New Zealand: Compensation for Employee Availability
An Employment Court decision has confirmed if employers want their employees to be available outside of their normal working hours, then they must pay for their availability, even if they don’t do any extra hours.
NZ Post was taken to the Employment Court by the Postal Workers Union, challenging them on the question of whether they could require their employees to work additional hours, on top of their normal hours, and not pay them for keeping themselves available.
The postal workers had a clause in the Collective Agreement which is also reasonably common in Individual Agreements. It stated employees may be required to work reasonable overtime. If the postal worker did work, they were then paid overtime.
Compensation for availability provisions became a requirement in legalisation in April 2017. An availability provision is any term in an employment agreement where an employee is required to be available for work, but the employer is not required to provide work. Compulsory overtime clauses and stand-by or on-call clauses are examples of availability provisions.
An employer must have genuine reasons based on reasonable grounds, and the Employment Agreement must provide for the payment of reasonable compensation for the employee’s availability if it is a requirement to work. The employee can refuse to work more than their guaranteed hours if this is not in place.
In this case the Court ruled that the requirement to be available meant an employee’s personal life was affected. It stated in its decision that: “While it benefits NZ Post to have delivery agents holding themselves available to work overtime to enable it to meet its fluctuating business needs, this comes at a personal cost to the affected employee“.
The Court went on to say: “It seems to us to be self-evident that the value of an employee’s otherwise private time applies equally whether they are waiting to be called in for work or on the off-chance they might be required to undertake additional hours of work at the end of their usual working day. In either case the employee is forgoing opportunities in their private life“.
The union and NZ Post were sent back to mediation by the Court to try to determine what level of compensation will be paid.
This decision will have a significant impact on the large number of businesses who have not amended their Employment Agreements since the legislation changes. Fundamentally, if an employer wants to obligate an employee to work additional hours they must pay for the privilege of the employee simply being available in case they are required to work. The big question yet to be answered by the Courts is what constitutes “reasonable compensation”.