Availability Provisions Clarified: Case Law Update

In response to “zero hours” contracts, legislation was introduced on 1 April 2016, making zero-hour contracts unlawful and prohibiting the use of availability provisions unless certain criteria are met. 

Earlier this month, on 2 May 2019, in the case of Postal Workers Union of Aotearoa Inc v New Zealand Post Ltd, the Employment Court grappled with this new legislation.  Importantly, the Court provided much-needed clarity on the interpretation and application of availability provisions.

The Court rejected the argument that the availability provision legislation was limited to zero-hour contracts, which provide no guaranteed hours of work but require an employee to remain available to accept work.  Rather, the Court found that the provision in the collective agreement requiring employees to work “reasonable overtime” was in fact an availability provision. 

The Court reached the conclusion that:

  • If an employer wishes to rely on being able to require an employee to work overtime, as opposed to it being a voluntary exercise, it must comply with the requirements of the [Employment Relations] Act, including by providing reasonable compensation for the availability the employee has committed to providing for the employer’s benefit. 
  • If the requirements of the Act are not met, the result is that the employee can decline to make themselves available. 

The Court went on to consider section 67D(7) of the Employment Relations Act 2000 which allows employers and salaried employees to agree that the employee’s remuneration includes compensation for the employee making himself or herself available for work under an availability provision. 

NZ Post argued that the delivery agents were paid a ‘salary’ which the parties had agreed incorporated availability compensation.  This argument was rejected on the evidence and the Court did not accept that delivery agents were paid by way of a salary.  

However, importantly, the Court went on to comment that, even if those hurdles were overcome, the clause in the agreement did not make reference to compensation, nor was there any evidence that both the employer and employee agreed that the employee’s remuneration incorporated compensation for availability. 

Ultimately, the Court held that the availability provision requiring delivery agents to work reasonable overtime in excess of their standard hours, was unenforceable as no provision was made for reasonable compensation.  Delivery agents were therefore entitled to refuse to perform work in addition to their guaranteed hours. 

What employers need to know

  • If an employer has genuine reasons for requiring employees to be available to work additional hours, the legislative requirements must be complied with, which includes providing reasonable compensation for that availability.  Failure to comply will mean an employee can decline such work.
  • In respect of salaried employees, if the employee’s salary is intended to include reasonable compensation for their availability to work additional hours, this will now need to be expressly specified in the employment agreement. 

Author: Aishleen Sluiters, Managing Barrister 

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