He said it was "unfair" and "unbalanced" that an employer did not have to commit a minimum number of hours, and could expect an employee to be available for work when required.
"I think that's unfair, it's unbalanced and it's going to be unlawful."
Mr Woodhouse said he would like to ensure a commitment of hours for employees, which would be written into an employment agreement.
"If an employer wants somebody to be available on call, then it would be necessary to provide reasonable compensation for that person being on call."
He said he could not say what this compensation would be.
"The law is not going to be specific about what that reasonable compensation would be, because frankly there is a plethora of different scenarios and it is really hard to write a rule for everyone.
"We've stepped back from that and said this is best done by the employees and the employers, within a set of sound principles which enable fairness and flexibility."
Earlier this year zero hour contracts came under fire, with many employees effected by the contracts going on strike across the country.
Mr Woodhouse said the changes would be reflected in an Employment Standards Bill, and would be introduced to Parliament later this year.
Labour Leader Andrew Little said proposed changes to zero hour contracts were confusing, and he did not believe they would make a real difference to vulnerable workers.
He said there was still no expectations on employers to actually provide work, and there was no guarantees that compensation would be fair. "People instinctively know these contracts are unfair.
A worker who ostensibly has a full time role can have their hours changing massively from week to week, or can find themselves with no hours at all for the week," Mr Little said.
BusinessNZ chief executive Phil O'Reilly said the Government's proposals for zero hours contracts looked workable.
He said zero hours contracts were not used in the vast majority of workplaces and problems with their use was not widespread.
"Zero hours contracts and other forms of casual contracts that are agreed between the employer and employee can be very useful for both parties.
"In a few situations they have been controversial, and the Government is seeking to provide some protections in legislation.
"We have yet to see what form that protection might take, and business would reserve the right to comment on the draft legislation," he said.
Unfair practices which will be prohibited:
- 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.
