Employment Relations Amendment Act 2016
From 1 April 2017, all individual employment agreements will need to comply with new employment standards under the Employment Relations Act 2000.
These new requirements were introduced by the Employment Relations Amendment Act 2016. Employers were given a one-year grace period from the date that the amendment was passed, with only individual employment agreements entered into from 1 April 2016 onward currently needing to be compliant. That grace period is now almost up, and the changes will soon apply to all individual employment agreements. Collective employment agreements will only need to be updated when the collective agreement is replaced.
The key changes relate to "zero-hour contracts" (now referred to as availability provisions), secondary employment provisions, and cancellation of shifts for shift workers.
"Zero-hour" contracts have been prohibited. If an employer requires an employee to be available to work additional hours, and the employee is required to accept any work made available, this is likely to amount to an availability provision.
Availability provisions can only be included in employment agreements if the employer:
has genuine reasons based on reasonable grounds for including the availability provision;
provides the employee with some "guaranteed hours";
provides the employee with "reasonable compensation" for being available (for salaried employees, the salary can include this compensation); and
specifies the hours for which the employee is expected to be available above their guaranteed hours.
Some legal commentators have recently said that an "hours of work" clause in a salaried employee's agreement (that states that the salary covers additional hours necessary to perform the role) will be unlawful unless the number of additional hours are specified and additional "reasonable compensation" is paid.
Some disagree with this view and does not believe that was what Parliament intended. Rather, the requirements relating to availability provisions are intended to apply to situations where an employee is required to be effectively "on-call" to work additional hours, without (until now) any guarantee of work.
Secondary employment restrictions mean employers can only restrict an employee from undertaking secondary employment if they have genuine reasons based on reasonable grounds for including such a provision in their employment agreement.
Finally, employers must now include a reasonable period of notice for cancelling a shift in shift workers' employment agreements, as well as an amount of "reasonable compensation" that will be paid to the employee if this reasonable period of notice is not given. This means that if an agreement does not comply and an employer cancels a shift, then the employee is entitled to what they would have earned for working that shift.
Employers will need to review their individual employment agreements and check to ensure that they are compliant by 1 April 2017. Failure to do so could result in employers facing personal grievance claims, penalties, or being unable to enforce non-compliant clauses
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.