Zero Hour Contracts

Issues on the “Zero Hour Contracts” for employees have been topical in the lead up to the Employment Standards Legislation Bill (“the Bill”), which is due to be passed on 1 April 2016.

Zero Hour Contracts, in essence, is an employment agreement which provides for an employer to engage an employee without any reciprocal guarantee of workhours and therefore no guarantee of any remuneration. Employees are expected to be on-call all the time, without being paid anything to recognise this commitment. There are four practices that are problematic and associated with such contracts being:

• Employers not setting down minimum hours;
• Employers cancelling shifts without reasonable notice or compensation;
• Employers putting up reasonable restrictions on secondary employment; and
• Employers making unreasonable deductions from employees’ wages.
   

The key take home message is that the proposed reforms will not ban Zero Hour Contracts outright. Rather it provides statutory meaning and limitations to add balance. The result of this is that the ‘casual employment contract’ will remain intact, which may still be a viable option for employers.

There are still issues which need to be addressed before the Bill passes. One example is concerned about whether an employer could be stopped from simply creating a ‘one hour contract’ under the new legislation – which in practice may be no different from a Zero Hour Contract.

The Transport and Industrial Relation Select Committee is currently undergoing a review of the Bill and its report will be due 12 February 2016. We will pay special attention to the recommendations made by the report in the new year and see how the trickier issues will be dealt with.

This Article is intended as general information and not specific legal advice about casual employment relationships. Please feel free to get in touch to find out how we can assist you.

James Turner (Partner) on (09) 966 3603 (jturner@mcveaghfleming.co.nz) 

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Employment Law