Every now and again we still come across employment agreements with no minimum guaranteed hours for the employee, or sometimes known as, Zero Hour Agreements. This was declared unlawful in April 2016 and cannot be enforced anymore. Any employer in breach of this, could be held liable for a penalty.
With a Zero Hours Agreement, an employer didn’t have to stipulate how many hours an employee would have to work for on any day or week. Employers could therefore offer work to the employees as and when they required staff. This made planning hard for employees as they never knew how many hours they would work in any given week and then how much pay they would receive. This made committing to financial obligations very tricky.
Sometimes there is no intention on the employer's part to force a 'Zero Hour' agreement or negatively impact their staff's wages, it was simply developed over time with custom and practice that staff worked a 40 hour week between the hours of x and y.
The law then changed and prescribed that every employee must have minimum guaranteed hours stipulated in their agreements. These would be the minimum hours the employer will require the employee to work and then in return the minimum guaranteed hours the employee will receive pay for.
The minimum hours can be structured as daily or weekly or even fortnightly hours and these hours can be anything, there is no prescription in the amount of hours. The employee and the employer can agree on as little as only a couple of hours per week – the only problem seen with the low hours is that good candidates are deterred from applying as they require a bigger fixed income.
Guaranteed hours means hours that the employer will offer and pay the employee every week, month or fortnightly, depending on what was agreed on, even if no work is available. If the employee works more than the guaranteed hours, he/she may receive more pay, again, depending on what was agreed on in the agreement.
If the employer offers the guaranteed hours to the employee and the employee declines those hours, the employer doesn’t have to pay the employee the hours unworked for that period, and it may also become a disciplinary matter.
If you currently do not have guaranteed minimum hours, we strongly suggest you agree in writing with employees on this point and sign either a variation agreement or confirmation notice to ensure you are all on the same page and legally compliant.
If your agreements do not specify this, it's probably worth looking at your employment agreements in their entirety as there may be more gaps since they will be at least 4 years old. All our employment agreements available online are comprehensive,