When can you require an employee to be on-call for work, and when must they be compensated?
The law requires employers to provide reasonable compensation for employees’ availability to work additional hours, with strict criteria for availability provisions.
This article has been provided by our partner Ford Sumner (FSL), employment law experts.
Background
Compensating an employee for working additional hours is a tricky part of the law to navigate. In the past, employers could require employees to be available for work but not pay them for it. Availability provision amendments came into force in 2016 to combat waged workers with ‘zero hour’ contracts who were required to be on call, and to accept any and all work offered by their employer. The amendments introduced strict criteria for when it is appropriate to include an availability provision in an employment agreement, and mandates that an employee needs to receive ‘reasonable compensation’ for being available, whether or not they get called on to perform additional work. Now, the law is trying to navigate where salaried employees fit into this equation, and when a salary can be said to be ‘reasonable compensation’ for being available to work.
A key feature of an availability provision is that it allows an employer to offer additional work to an employee, which the employee cannot refuse to perform. This is different to offering more hours at regular pay, or at overtime rates, that the employee can decline performing.
The Court will look at the real nature of the clause, not just how it has been labelled. If the clause does not allow the employee to turn down the additional work, it is likely that it will be deemed to be an availability provision.
Recent case law
The Chief of the New Zealand Defence Force v Williams [2025] NZEmpC 16 is a recent Employment Court decision that looked at whether the individual employment agreements (“IEAs”) of three salaried employees (“the Employees”) contained clauses that met the requirements of being ‘availability’ provisions under sections 67D and 67E of the Employment Relations Act 2000 (“the Act”).
The IEAs provided that the employee was “required to work such hours and days as are reasonably necessary to achieve the performance expectations established in your Position Description…those directed by your manager and those required by the NZDF to generally meet the operational needs”.
The IEAs also provided that the Employees’ total remuneration was “full compensation for the work required, and the work [undertaken]” and that “overtime will not be paid”.
The issues the Court set out to determine were:
- Whether the IEAs contained an availability provision as defined by s 67D of the Act;
- Whether the employees were required to be available to perform work in addition to their guaranteed hours; and
- If the IEAs did contain an availability provision, whether they provided payment of reasonable compensation within the meaning of s 67D(7) of the Act.
While this case was directed towards salaried employees, the law applies to any employee under an employment agreement.
Relevantly, the Court summarised the law on availability provisions as being:
A non-compliant availability provision (i.e. not having genuine reasons, not having minimum guaranteed hours, not specifying the number of additional hours the employee must be “available” for, or not providing reasonable compensation for being available) renders the provision unenforceable against the employee, who in turn might have good grounds for raising an unjustified disadvantage claim against their employer.
In the Williams case, the provisions in the IEAs were found to be availability provisions, as the wording indicated the Employees:
- were required to be available outside of the guaranteed hours stated in the IEAs when reasonably necessary; and
- were required to accept the additional work whenever directed to by their employer.
As the IEAs contained an availability provision, the Court had to decide whether the Employees were reasonably compensated by their salary for being available 24/7, which the Court held they were not. As a result, the employer had to compensate the employees for all the times they made themselves ‘available’ over the course of their employment.
Key takeaways
Employers should ensure their employment agreements contain proper availability provisions entitling them to require their employees to work beyond their guaranteed hours. Employees also need to be reasonably compensated for keeping themselves available, whether or not additional work is offered to them by their employer. This is particularly important in businesses where working over and above guaranteed hours is common practice. Employers who get these key steps wrong might find their employees are entitled to refuse to perform work above the guaranteed hours stipulated in their IEA, and may have grounds for raise a personal grievance.
This article was originally published by Ford Sumner Lawyers. A proud partner of Retail NZ, Ford Sumner Lawyers offers Retail NZ members a 10% discount off their standard hourly rates.
If you are concerned about whether your business’ employment agreements and/or practices are compliant with current employment law, please feel free to contact FSL at [email protected] or 04 910 3200.
