Should employers ask staff to work longer hours?

Thinking about asking your employees to work longer hours? Think again.

A recent Employment Court decision raises big questions over whether employees should be made to work additional hours.

There are many employment agreements that have clauses saying staff may be required to work reasonable overtime.

For example, salaried staff may recognise clauses like “the duties of your position may require you to work additional hours beyond the normal hours of work”.

However, a victory for the Postal Workers Union against New Zealand Post in the Employment Court means the goalposts have shifted.

In fact, the Court ruled that employees may not be obliged to work additional hours at all.

According to DLA Piper, all employment agreements will need to be reviewed to check for compliance.

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…”.

While the posties get paid for overtime, the Postal Workers Union argued – successfully – that this clause is an “availability provision” under section 67E of the Employment Relations Act 2000 (ERA).

Since 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.

So how was this decision arrived at?

DLA Piper partner John Hannan said Sections 67C-67H of the ERA were inserted in 2016 and 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).

However, the Court has decided this was not necessarily Parliament’s intention, and there are now larger implications, he said.

“Employment agreements, to put it simply, now require valid ‘availability provisions’ if employers want to require staff to work overtime or extra hours.”

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, according to DLA Piper.

NZ Post’s overtime clauses came without availability compensation. Staff are entitled to say “No” to extra hours.

So what does this all mean for employers? Firstly, they need to immediately review their employment agreements.

Hannan said that 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”, said Hannan.

If your employees are on wages, a loading of the standard hourly rate may be feasible.

However, for salaried employees there may need to be a provision inserted that the salary covers all hours worked.

The reason? Without such provisions, employees now have no obligation to work additional hours.