Government looks to outlaw zero hour contracts

  • News
  • July 14, 2015
  • Elly Strang
Government looks to outlaw zero hour contracts

Zero hour contracts made headlines in New Zealand earlier this year when McDonald’s workers went on strike to protest them.

The controversy surrounding the contracts resulted in Restaurant Brands, Hell Pizza and McDonald’s banning them.

Zero hour contracts allow businesses to hire staff with no guarantee of work, hence the “zero hours” term.

Their pay is varied depending on the hours they work and sick pay is often not included.

Woodhouse announced yesterday that the Government is putting measures in place to prevent unfair employment practices, including zero hour contracts.

The proposed changes will inhibit unfair practices, including:

  • Employers not committing any hours of work, but expecting employees to be available when required
  • Employers cancelling a shift without providing reasonable notice or compensation to the employee
  • Employers putting unreasonable restrictions on secondary employment of employees
  • Employers making unreasonable deductions from employees’ wages.

The changes also include the employer and employee agreeing to set amount of hours up front in the employment agreement.

Equal Employment Commissioner Dr Jackie Blue says the changes are a positive first step towards fair employment practices.

“I am encouraged that the minister has pointed out the need for a better employment relations framework and states that zero-hours aren’t it,” she says.

“The bill is a useful first step and good starting point for a more in-depth discussion on workplace fairness that will only be strengthened through the public submission and select committee process.”

BusinessNZ chief executive Phil O’Reilly says zero hour contracts are not always problematic and can be very useful for both parties.

“Any legislation that eventuates should be even-handed in helping employees manage their employment conditions while still preserving business flexibility.”

But unions that represent the workers have spoken out against the changes.

Service and Food Workers Union national secretary John Ryall says the new policies will make it harder to challenge zero-hour contracts.

“They’re essentially making zero-hours lawful,” Ryall says.

“They’re planning to enshrine in law the employers ability to guarantee no hours if agreed to at the beginning of employment.”

The Council of Trade Unions (CTU) says the changes are an additional barrier to secure work.

“The new law allows employers to continue to offer 'no hours'. This practice should be unlawful except where impractical," CTU president Helen Kelly says.

CTU has a few suggestions of its own it would like the Government to implement.

These include hours of work to be included in the employment agreement where possible, rules that stop workers competing against each other for the available hours and freedom to work a second job instead of restrictions.

Unite Union national director Mike Treen says guaranteeing a minimum amount of hours in a contract doesn’t solve the abuses made possible by zero-hour contracts.

"Workers need a guaranteed minimum to start and the ability to build up their hours over time,” Treen says.

“Companies should not be allowed to hire additional staff until all available hours are offered to existing staff.

“That is what we negotiated with the fast food companies and this principle should be included in law.”

Law firm Chapman Tripp says the bill allows casual employment agreements, but differs when the employee is expected to be on call for work. In that case, the employer is required to provide compensation.

"Employers, particularly those with existing part-time or shift work arrangements, will need to be mindful of the Bill's provisions and to ensure new notice and compensation requirements are provided for in their employment agreements," the firm said in a statement.

The changes will be introduced in an Employment Standards Bill, which will enter parliament later this year.

There will be the opportunity to make submissions on the Bill.

​ ​

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