Editorial: Time to give zero-hour deals final notice

Workplace Relations Minister Michael Woodhouse. File photo / Mark Mitchell

If the wording of legislation lives up the Government's promise at the weekend, this country may soon be rid of "zero-hour contracts". These are not contracts in the usual sense; they are an unfair practice in some industries where the workflow is unpredictable from day to day. On slow days, too many employers assume the right to send staff away without pay for the hours they are not needed.

The practice is particularly rife among small employers in retail and service sectors who might now have paused to consider how unfair it is. After all, they are losing money themselves on slow days. They forget, perhaps, that they can make it up on the good days, but the person they have employed on an hourly wage is not in the same position. The employee probably has to be available for 40 hours a week with no certainty of 40 hours pay. And these tend to be minimum wage industries where every dollar is vital to the earner's weekly budget.

Workplace Relations Minister Michael Woodhouse proposes to tackle the inequity with legislation stipulating that when an employee is hired to be available for a set number of hours, the hours must be stated in an employment agreement. It will then be illegal for the employer to cancel a shift, or part of a shift, without either reasonable notice or reasonable compensation for late notice.

This does not go as far as the Labour Party and unions would like. It does not insist that all employment agreements must specify a number of hours to be paid. The Government will leave room for employment on a "casual" basis when it suits both parties. The problem is the parties seldom bargain with equal power. Casual employment usually means being on call when the employer decides work is to be done. Being on call usually precludes paid work elsewhere, though not always.

Mr Woodhouse also proposes to make it illegal for employers to place unreasonable restrictions on an employee's secondary employment. This should help to ensure that employers sign agreements that provide all the hours of work they will usually need. Those who undercommit themselves may have no legal right to restrict an employee's other arrangements. To reinforce employees' rights in this respect, the minister says the law will ensure they are free to decline to work beyond the number of hours in their agreement.

If employers want to make it a condition of the agreement that staff must be available beyond the stated hours if needed, the agreement will have to provide a retainer of some sort.

Mr Woodhouse aims to reduce unfairness without unduly restricting the range of possible working agreements. Whether he has succeeded will not be known until his Employment Standards Bill appears later this year. It will contain crucial terms such as "reasonable notice" and "reasonable compensation" that will probably need to be defined by the Employment Court.

But employers are on notice now. They bear the risks of business and have a right to profit from others' work, the workers have a right to a secure wage. That is the bargain.