Should minimum hours in a contract be paid even for less rostered time?

The Employment Relations Authority (ERA) recently dealt with a wages dispute where a worker argued he was owed payment for minimum contracted hours, despite being rostered for less time.

The worker said his employment agreement promised him "a minimum of 40 hours per week" but he wasn't paid for these minimum hours during slower periods.

The case explored whether specifying minimum hours in an employment agreement creates an obligation to pay for those hours - even when business needs don't require them.

Worker’s minimum hours under the contract

The worker was employed as an acting duty manager at an East Auckland bar and eatery under an agreement dated 13 March 2023.

Over his 25-week employment period, he identified 64.75 unpaid hours across multiple weeks where he was rostered below the 40-hour minimum, calculating he was owed $1,726.64 in wages.

The employer argued they never promised to provide or pay for 40 hours each week. Instead, they said their general manager set weekly rosters based on the business's "operational situation" and paid the worker only for hours actually worked according to that roster.

Agreed working hours vs. performed work

The Employment Relations Act 2000 requires employment agreements to specify either agreed working hours or arrangements about when work will be performed. The Act specifically states that agreements should outline guaranteed hours, work days, start and finish times, and any flexibility in these arrangements.

The disputed clause in the employment agreement stated: "Hours of work – As a full-time employee, you agree to work a minimum of 40 hours per week to discharge your duties.

However, due to the nature of our business, your hours of work will be in accordance with our roster schedule which is decided from time to time."

ERA analyses employment contract

The ERA examined how a reasonable person would understand the agreement's meaning. As stated in the decision:

"The hours of work clause in this employment agreement required [the worker] to reserve at least 40 hours of his time each week to be used as [the employer] required."

The Authority dismissed the employer's position that the roster could set any number of hours below 40.

The decision noted: "If that was the mutual intention of the clause, the words expressing his agreement to work a minimum of 40 hours would have no meaning."

The ERA emphasised established employment law principles about paying workers for agreed hours when they're ready and willing to work.

Their determination stated: "paying fewer than 40 hours would be inconsistent with the common law principle obliging an employer to pay a worker for their agreed hours of work provided the worker was ready, willing and able to work those hours."

The Authority found no evidence that the worker wasn't available to work. As noted in the decision: 

"While there was some disagreement about whether [he] had been available to work all the hours referred to, the evidence was not sufficient to establish he had failed to be ready, willing and able to work the agreed minimum of 40 hours."

"The terms of employment mutually agreed between [the employer] and [the worker] required him to agree to reserve at least 40 hours in each week to carry out duties on days and times [the employer] considered best served the needs of its business," the ERA concluded.

The Authority ordered the employer to pay $1,726.64 for the unpaid hours, plus interest calculated from 11 September 2023, and reimburse the $71.55 ERA application fee.

This case shows that when employment agreements specify minimum hours, employers must either provide those hours or pay for them if the worker was available to work. The only exceptions would be situations where workers are sick, on annual leave, or fail to show up for rostered shifts.