Hours of Work: Are your agreements legal?

I'm very passionate about the topic of hours of work.?

Last year I did some research for a conference presentation and I discovered that 34% of NZ employees were working more hours than they are being paid (Stats NZ, 2023).?

And at the same time we have 57% of NZ employees currently at risk of burnout with exhaustion being a major contributor ( Prof Jarrod Haar, PhD, FRSNZ, CFHRNZ , 2024).

You’d have to be mad to not see the correlation between hours of work and burnout.

As I continued my research I was shocked to see on the Employment NZ website that employment agreements are supposed to be a maximum of 40 hours unless an agreement is made. ?It also said employees should be paid for every hour worked.

I shared this with Employment Lawyer Sanam Ahmadzadeh Salmani in a meeting we had recently and she didn’t believe me!?

She had always believed that if an employee agrees to work 50 or 60 hour weeks that was legal so long as it was agreed and documented in their Employment Agreement.?

In fact she still believes and knows this to be true given it's what the law currently says – legally speaking agreements don't need to be capped at 40 hours if a higher amount has been agreed to.?

And this is probably why the misconception exists.?

Fast forward a few months and I came across the Hours of Work episode on Sanam’s awesome podcast Law Lenz: Employment Law Done Right.?

In preparation for the episode Sanam went on the Employment NZ website and ended up going down a rabbit hole trying to find where the guidance was coming from.

When she looked on the Employment NZ website she was also surprised to see the 40 hours cap and agreed...

It’s a rule that nobody talks about and everyone seems to be getting wrong.?

I recommend taking a listen to the podcast but in short here are the details that you need to know to make sure that you're compliant…?

?? Section 65 of the Employment Relations Act specifies that hours of work need to be mentioned in all Employment Agreements

??? The agreed hours of work need to be in accordance with Section 67, meaning they need to be agreed by the employer and the employee by both parties signing an employment agreement

??? The act clearly lays out that hours of work can mean the guaranteed number of hours that an employee is being given and the days in which they’re going to work?

?? It can even go so far as to mention the start and finish times of work, including flexibility

But here’s the key part…

?? Section 11B of The Minimum Wage Act 1983 details that employment agreements should not set hours that are more than 40 (excluding overtime) so 40 hours per week is the (default) maximum hours to be worked

?? However the Act does say if the employer and employee agree, the employee CAN work more than 40 hours but that needs to be clearly detailed in the agreement

?? If employees generally do more than 40 hours, then it is critical to have a maximum or an upper limit in the agreement

Generally it’s pretty easy to follow this legislation with waged employees who generally work their hours and get paid via timesheets.

And if they work over their agreed hours, then overtime is typically paid at the normal rate of pay.

But really this post is directed at the hours of work of salaried workers and the common practice of “reasonable additional hours” being written into the agreements.? You know the ones?!?

When additional hours aren’t reasonable and employees aren’t being paid overtime, they are effectively working for free.

Sure an hour here or a couple of hours there is reasonable but Sanam’s advice is “There is no exact hard or fast rule but it's really important to make sure that you are balancing hours fair and reasonably – my best advice is to make sure that you are monitoring how many additional hours they're doing”.

You’ve probably already zoned out thinking your workplace is all good, your agreements have 40 hours a week in them. ?

THINK AGAIN!!?

Not getting the hours of work clauses correct in employment agreements could cost $20,000!

I would recommend taking Sanam’s warning for the following reasons:

?? The legislation in place as described above in the ERA and Minimum Wage Acts

?? There are ERA cases and legal precedents in NZ (ERA Cases – Pick Hawkes Bay 2021 and H4M 2020) where employers have gotten this wrong and they've been penalised for it

?? An employee could complain to a Labour Inspectorate (much easier in an online world) or you might get a random Labour Inspectorate Audit

Hours of work are clearly a huge issue here in NZ and this needs to change.

Does your workplace have a maximum amount of hours written in your employment agreements??

#hoursofwork #era #employmentagreements #wellbeingfirst #wellbeingtick