Being ‘On Call’ Could Require Minimum Wage Payments

A recent decision from the Employment Relations Authority (ERA) has determined that being ‘on call’ is ‘work’ and therefore for each hour the employee is on call they must be paid the minimum wage. 

This decision could have significant implications for many industries and businesses. Businesses use ‘on call’ as a means of providing 24/7 response to their customer without incurring an often unaffordable wages cost in the process. A requirement to pay the minimum wage for every on call hour will not be economically viable for many businesses. 

Before the panic buttons are hit, it is important to understand the rationale behind this case and also identify the specific circumstances that made being ‘on call’ classified as being work. It won’t apply in all ‘on call’ situations. 

The ERA considered the Court of Appeal decision in Idea Services Ltd v Dixon. This was the ‘Sleepover’ case where it was determined employees who were required to sleepover in the residences of the people they cared for, were working while asleep. In assessing what was deemed to be work, three criteria were established by the Court of Appeal: 

• The constraints on the freedom of the employee
• The nature and extent of the responsibilities, and
• The benefit to the employer of having the employee perform the role. 

The Court also noted the more significantly a criteria applies, the more likely the activity will be deemed to be work. In other words, the greater the restrictions, the more responsibility and the greater benefit to the employer, the higher the probability the minimum wage should be paid for the work activity (in that case sleeping over). 

The same principles were applied in this ‘on call’ case. The employees were anesthetic technicians at the DHB. When on call, they were required to be able to report to work within 10 minutes of receiving the call. The benefit for the DHB is that they didn’t have to have staff rostered 24/7 in the theatres, but were still able to respond to emergency situations outside of normal operating hours. 

I am sure most people would agree that being available and ready to report at work within 10 minutes would place significant restraints on what an employee could do. 

Our advice to employers who have ‘on call’ employees is to look closely at the requirements of your staff, consider whether the restrictions you are requiring of the employee are necessary to deliver the service, and if you are in doubt about how this ERA decision will apply to you, please give us a call.