New Zealand: Availability Provisions

In August the Employment Court released its first decision on so-called ‘availability provisions’, whereby an employee must be on standby to work any hours the employer requires them to work, but on the other hand, they can only work if the employer gives them work to do. This arrangement is common in ‘zero-hours contracts’ and section 67D of the Employment Relations Act 2000 was introduced by Parliament to curb this practice. The case at hand involved the interpretation of this provision by the Court.

Background to Availability Provisions

‘Availability provisions’ mean that employees must accept any work that the employer makes available for them, but they can only work if the employer gives them work to do.  These provisions are not permitted unless certain criteria are met.  For example, an employee’s agreed hours of work must include some guaranteed hours.   The Employment Relations Act states that if employees are required to be available for work as needed by their employer outside of their guaranteed hours, there must be an availability provision covering this and the provision must include reasonable compensation for the employee making him or herself available.

In Fraser v McDonald’s Restaurants (New Zealand) Ltd the Employment Court considered whether clauses in McDonald’s individual employment agreements amounted to availability provisions, as defined in section 67D.

Facts

The case concerned two employees who worked at McDonald’s, each of whom claimed their employment agreements contained an availability provision which did not meet the requirements of section 67D.  The provisions stated that, in addition to guaranteed hours, McDonald’s could roster or request that employees work additional hours within timeframes that they had indicated they were available to work.  This could occur in the following ways:

• Employees could be rostered in the week prior to each shift to work additional hours.  They had 24 hours from the posting of this rostered schedule to tell their employer that they could not work these additional hours;
• Employees could be requested to work hours in addition to the scheduled roster.

The issue before the Court was whether the provisions amounted to a “requirement to be available” under section 67D(1).

Result

The Employment Court considered both the wording of the contractual provisions and evidence about the practice of the business in implementing the provisions.  It emphasised that in assessing the lawfulness of an availability provision pursuant to section 67D(1), not only must the  availability provision require  employees to be available to work additional hours, but on the facts, the affected employees must actually work them.

The provisions did not meet this level of compulsion.  The use of the word „requested“ rather than the word „required“ suggests that employees could be asked but not compelled to work additional hours.  Combining this with evidence that in practice, McDonald’s did not pressure employees to work extra hours, or impose a penalty on them if they refused to do so, the Court found that the provisions were not „availability provisions“ under section 67D.

Significance 

Since 1 April 2017, all individual employment agreements must include an availability provision if an employer requires an employee to be available for work outside their specified guaranteed hours.  This includes providing reasonable compensation.  The need for an availability provision will not arise if the employment agreement does not compel the employee to be available to work additional hours. Further, in assessing whether an availability provision is necessary or compliant with section 67D, the practice of the employer will be relevant.