News reports gave less air time to the deadline for employers to make changes to all existing employment agreements – 1 April 2017.
Many employers will have agreements which fall foul of the new amendments and could find themselves up for fines or liable to pay large amounts of back pay for overtime or cancelled shifts unless the agreements are updated. This is a golden opportunity to tidy up employment agreements which might be outdated or not allow employers to run their businesses in the current environment.
This is a golden opportunity to tidy up employment agreements which might be outdated or not allow employers to run their businesses in the current environment.
In case you missed the amendments, our brief summary of the key changes are set out below.
“Zero-hours contracts” sound like something which only exist in terrible working conditions. However they are more common that you might think. Simply put, they are employment agreements where an employer can require its employees to attend work for any number of hours but with no guarantee that the employee will get any work at all.
The concern is that staff do not know whether they would receive enough hours from week-to-week to pay their rent, mortgage and other fixed expenses. This arrangement is different to casual staff who have the ability to decline work with no repercussions.
From April 2017, all employment agreements must specify the number of agreed hours between an employer and employee. This means setting out the days and start and finish times when work will be carried out (and any flexibility e.g. rostering). If an employer wants to be able to require staff to work (as opposed to a casual employer), then the agreement will also need to specify a number of guaranteed hours i.e. a minimum number of hours per week. This applies to salaried employees and staff who are paid wages.
There is also a new provision which essentially makes it compulsory to pay overtime to waged staff if the employer wants to be able to require staff to work more than their guaranteed hours. The provision in the contract must set out an additional period of time where the employer may require the employee to be available to work. The additional period must be “reasonable” and there are strict criteria as to how that will be assessed. However, until the criteria has been considered through the courts businesses should think carefully about such arrangements. Staff on salaries can have the compensation for availability hours considered as a part of their overall salary package.
Simply put, they are employment agreements where an employer can require its employees to attend work for any number of hours but with no guarantee that the employee will get any work at all.
There are now strict rules about when employers can cancel shifts without compensating their staff. It is critical that employment agreements contain a written provision about this, otherwise the employer will have to pay for any cancelled shift – regardless of how much advance notice is provided.
The solution is to include a provision setting out reasonable notice for shift cancellation. The notice provided must be reasonable to avoid any payment for the cancellation. There are set considerations in the Act for determining the notice period, but it will remain to be seen how the Authority and Court interpret those criteria.
Further, if an employer cancels a shift after the notice period, but before the shift begins, they will have to pay the employee an agreed amount of compensation. As with the period of notice, the compensation amount must be determined with regard to set considerations which will become clearer once the courts have provided some guidance.
There are now stricter requirements regarding wage and time records. Unlike the previous provision, employers will now have to keep a record of time for staff on salaries as well as their waged staff.
This will likely add some administration costs to an operation with mostly salaried staff which hasn’t kept time records in the past. The new requirements are designed to enable Labour Inspectors to easily confirm compliance with minimum statutory entitlements. Employers may choose to have their salaried staff keep old-fashioned time sheets or look to more modern online recording methods to minimise the administration time.
How can we help?
WRMK is experienced in dealing with all aspects of employment law. We regularly assist employers to ensure their employment agreements and record-keeping comply with the latest requirements.
If you would like further information about the changes or any employment matters please feel free to contact our employment law team or your usual WRMK legal advisor.
Our thanks to Simon Davies-Colley for writing this article.