Asking your staff to work longer hours? Not so fast.

A new Employment Court decision raises big question marks over whether employees can be made to work extra hours.

Many employment agreements have clauses saying staff may be required to work reasonable overtime. E.g. salaried staff may recognise clauses like “the duties of your position may require you to work additional hours beyond the normal hours of work". But a victory for the Postal Workers Union against New Zealand Post in the Employment Court means the goalposts have shifted. The Court has decided employees may not be obliged to work additional hours at all.

ALL employment agreements will need to be reviewed to check for compliance, says DLA Piper.

The background here is that posties working for NZ Post have a collective employment agreement (CEA) that states "delivery agents may be required to work reasonable over time in excess of their standard hours…". The posties get paid for overtime, but the Postal Workers Union argued - successfully - that this clause is an "availability provision" under section 67E of the Employment Relations Act 2000 (ERA). Because it makes no provision for payment of “reasonable compensation” for being available to work overtime, on top of the pay for overtime worked, the clause is unenforceable. Posties can refuse to work extra hours.

How was this decision arrived at? DLA Piper partner John Hannan says “Sections 67C-67H of the ERA were inserted in 2016. Most commentators thought they were there to deal with undesirable ‘zero hours’ contracts (where an employee has no guaranteed hours of work, and is not entitled to refuse work or to take up secondary employment). But the Court has decided this was not necessarily Parliament’s intention, and there are now larger implications”, he says. “Employment agreements, to put it simply, now require valid ‘availability provisions’ if employers want to require staff to work overtime or extra hours.”

In the view of DLA Piper, employers must have genuine reasons for including availability provisions: those reasons must be ‘reasonable’ and must provide for the payment of ‘reasonable compensation’ in return for an employee being ready and available for extra work. NZ Post’s overtime clauses came without availability compensation. Staff are entitled to say “No” to extra hours.

What does this mean for employers? They need to immediately review their employment agreements. John Hannan says “Any provision in an employment agreement requiring an employee to work overtime when requested will be an ‘availability clause’, and not enforceable unless it is reasonable and accompanied by compensation. Just offering overtime money is no longer enough.”

“An employer who in some way penalises or disadvantages a staff member for refusing to work additional hours will be exposed to personal grievance claims and awards of damages”, says John Hannan. If your employees are on wages, a loading of the standard hourly rate may be feasible. For salaried employees, there may need to be a provision inserted that the salary covers all hours worked. Without such provisions, employees now have no obligation to work additional hours.

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