Shift work: cancelling shifts and availability provisions
When can an employer cancel an employee’s shift or require an employee to be available for work?
Changes to the rules in the Employment Relations Act 2000 (“the Act”) that came into force on 1 April 2016 restricted the freedom employers had to cancel shifts or to require their employees to be available for work which ultimately may or may not be offered.
Initially these pro-employee changes only applied to agreements entered into after the date the changes came into force. Since 1 April 2017 the changes have applied to all employment agreements.
A work shift is defined in the Act as a period of work performed in a system of work in which the periods of work may be continuous or effectively continuous and which may occur at different times on different days of the week. The classic example of shift work is a period of work such as a morning, afternoon or night shift taking place in the context of a 24-hour operation such as a factory or at a fast-food restaurant chain.
Under the Act an employer must give reasonable notice to employees before cancelling their shifts. If reasonable notice is not given, reasonable compensation must be paid instead. The notice period and the right to compensation, must be specified in a written employment agreement.
What is reasonable to give as notice of cancellation of a shift depends on a variety of factors including the nature of the employer's business (including the employer’s ability to control or foresee the circumstances that give rise to the proposed cancellation), the likely effect of the cancellation on the employees and how many guaranteed hours of work employees have been granted.
The level of compensation to be paid if reasonable notice is not given also depends on the circumstances. The period of actual notice given, the remuneration employees would have received from working the shift and the cost to the employees in preparing for the shift are all relevant factors to be considered under the Act.
The employee is entitled to the remuneration they would have earned from working the whole shift if the shift is cancelled in the following circumstances:
a) If no notice is given by the employer until the shift begins,
b) If the employer cancels the shift part way through or
c) If an employer cancels a shift without an employment agreement that complies with the above rules.
Making employees available for work
The Act prohibits what are known as "zero hour contracts" under which employees are required to make themselves available for work (whether or not that work is offered or not) and without the guarantee of any work being offered.
Employers must now provide guarantee hours of work for employees they want to make available for work that ultimately may or may not be offered ("an availability provision"). Employers can only include an availability provision in their employment agreements if they have genuine reasons based on reasonable grounds for doing so. Reasonable compensation must also be paid for the employees keeping themselves available for work.
Whether or not an employer has genuine reasons based on reasonable grounds for including an availability provision depends on factors such as the business demands of the employer, the number of hours for which employees would be required to be available and how many hours the employees are guaranteed.
Reasonable compensation for employees making themselves available is to be calculated with reference to the number of hours for which employees are required to be available, how many hours are guaranteed, the nature of any restrictions resulting from the employees making themselves available and the amount of remuneration received by the employees by way of salary or wages. If employees are remunerated by way of salary, the employer and employees may specifically agree that the employees’ remuneration includes compensation for making themselves available.
The Act provides limited guidance as to what constitutes “reasonable notice”, “reasonable grounds” or “reasonable compensation” in relation to cancelling an employee’s shift or making an employee available for work which ultimately may or may not be offered, other than to state that it depends on the circumstances, as described above. There will be more clarity over time as the rules are interpreted in the cases that come before the courts.
Employers must be careful to follow the rules because a failure to do so may result in an order from the Employment Relations Authority that the employee must be compensated. The employer may also be found in breach of employment standards.
The Employment Standards Legislation Act 2015 which came into force on 1 April 2016 introduced significantly tougher sanctions for breaches of employment standards, for example the maximum fine for an individual’s breach of employment standard has increased from $10,000 to $50,000. Recidivist employers may also be publically named or banned from being a manager.
If you are shift-working employee or an employer of shift workers and have any questions about the reasonableness of notice periods or compensation offered in your employment agreement, an availability provision or need to update your agreements to reflect the changes to the rules, please do not hesitate to get in touch with one of our expert employment lawyers.