Employees Work Overtime?

If you require employees to do overtime, even if they can turn it down in practice, they must be compensated for this availability according to a recent Employment Court decision.

The case, Stewart v Affco New Zealand Ltd [2022] NZEmpC 200, highlights the need to ensure the wording in Employment Agreements accurately reflects working practices and that any clause meets the requirements specified in the Employment Relations Act (the Act).

The requirement for ‘availability clauses’ came into being in 2016. An Employment Agreement doesn’t have to have one unless an employer requires an employee to be available outside their normal working hours. This may be to work overtime at the end of a work day to finish a job or come in on their day off to cover staff shortages. An employer can’t simply require employees to be available.  To have an availability provision the Employment Agreement must:

• Specify a minimum number of guaranteed hours of work including days of the week and start and finish times;
• Relate to a period the employee is required to be available that is in addition to those guaranteed hours of work; and
• Provide reasonable compensation for the employee making themselves available to undertake the work (for salaried employees, their salary can provide this compensation).

Mr Stewart was employed by AFFCO in 2018.  His Employment Agreement said he was required to be available for overtime but didn’t provide for compensation. In 2020 AFFCO offered Mr Stewart 1.25% on top of his weekly wage for availability. He declined this. Mr Stewart continued to work significant overtime (for which he was paid for the hours worked), and claimed he had no choice although AFFCO never explicitly said he had to do the overtime.

This resulted in Mr Stewart being unable to plan his life outside of work when he may be required to do overtime. The Court concluded this unjustifiably disadvantaged Mr Stewart and ruled this was a non-compliant availability provision and Mr Stewart was entitled to availability compensation back dated four years to when he signed his employment agreement.

If you have a requirement for employees to work overtime or be available outside of their normal working hours, it is important that your Employment Agreements accurately reflect this and comply with the legislative requirements. If you have concerns, please contact one of our Consultants.