Why overlooking overtime and pay reviews costs businesses

Published 28 Jun 2025 | 2 min read

Working excessive hours without agreement. Promised pay reviews never delivered.

These were the claims at the centre of a recent personal grievance that forced the Employment Relations Authority (ERA) to untangle what went wrong between a freight and concrete company and one of its promoted employees.

For New Zealand businesses, the decision is a sharp reminder: even well-intentioned employment relationships can breach the law if contract terms are not properly followed or documented.

How did overtime and pay reviews lead to a grievance claim?

Many businesses are under pressure to do more with less. When skilled staff are promoted or step up during gaps in leadership, it's easy to rely on verbal agreements or blurred job boundaries.

But in this case, an engineer and truck driver argued his employer pushed him into excessive overtime without proper agreement and failed to review his pay as contractually required. Eventually, he resigned and claimed constructive dismissal.

What complicated the situation was the mix of formal contracts, informal pressure, and high expectations. The company claimed the worker had agreed to flexible hours and was the only employee capable of performing critical concrete batching work.

But time records showed a pattern of repeated Saturday work and long weeks without clear mutual agreement.

On top of this, pay reviews were promised but never held, with the employer later deciding they were unnecessary without actually engaging the worker.

What the ERA decided, and what businesses must take from it:

• The worker’s agreement stated overtime over 40 hours per week must be by mutual agreement. The Authority found this was not honoured, as the worker had no real ability to decline the extra hours.
• Pay reviews were a contractual obligation. The company failed to conduct both the probationary and annual reviews, despite clear terms requiring them to do so in consultation with the worker.
• The ERA dismissed health and safety concerns, stating the employer had sufficiently mitigated risks and complied with its duties.
• The worker’s claims of constructive dismissal were not upheld. The breaches were found to be unjustified actions but not serious enough to warrant resignation.
• The worker was awarded $14,000 for disadvantage caused by lack of overtime control and failure to review pay, recognising his loss of dignity and emotional impact.

This decision proves how crucial it is for New Zealand employers to honour the detail in employment agreements, especially around overtime and remuneration reviews.

Even if business needs change or verbal agreements occur, they do not override what is written and signed.

Employers should also avoid relying on informal communication when managing performance-related decisions like pay reviews.

For New Zealand managers and HR teams, the takeaway is simple: drive clarity into your contracts, prove agreement through records, and protect your workplace relationships by sticking to the commitments you’ve made.

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NZ law requirements?

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