The legality of availability clauses: Employment agreements can't require employee availability 24/7

In LYE v ISO Ltd the Employment Relations Authority was required to consider whether the employee was disadvantaged by his employment agreement which contained an availability provision in breach of s67D of the Employment Relations Act 2000 [1].  

An earlier judgment had determined that the employee (and other stevedore’s at a port) had provisions in their individual employment agreement that were unlawful availability provisions. The employer had been ordered to cease including availability provisions that did not specify guaranteed hours of work and did not specify the period which employees are required to be available above those guaranteed hours. 

The employee raised a personal grievance, claiming that the agreement stated he had to be available to work 24/7, without reasonable compensation, to his disadvantage. He sought remedies.  

The Authority upheld the grievance on the basis that: 

• The employee’s working arrangement caused a real intrusion into his private life. He did not have any certainty in terms/shifts in advance, which meant that he could not make commitments, like booking appointments or picking his son up from school; 
• The employee was not reasonably compensated for his availability as required under the Employment Relations Act; 
• Even though the employee had access to Planned Time Off (PTOs), using a PTO would mean he could not be offered an additional shift that fortnight and would be paid less than the guaranteed retainer. PTOs could also be cancelled by the employer and there were a limited number of PTO days which could be sought. 

The employee was found to have been disadvantaged by his employment agreement not being in accordance with the Act. The Authority ordered the employer pay him as remedies: 

• $22,500 gross as compensation for a lost benefit; and 
• $15,000 as compensation for humiliation, loss of dignity and injury to feelings. 

This case is another reminder to employers who don’t comply with fundamental employment obligations that there can be significant financial consequences. 

The statutory requirements for a valid availability provision are clear, but regularly missed in drafting terms of employment. It should be no surprise that stating an employee must be available to work 24/7 will not comply. We recommend employment law guidance when drafting availability and cancellation clauses to ensure they are lawful. 

The team of specialist employment lawyers at DTI Lawyers are experts and can assist you with a review of employment agreements to ensure that they are consistent with current law and best practice. Please don’t hesitate to contact us on 07 282 0174, or reception@dtilawyers.co.nz