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Availability Provisions in Employment Agreements

21 May 2019

The 2016 amendments to the Employment Relations Act 2000 introduced rules around when and how an availability provision can be included in an employment agreement. However there has been uncertainty as to how broadly the rules could be applied. The case of Fraser v McDonald’s Restaurants (NZ) Limited [2017] was the first landmark case to assess whether availability provision rules were engaged or infringed. Since then there has been debate over whether these rules apply to just ‘zero hours’ workers and or whether they apply to all employees.

In the recent case of Postal Workers Union of Aotearoa Inc v New Zealand Post Limited the full bench of the Employment Court has said “yes” they do encompass all employees and in their decision have provided further certainty on how these provisions should be applied. Their overarching view is that the intent of the legislation is to be as far-reaching as possible to reach the purpose of addressing unfair working practice relating to employee unavailability not just limited to ‘zero hour’ contracts.

Postal Workers Union of Aotearoa Inc v New Zealand Post Limited

New Zealand Post employs Delivery Agents, what we know as “Posties” under a Collective Agreement to deliver mail to households and businesses throughout New Zealand.

Clause O2O of the Agreement states, “Delivery agents may be required to work reasonable overtime in excess of their standard weekly hours, 37 hours and 40 minutes, (subject to safe operating procedures), provided that work is voluntary on days which are otherwise non-rostered days for an individual employee.” There is no reference to any compensation payable to the Posties in that clause or in the agreement

Essentially what this clause means in practical terms is that if you are a Postie rostered on for work that day, you do not know what time you will finish each day as overtime may be required at the end of your working day to deliver all mail depending on how much mail is required to be delivered. And of course each day the mail quantities are unpredictable. However Posties are still expected to remain available in case overtime is required.

Postal Workers Union Submission

The Plaintiff, the Postal Workers Union said that the requirement under this clause 020 was an availability provision covered by the rules set out in the Employment Relations Act that took effect in 2016. They said the clause requires Posties to make themselves available to work in excess of their guaranteed hours of work at New Zealand Post’s request.

The Union also said that this clause nor any other provision of the Collective Agreement provided for payment of reasonable compensation for such availability, therefore it follows that clause 020 is unenforceable and that a Postie may refuse to work overtime on rostered days regardless or not of whether there is mail to deliver.

NZ Post – 3 Main Arguments

  1. That Clause 020 was not an availability provision having regard to the scheme and purpose of the relevant statutory provision which was directly aimed at zero hour contracts. They submitted that the performance of ‘Postie’ work is not conditional on New Zealand Post making work available because the delivery agents are not on standby or waiting for a decision to provide them with any work rather they are working as rostered and are simply required to do additional work at the end of the day and when operational demands require and that to apply this, would apply to every Employment Agreement other than casual agreements and therefore require the guaranteed hours to be included in the great majority of Employment Agreements.
  2. That Section 67E only permits employees to refuse to perform work in addition to any guaranteed hours specified in an Employment Agreement as the Collective Agreement does not specify guaranteed hours of work. Accordingly Section 67E is not engaged. This means that a delivery agent is not entitled to refuse work.
  3. That even if Clause 020 was an unavailability provision then no issue arises because Posties are remunerated by way of salary, which incorporates reasonable compensation for availability.

Employment Court Decision

They rejected the first argument on the basis that the legislation recognises an employee’s time is a commodity which has a value. The Court saw no distinction in the law between an employee who is restricted in their personal life because they may be required to work some hours, from an employee who has work but is restricted in their personal life because they may have to perform additional hours beyond what has been agreed.

The provisions from 2016 were intended to redress balance in terms of contractual arrangements in employment particularly for vulnerable workers with bargaining power. If the legislation is ambiguous and has unintended consequence it is for parliament to address and not the court’s role to assume something has gone wrong in the drafting.

They held that s67D was not intended to be limited to ‘zero-hour’ contracts, but rather that it was intended to ensure that reasonable compensation was payable to employees who make themselves available for the employer’s benefit. It is true zero hour contracts were an example of the balance to be addressed but nothing to suggest that were the only instance of imbalance to be addressed.

The Court rejected the second argument –on the basis there is nothing uncertain about 37.40 hours specifying the guaranteed hours of work. This is the minimum number of hours that employee and company have agreed as clause O14 provided and the contractual hours for a Postie provided for in the collective are guaranteed hours for the purpose s of S67E.

The Court rejected the third argument on the basis that the relevant clause did not specifically refer to any compensation or component of salary which was directly related to compensating the employees for their availability. The Court found the clause was an availability provision but was unenforceable because it did not provide for reasonable compensation (not complying with s67E of the ERA as no provision was made for reasonable compensation).

The Court ruled delivery agents can decline to make themselves available for overtime if they are not reasonably compensated for doing so.

Summary

The Employment Court observed that the legislation reflected a statutory recognition that an employee’s time is a ‘commodity which has a value’, and that that was not a ‘startling or novel proposition’.

The intention of the law was to ensure reasonable compensation was payable to employees who made themselves available for work, for their employer’s benefit, and so were unable to accept other work or engage in any other activity.

Its judgement said “We accept that various factors affect the time it takes to meet the operational delivery needs of NZ Post’s business, including the day of the week; planned and unplanned delivery agent absences; the volume of product to be delivered and other contingencies. We accept, too, that some of these factors are outside of NZ Post’s control and that some are within the control of individual delivery agents. While we appreciate that it is difficult for NZ Post to know with certainty what hours will be required to complete deliveries from day to day, we do not think that this factor materially assists in determining whether the requirements of [the law] are met”.

What you need to do

This decision will have a wide impact. Employers who want to be able to require their employers to be available to work over and above their standard regular hours (rather than it being a voluntary exercise) must have a compliant availability provision in their employment agreements. Without a legally-compliant availability provision in their employment agreement can refuse to be available on the basis that their availability provision is unenforceable.

You will need to check that the availability provision has not inadvertently led to the minimum wage being breached in that where a person is on a low salary, works long hours and has an availability provision, there is a risk that working extended hours could be a breach of the minimum wage.