. An availability clause allows the parties to have some flexibility in the agreed hours.

Whether it is practical for the employer to run the business without the availability clause; The number of hours the employee is required to be available; The number of hours the employee is required to be available compared to guaranteed hours; The nature of restrictions on the employee (e.g. stay within proximity, no drinking, etc.

If you are uncertain, it is best to get advice early to avoid problems later on, because the amendments have also increased the powers of Labor Inspectors to ensure compliance with the new rules. The penalties have also been increased to motivate employers to follow the new rules.

In some instances penalties may be up to $50,000 for an individual; or for a company up to $100,000, or three times the financial gain made as a result of the breach. If there’s not an availability clause in your agreement that meets those requirements, you’re free to turn down any work you’re offered above your guaranteed hours.

This includes where you’ve agreed on a number of guaranteed hours, or on the days of the week you’ll work, or on start and finish times, or on any flexibility about those issues. If your boss doesn’t include this in your written agreement, you (or a labor inspector) can take them to the Employment Relations Authority, who can then order them to pay a monetary penalty.

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The other prominent Solicitor at Hanna & Season was Cyril McGinley who joined the firm in the late 1920s and retired as a Consultant in 1997 aged 87. These contracts have become known colloquially as ‘ zerohourcontracts and have posed significant challenges for employees who would find themselves working 40 hours one week and declined any work at all the next week in the most extreme cases, all the while being required to be available and not have another job.

Due to a rise in the number of zerohourcontracts in recent years, and protests of employees engaged on such contracts, the Employment Standards Legislation Bill was passed on 1 April 2016 to restrict the use of these agreements. Employers are still able to require workers to be available during certain times, however now if they wish to do so, they must give reasonable compensation to employees for being ‘on call’ as well as being required to give workers a minimum number of guaranteed hours.

A sticking point in the legislation which will no doubt pose problems over the coming years is the requirement to provide ‘reasonable compensation’ for workers who are on call beyond their guaranteed hours. The legislation does not provide guidance as to what constitutes reasonable compensation as it will be heavily dependent on the industry and on the effect of the provision on the individual employee.

• The employment agreement should specify a reasonable notice period to be given before a shift is cancelled; • The employment agreement should specify reasonable compensation for when the shift is cancelled outside the specified notice period.

Without knowing how a new law fits within the established framework and how the overall system operates its easy to get hold of the wrong end of the stick. So any New Zealand experts out there should feel free to correct me in the comments section.

The Bill (or at least the part we are interested in) inserts new provisions into the Employment Relations Act 2000. In its provisions on hours of work it requires employment contracts or collective agreements to specify the number of guaranteed hours of work that the employee is entitled to (S.67C).

Employers are perfectly free to specify that there are no guaranteed hours of work. So here the Bill is seeking to regulate the extent to which an employer can require an employee to be available for work while not being guaranteed it.

(b) relate to a period for which an employee is required to be available that is in addition to those guaranteed hours of work. That means that if you have no guaranteed hours, you cannot require an employee to be available for work.

To tie this altogether, the Bill specifies that employees may refuse to do work in excess of the minimum guarantee if the employer does not have a properly justified ‘admissibility provision’ providing adequate compensation. There are also the expected rights not to be subjected to a detriment for refusing additional work.

Finally, the Bill also provides for employees to be compensated if their employer cancels a shift at short notice. But it only bans zero -hours contracts if what you mean by that term is a contract where the employer is not obliged to offer any work, but the employee is obliged to accept work offered by the employer.

It does not address contracts in which the employer accepts that just as it is not obliged to offer work, the employee is free to refuse it. The Small Business Enterprise and Employment Act 2015 sought to ban exclusivity clauses in zero -hours contracts.

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