Employment Court Guidance on Availability clauses

A recent Employment Court ruling provides guidance with regard to the meaning of “availability”, including the concept of “reasonable compensation” for availability. That is, whether employers can require their employees to work additional hours of work above their standard working hours, without paying them for being available to work.

In Postal Workers Union of Aotearoa Inc v New Zealand Post Limited, NZ Post delivery agents’ collective agreement included a clause, requiring workers (i.e. your local ‘Postie’) to work reasonable overtime in excess of their standard hours. The clause said:

“Delivery Agents may be required to work reasonable overtime in excess of their standard hours (subject to safe operating procedures) 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, but the issue before the Court was whether NZ Post could require workers to perform extra hours of work, and also whether NZ Post was obligated to provide additional compensation to the Posties for requiring them to be available.

The Employment Relations Act (the Act) states that employers must have genuine reasons based on reasonable grounds for requiring an employee’s available to work over and above his/her guaranteed hours, and the employee must receive reasonable compensation for remaining available.

In NZ Post, the Posties, who were paid on an hourly basis, argued the clause was an availability provision, but because no availability compensation was paid, it was unenforceable. The position of NZ Post was that: the provisions regarding availability in the Act, were intended to be limited to “zero hour” agreements (i.e. where employees have no guaranteed hours of work but are required to make themselves available); and that if the clause was an availability provision, it was enforceable because it provided for reasonable compensation by way of salary. The position of NZ Post was that this was consistent with provisions within the Act that provide salary may incorporate reasonable compensation for availability, as distinct from wages.

The Employment Court determined that:

• The NZ Post clause is an availability provision. The purpose of the availability provisions in the Act 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. Employees should be reasonably compensated for making themselves available to incursion into their private lives.
• The clause cannot be enforced because there is no reference to compensation for availability or to guaranteed hours of work.
• Accordingly, Posties are entitled to refuse to perform work in addition to their guaranteed hours on rostered days.

The Court observed that the purpose of the Act was to ensure that reasonable compensation is provided where employees make themselves available for the employer’s benefit, thereby making themselves unavailable to accept other work or engage in personal activities. In addition, in this case, the workers were not paid salary therefore this aspect of the argument failed.

The Court commented that the way in which compensation is to be calculated suggests that the greater the span of agreed availability, the larger the compensatory payment should be. The nature of any resulting restrictions was also a relevant factor for consideration.

The Court noted that the particular wording of an agreement will likely be pivotal in any assessment of whether a clause is deemed an availability provision.

This case provides a good opportunity for employers who require an employee to be available to work additional hours, to review their current practice. Employers must:

• have a genuine reason based on reasonable grounds for that; and
• specify the requirement in the relevant employment agreement, including the guaranteed hours of work, period of availability required, and reasonable compensation payable for the availability.

Where an availability provision does not comply with these requirements, the clause cannot be enforced and employees will be entitled to decline any additional hours. Further, they cannot be treated adversely for doing so.

Many employers had taken a view that availability provisions relate to waged (not salaried) employees. However, the Court’s judgment makes it clear that just because an employee is on a salary does not mean that the salary sufficiently compensates the employee for his/her availability. The parties must agree that the compensation for the employee’s availability has been included in the salary, or, an on-call allowance should be introduced in order to ensure compliance.

This case highlights the necessity for employers to have a carefully drafted, compliant availability provision, if you require your employees to be available to work in addition to their normal working hours. DTI Lawyers are happy to review any existing clauses, or work with you to draft appropriate and compliant terms for your workplace.