Employment dispute in Christchurch where a business faced consequences for dismissing an employee before their start date, resulting in an $18.5K payout.
Published 14 March 2023 | 2 min read
Are hours of work clearly stated within your employee agreements?
In 2023, it has become increasingly crucial for small-to-medium businesses and their employees in New Zealand to pay close attention to the requirements around hours of work and rates of pay within employment agreements.
A recent example of a convenience store in Auckland serves as a stark reminder of the consequences of failing to adhere to these legal obligations. In this case, the business was ordered to pay $28,000 in arrears and penalties for failing to keep accurate records, pay minimum wage, and provide written employment agreements to staff. Such hefty penalties can have a significant impact on the financial stability of small businesses, making it more important than ever to ensure that all aspects of the employment agreement, including hours of work, are agreed upon and clearly outlined by both the employer and employee.
We are reminding employers to ensure all employees’ hours of work and rates of pay are agreed and understood by both the employer and employee in a clearly written employment agreement.
This should include the required hours of work and the times the employee is to work.
How many hours can you legally work in NZ in 2023?
Employers should ensure employment agreements do not require employees to work more than 40 hours per week (not including overtime) unless the employer and employee have agreed otherwise. If the maximum number of hours (not including overtime) are less than 40, the employer and employee must try to fix the hours so they are worked on no more than five days of the week.
Changes to hours of work must be agreed in writing by the employee and employer.
Reasonableness of additional hours
The nature of work may require employees to work overtime or extra hours. If an employer requires employees to be ‘available to work’ over and above their agreed hours ‘as reasonably required’, they must agree on any compensation for this overtime.
Whether this overtime is factored into the employee’s salary or will be paid at the employee’s normal rate of pay (at least the minimum wage rate) or a higher rate of pay, the arrangement needs to be agreed by the employer and the employee. This should be put in writing within the employment agreement so that both parties are clear.
Additionally, if an employer requires employees to be available to work over and above their agreed hours, there must be reasonable grounds for including an availability provision, and employees must have the option to accept or decline the extra hours.
Availability provision
In some instances, an employer may decide to include an availability provision within an employment agreement.
Misunderstandings surrounding availability provisions can cause issues.
Employers must have genuine reasons based on reasonable grounds for including an availability provision and reasonable compensation must be provided to the employees for making themselves available to work under the provision. Issues can arise if employees are not given the option to accept or decline the extra hours.
Employers should carefully consider their overtime expectations of both salaried and waged staff and ensure that the wording of their employment agreements meets the requirements of the legislation.
What next?
This article is not intended as legal advice but is intended to alert you to current topics of interest. For further advice about hours of work and employment agreements tailored to your organisation's needs please contact our consulting team here.