It’s official. Omicron is here and we face another uncertain year with predicted labour shortages and time off. Many Kiwis may be working longer and harder as a result. So, what are the rules about hours of work and overtime?
The first step is to check the employment agreement. It should normally specify any agreed hours which includes any, or all, of the following:
· The number of guaranteed hours (i.e. the minimum hours that the employer will provide);
· The days of the week on which work is to be performed;
· The start and finish times of work.
It’s ok to have some flexibility about the days of the week and start and finish times. For employees covered by a collective employment agreement, their agreed hours can be covered in additional terms and conditions, such as in a letter.
If the hours of work aren’t agreed, the employment agreement should at least indicate the arrangements relating to the times the employee is to work.
Maximum hours should be fixed at no more than 40 hours per week, unless the parties agree to more. This doesn’t include overtime, however.
Many employment agreements contain clauses requiring employees to work “reasonable overtime”, or to be on-call or stand-by for additional work.
These types of clauses are known as “availability provisions” (i.e. they require employees to be available for work, but this is conditional on the employer making the work available).
Such clauses should be approached with care due to rules introduced in 2016 which limit the circumstances in which employees can be required by an employer to work above their standard hours.
Employees are entitled to refuse to perform additional work (and must not be treated adversely if they do refuse) unless their employment agreement contains a valid availability provision. There are technical rules for these provisions, including:
· The employment agreement must specify agreed hours of work and include guaranteed hours of work for the employee. “Zero hours” contracts where the employer doesn’t guarantee at least some work won’t qualify for this;
· The provision must relate to a period for which the employee is required to be available in addition to the guaranteed hours;
· Employers must have genuine reasons based on reasonable grounds for including the provision in the first place;
· The provision must provide for the employee to be paid reasonable compensation for being available to perform extra work. This is different to payment for the overtime work itself.
What is reasonable compensation?
There is no set amount but it involves having regard to things like:
· The number of hours the employee must be available and the proportion of this to the agreed hours of work;
· Any restrictions resulting from being available;
· The payment rate for the additional work;
· The amount of the employee’s salary.
It’s possible for salaried employees to agree that their salary amount already compensates them for being available for additional work. The amount still has to be reasonable in reality however.
Does this mean that employees must get extra compensation for working flexible days and times, like on a roster system?
No. It’s still ok to agree to flexible days and start and finish times, such as under a roster system. As long as employees are rostered only for their agreed number of hours and within the days and times that the employees have nominated as available, the compensation requirement should not arise. It could be problematic, however, if the employer mandates hours of availability rather than this being the employee’s choice.
Should employees be paid extra for working additional hours?
That depends on the employment agreement. Salaried employees often have clauses stating their normal salary compensates them for additional hours worked. That’s technically ok providing minimum wage entitlements are met. Workers who are paid by the hour should be paid at least their normal rate for overtime work (or possibly more depending on their employment agreement).
Are there any legal limits on how much overtime employees can be required to do?
There is no exact limit (other than what the parties might agree to in an employment agreement).
Employers who place unreasonable demands on their employees risk facing personal grievances and may breach health and safety obligations however.
If you have any queries or concerns about hours of work or require assistance with the terms of an employment agreement, the Corcoran French employment team is here to help.