New Zealand bans zero hours contracts? Not exactly….

So New Zealand has banned zero-hours contracts. As Jeremy Corbyn says…

Obviously I wouldn’t be writing about this if it was as straightforward as that. New Zealand hasn’t banned zero-hours contracts. At least, not exactly. But what they have done is interesting and worth taking a look at.

It’s always tricky wading into other people’s legal systems. Without knowing how a new law fits within the established framework and how the overall system operates its easy to get hold of the wrong end of the stick. So any New Zealand experts out there should feel free to correct me in the comments section. But as far as I can tell the relevant Bill is the new Employment Relations Amendment Bill no 3 which was passed on Thursday 10 March.

The New Zealand ‘Availability Provision’

The Bill (or at least the part we are interested in) inserts new provisions into the Employment Relations Act 2000. In its provisions on hours of work it requires employment contracts or collective agreements to specify the number of guaranteed hours of work that the employee is entitled to (S.67C). But it does not set a minimum. Employers are perfectly free to specify that there are no guaranteed hours of work.

But here here is the good bit.

S.67E Availability Provision

(1) In this section and section 67EA, an availability provision means a provision in an employment agreement under which—

(a) the employee’s performance of work is conditional on the     employer making work available to the employee; and

  (c) (sic) the employee is required to be available to accept any work that the employer makes available.

So here the Bill is seeking to regulate the extent to which an employer can require an employee to be available for work while not being guaranteed it.

(2) An availability provision may only—

(a)  be included in an employment agreement that specifies agreed hours of work and that includes guaranteed hours of work among those agreed hours; and

(b)  relate to a period for which an employee is required to be available that is in addition to those guaranteed hours of work.

That means that if you have no guaranteed hours, you cannot require an employee to be available for work. If you offer work without guaranteeing any, then the employee must be free to refuse any work that is offered. That particular kind of zero-hours contract is indeed being banned.

But can an employer get around this ban by simply offering a token amount of work – say one hour a week? Well, they have thought of that. The Bill goes on…

(3) An availability provision must not be included in an employment agreement unless—

(a) the employer has genuine reasons based on reasonable grounds for including the availability provision and the number of hours of work specified in that provision; and

(b) the availability provision provides for the payment of reasonable compensation to the employee for making himself or herself available to perform work under the provision.

(3A)  An availability provision that is not included in an employment agreement in accordance with subsection (3) is not enforceable against the employee

In other words, a contract with minimum guaranteed hours  – whether that is one hour a week or forty hours a week – cannot require the performance of additional hours unless there are reasonable grounds for doing so and the contract provides adequate compensation for the employee being available. This is about much more than zero-hours contracts; it is about employment relationships where the obligation on the employee to be available for work exceed the employer’s obligation to offer it. That seems rather neat.

To tie this altogether, the Bill specifies that employees may refuse to do work in excess of the minimum guarantee if the employer does not have a properly justified ‘admissibility provision’ providing adequate compensation. There are also the expected rights not to be subjected to a detriment for refusing additional work.

Finally, the Bill also provides for employees to be compensated if their employer cancels a shift at short notice.

Without knowing much about the employment law system of New Zealand, I would say that this is a radical measure that will indeed go some way to addressing the imbalance in some employment contracts. But it only bans zero-hours contracts if what you mean by that term is a contract where the employer is not obliged to offer any work, but the employee is obliged to accept work offered by the employer. It does not address contracts in which the employer accepts that just as it is not obliged to offer work, the employee is free to refuse it. If that is what you mean by a zero hours contract, then New Zealand has not banned them at all.

What about the UK?

The New Zealand reform could easily be adopted in the UK. Indeed the structure of the law is already in place. The Small Business Enterprise and Employment Act 2015 sought to  ban exclusivity clauses in zero-hours contracts. But were they ever really a problem in the first place? I doubt many employers really cared whether their zero-hours employee was doing work for another employer. But I suspect many are concerned if he or she is not available for work. Extending the law along New Zealand lines would be quite straightforward and would mean that an employer would be incentivised to guarantee as many hours as possible, knowing that if more hours are needed the employee would be free to refuse them.

But of course the effectiveness of that depends on the state of the labour market – and the bargaining power that the two sides to the employment relationship can exert. An employer may be very happy to give an employee complete freedom to refuse work if it is clear that the employee needs to take whatever work is offered. The freedom to turn work down may be a rather hollow one for an employee trying to scrape together enough hours of work to make ends meet.

This is not to denigrate the New Zealand law – it seems perfectly sensible. For what it’s worth I think the Government in the UK should look to do something similar (place your bets). But has New Zealand banned zero hours contracts? Well, not exactly.

About Darren Newman

Employment law consultant, trainer, writer and anorak
This entry was posted in Uncategorized, Zero Hours COntracts and tagged , , , , . Bookmark the permalink.

2 Responses to New Zealand bans zero hours contracts? Not exactly….

  1. Rolanda Markey says:

    Hi Darren

    Great blog thanks! What is immediately noticeable is how beautifully simple and plain the language of the New Zealand legislation is! It would be great if we could get to that stage in the UK.


  2. Reblogged this on Legal Problem Child and commented:
    Great examination of the recent legislation from NZ. Thank you.

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