Do your overtime provisions comply with employment law legislation?


A recent Employment Court decision has issued a stern reminder about availability provisions and traditional overtime requirements.

In 2015 the spotlight was put on zero hour contracts – the type commonly used in the fast food and other low skilled industries. Typically, these employment agreements involved no guaranteed hours of work, but a requirement that the employee was available to work whenever the employer directed. They often also contained restrictions on any other employment, meaning an employee could not work for other employers but did not have guaranteed work during the periods they were required to be available. 

As a result, amendments were made to the Employment Relations Act 2000 which made zero hour contracts illegal. However, the amendments do not only apply to zero-hour contracts, something which the Employment Court has recently had to remind New Zealand Post Limited (NZ Post).

NZ Post’s collective agreement contained a fairly standard clause which required employees to be available to work additional hours at the end of their regular shift if the operational demands of the business required. The question for the Court was whether, following the 2016 changes to the law, NZ Post could require posties to perform extra hours of work in addition to their standard hours without compensating them for their availability, as many employers have always done. The answer was a firm no.

The Court noted that while it benefited NZ Post to have posties make themselves available to work overtime to enable it to meet its fluctuating needs, this came at a personal cost to the employee, for which the employee should be compensated for. It described the 2016 changes to the legislation as “...statutory recognition that an employee’s time is a commodity which has a value.”

The take home? Any business that uses overtime provisions, or that requires an employee to be available to work outside of their regular hours (rather than it being a voluntary exercise), needs to urgently review their employment agreements to ensure that if availability provisions are being used, the employee has guaranteed hours of work, and is being reasonably compensated for that availability.

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