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Q+A: Woodhouse - proposed changes to zero-hour contracts

Q+A: Michael Woodhouse - proposed changes to zero-hour contracts

Q + A

Episode 20


Interviewed by CORIN DANN

MICHAEL There is no legal definition of zero hours, but I was very concerned about four aspects of employment agreements that were widely described as zero hours. The fundamental one, though, is this, and that is the principle of mutual obligation, where the employer doesn’t have to commit a minimum number of hours but expects the employee to be available for work when required. I think that’s unfair. It’s unbalanced, and it’s going to be unlawful.

CORIN How will you stop it?

MICHAEL Well, we’re going to say that where there is a commitment of hours, they should be written down in the employment agreement. Above that, both the employer and the employee are free to refuse work if it’s available or to commit to it on a casual basis as required.

CORIN So the employee, because previously there was concern that if they turned down work, they would suffer consequences of that, you’re saying that they’ll be okay? How will they be protected?

MICHAEL Yeah, and that goes to another part of the zero hours landscape that I was uncomfortable with, and that was the ability of the employee to go and seek other work, other part-time work, if the employer couldn’t commit to a larger number of hours, and so they were kind of constrained both ways. That will also be made unlawful unless there are good reasons for doing so. We know in things like— for science and innovation where there is intellectual capacity that the employee might have, it’s entirely appropriate to have somebody constrained from going and working for another employer. But in hospitality, for example, I don’t think that’s appropriate.

CORIN But can an employer and an employee sit down and negotiate a contract that still actually has zero hours in it but that the employer wants that worker to be available? Could that still be designed?

MICHAEL Well, firstly, it’s important to say that there are still going to be casual agreements. I think that’s appropriate, certainly for the employees. Whether you’re a university student or a recent migrant, casual employment still has a very important part to play. 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. Now, the law isn’t going to be specific about what that reasonable compensation would be, because, frankly, there is a plethora of different scenarios and it’s really hard to write a rule for every one of them.

CORIN Is there a ball park, though? So we’re talking a retainer almost to sort of keep them on standby, aren’t we?

MICHAEL Yeah, and effectively that’s probably not going to be appropriate for things like hospitality and the fast food industry. So what I expect will occur here is that employers and employees or their unions are going to sit down and have a much better conversation about what would be the appropriate circumstances for having someone on call, probably change the rostering practice and avoid some of the dysfunctional behaviours that we’ve had reported to us.

CORIN But do you have an idea of what appropriate compensation for someone effectively having to sit by the phone and be available should that employer demand they come in, what’s an appropriate compensation? Are we talking a couple of hours of—? I’ve got no idea. What would be appropriate?

MICHAEL Well, look, the obvious one is money, so a retainer, as you described, for being on call. But as I say, I don’t think that it’s going to be necessary or appropriate in some of those industries that have been using these practices. What we’re more likely to see is a greater commitment of shifts and hours being built into the agreement and then having a number of staff who are available at relatively short notice if required. Now, the other aspect of that, of course, is that sometimes we have rosters appointed and then shifts cancelled at short notice. That will also be not allowed unless there is an appropriate compensation. Again, the nature of the notice period, the nature of the compensation will depend on the individual organisation. But it’s important to me that we get those sorts of things set out up front and preferably in the employment agreement.

CORIN What about people who turn up to work and then it’s too quiet, so they send you home?

MICHAEL Well, frankly, I don’t think that’s appropriate. If you’ve been rostered, if you’ve made arrangements for transport, for childcare, you may have had to sacrifice something that you’d otherwise be doing, to be sent home during a shift or just before the start of a shift would not be lawful under these arrangements unless reasonable compensation was paid.

CORIN The idea— So basically you’re putting in some safeguards here, because what I’m getting the sense of is there could still technically be a zero-hour contract, but you would have safeguards. Is that right?

MICHAEL Well, I prefer to refer to them as casual contracts.

CORIN But they can sign it with no hours stipulated.

MICHAEL Yes, they could. That would effectively be a casual agreement, where there is no commitment on either side to a minimum number of hours or by the employee to accept hours when offered. What I think will happen is that there will be a commitment of a minimum number based on history, based on the record of the employee and the needs of the employer, let’s say two or three shifts a week. Any more than that— So that’s the minimum commitment. Any more than that would be required to be by mutual agreement, and the employee is free to say no without losing those other hours that had been referred to.

CORIN Sure, but how do you enforce this compensation idea, though? How do you make sure that the employee, often in a weaker position, in a low-skilled job, is in a position where they’re going to get appropriate compensation? If you’re not setting those terms, how do we know that they are going to get that proper compensation?

MICHAEL Look, I think that unions will have a part to play in that. They tend to be quite active in the sorts of industries that we are talking about. I think we’ll see a template that starts to emerge out of this. But the difficulty for me is in trying to set a rule for every scenario. We’ve stepped back from that and said that this is best done by the employees and the employers within a set of sound principles that enable fairness and flexibility, and I think that’s where we’ve landed there.

CORIN But a lot of workers aren’t in unions, so how are they going to get that assurance that they’re going to get appropriate compensation?

MICHAEL Well, look, it may be that they see the attraction in joining a union. I can’t rule that out. Certainly, it’s a bit of an opportunity for them. But I do think that once we’ve got the rules of engagement established, we’ll see changing rostering practices, changing engagement practices and probably greater disciplines on the employer’s side as well.

CORIN Have you spoken to the employers about this? Are they comfortable with it? Because they’re going to have to play ball here, aren’t they?

MICHAEL Yeah, we had a quite intensive consultation process with Business New Zealand, with CTU and with some industry organisations that were known to have used some of this. Broadly, they are accepting of the response that the Government has come up with. I think also it’s interesting to note that just since the issue of zero-hour agreements has been highlighted by the media, there’s been changing practice by those organisations. So I think broadly they’re very comfortable with where we’ve got to.

CORIN There will be some in the business community, though, surely who will be concerned that you’re putting in tighter constraints on a labour market at a time when we’re going into a slowing economy.

MICHAEL Yeah, look, I think, in fact, broadly the trend has been for growing numbers of jobs, and I don’t accept that that is ever a reason not to treat people fairly. If you were to go into, say, a hire company and say, ‘I’d like that piece of equipment to be available at any time that I need it and you’re not allowed to hire it out to anyone else in the meantime, but I’m not going to give you any compensation for that, right,’ you’d be laughed out the yard. Effectively, that’s what has been happening with zero-hours agreements. So what we’re doing is simply crystallising a principle of fairness that I think should endure through any economic conditions.

CORIN There was a high-profile issue of petrol station attendants who were having their pay docked when people stole petrol.


CORIN Will that type of thing be outlawed as well?

MICHAEL Look, we’ve had a really good look at the law around this, and I’m confident that it was probably unlawful when that occurred, but we are going to tighten the provisions up around deductions through no fault of the employee’s actions and make it very clear that that’s not lawful.

CORIN You’re also shepherding through health and safety legislation which has been controversial, and there has been suggestions that your caucus is divided about that. Certainly, there’s concerns from some in your caucus that this was too restrictive for small businesses in particular. I wonder whether you’ve got caucus support for this legislation.

MICHAEL Well, firstly, I should clarify that the caucus is not divided on health and safety reform. Yes, there were some concerns that we get the balance between improving our health-and-safety practice across all industries without wrapping smaller organisations up in red tape. We’re doing a review of that. I’m confident the select committee has got that in very good shape, and it’ll be reported back later this month. No, look, I think there’s a very clear understanding that we need fair and flexible work practices, and these announcements fit nicely with the minimum employment standards that I announced earlier this year, which requires greater levels of record keeping by employers and tougher sanctions on those who don’t comply.

CORIN Sure, but do you expect to get the caucus— have concerns raised by your caucus about this, given that it is going to put more red tape on business? They are going to have to change contracts and, I guess, make some moves here.

MICHAEL Look, for the overwhelming majority of employers, there will be no change. I think there are a vast majority of employers and employees who have very good and flexible arrangements. These are definitely in the minority, in my view, but I don’t accept that that would necessarily result in extra cost on employers.

CORIN I understand all that, but I’ll come back to that question. It is important. Given the fact that there were concerns raised about the health and safety legislation, do you expect to have caucus – the full caucus support – over these changes? Because it has to go right through the parliamentary process.

MICHAEL Absolutely it will, and I’ll be listening very carefully to the submissions from all stakeholders in this.

CORIN In your caucus?

MICHAEL I have every confidence that there isn’t a member of my caucus that would support the continuation of practices that are inherently unfair.

CORIN Are they aware of these changes?

MICHAEL Yes, they are, absolutely.

CORIN And was there any concerns raised?

MICHAEL No, I don’t think so. I think there’s a broad support right across the caucus for these changes.

CORIN Because it’s interesting. I mean, just before you mentioned you encourage people to join a union.

MICHAEL I wasn’t encouraging them. I say that is a choice that is available.

CORIN That is a choice, but I just wonder whether you are staking yourself out as being a slightly more progressive member of this Cabinet and whether you’re in the same place as some of the others in the National Party in terms of employment law reform.

MICHAEL Look, I think there’ll be a number of people who don’t think that these reforms go anywhere near far enough, and there’ll be some that think they go too far. I think we’ve made the balance about right, and I’m certainly sure I have the support of all of my caucus on that and that we’ll have better employment landscape as a result of these changes.

CORIN But how do you see yourself in terms of where you put yourself on that spectrum in terms of that balance? Because you’re walking a very fine line here.

MICHAEL Look, it’s always a fine line between making sure we have fair and flexible arrangements and a pragmatic framework that is available for all organisations. Look, I’ve been an employer. I’ve been the CEO of a complex organisation. I know how easy it is to wrap organisations up in red tape, and I walk that balance I think pretty fairly.

CORIN Did you feel under pressure to water down the health-and-safety legislation in any way?

MICHAEL No, not at all. What I have seen is a caucus more engaged in that legislation than just about any other that I’ve been involved in, and I think that’s very very healthy. We’ve had a look and we’ve kicked the tyres on it as we said we would. Some of those changes that are yet to be made are very minor and technical, and I think we’ve got the bill in good shape.

CORIN What about corporate manslaughter? Amy Adams clearly asked you to have a look at that. Have you given that some consideration?

MICHAEL Yeah, I’m getting some advice from MBIE on this, and I’m open to it, but I think there’s two aspects to that. One is if we are to consider something, it would be difficult to fold it into this legislation without having to go back and consult the public and particularly employers on it. The second thing is what concerns is me is that if there is some kind of causing-death provision that it opens the door for people to attribute blame on the victim, and I’m very concerned to avoid that, some kind of contributory negligence defence that could be available. I’ve had a look at the current provisions, and I’m satisfied that they have very strong sanctions on organisations that do not meet the health-and-safety requirements and taking practical steps. I haven’t ruled it out yet, but I’ll need to be convinced.

CORIN You do sound like you’re saying that it’s not quite right to fit in in this legislation you’ve got before Parliament.

MICHAEL Well, firstly, it’s a timing issue. So I think we have got a very good piece of legislation that we need to get through. As I’ve said on a number of occasions, it’s not the law that’s going to change behaviours and our record in health and safety; it’s people’s attitudes and behaviours. But it is important that we get this legislation through. I’d like to see it through this year, and I am worried that considering a causing-death or corporate manslaughter may slow that down.


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