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Changes to Zero Hours/Cancelled Shifts Contracts

Don't be an 'April Fool' when it comes to employment law changes

Friday 1 April 2016, saw a raft of changes to the minimum employment framework come into force. Generally clauses such as this apply more to businesses that run shift work, such as hospitality, tourism, retail etc. but it is worthwhile checking your organisations employment agreements and workplace policies to ensure you remain compliant. In particular, any employment agreements that contain a restriction on secondary employment should be reviewed.

A brief summary of the key changes to the minimum employment framework is set out below.

  • Zero hour contracts not enforceable - an employer can only require an employee to be available for work without an obligation on the employer to provide work (an "availability provision") if:

  • The employee's employment agreement contains guaranteed hours of work (ie - the employee must be guaranteed a minimum number of hours each week in his/her employment agreement and the requirement to be available can only relate to additional hours).

  • The employer must have "genuine reasons based on reasonable grounds" for requiring an availability provision, and these reasons must be included in the employment agreement. Notably, this is the same test that must be met for an enforceable fixed term employment agreement.

  • The employee must be paid 'reasonable compensation' for his/her availability, with what is reasonable to be determined by factors including the employee's guaranteed hours, the rate of pay and any restrictions on the employee.

  • Cancellation of shifts only with reasonable notice or compensation - all employment agreements for shift workers must specify the period of notice required for cancellation of a shift, and the compensation payable if such notice is not provided when a shift is cancelled.

  • Secondary employment - an employment agreement must not prohibit an employee from working a second job unless the prohibition is for "genuine reasons based on reasonable grounds". Such reasons must be included in the employment agreement. Some examples of permissible reasons are set out in the Act, and include protecting commercially sensitive information or intellectual property, or preventing a conflict of interest. We anticipate that some employers may want to agree a prohibition on secondary employment for fatigue risk reasons.

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