Does having your Employee be 'on call' mean a bigger cost to your pocket?


There has been a lot of noise in the media recently since the recent Smith City Case about what constitutes work and whether an Employee should be entitled to receive the full minimum wage for such work (read more here). We have seen more cases come through in relation to what constitutes work particularly in the case where an Employee has an on call component as part of their role.

The Wages Protection Act 1983 does not provide an express definition for what constitutes work. However, since the Court of Appeal’s decision in Idea Services Limited v Dickson, where it was determined that a sleepover constitutes ‘work’ under s6 of the Wages Protection Act, the following criteria must be considered in determining whether the actions amounts to work:

  1. The constrains placed on the freedom the Employee would otherwise have to do as they please;
  2. The nature of the extent of the responsibilities placed on the Employee; and
  3. The benefit to the Employer of having the Employee perform the role.

The above criteria was applied in the Smith City case and found that morning work meetings, that staff were required to attend about 10-15 minutes before their usual start time amount to work. Recently, for the first time in New Zealand history, the Employment Court decision in South Canterbury District Health Board v Sanderson has confirmed that Employee’s who are ‘on call’ may also be considered at work and therefore entitled to receive the full minimum wage for each hour on call.

Within the Sanderson case the Court applied the above criteria to determine whether the anaesthetic technicians being on call would trigger the minimum wage entitlement. The Employees who were on call were on a rotating roster and required to stay close to the hospital in provided accommodation and had 10 minutes to respond to a call out. Although these Employees were not looking after vulnerable people like in the sleepover case, the level of responsibility was great due to the nature of the work in assisting the delivery of surgical services which could potentially impact a patients life. The Court determined that the time the Employee’s spent on call was not their own to do as they pleased given the level of constraints, the responsibility on the Employee was high and the benefit to the Employer was also high. As such, the Court determined that these Employees were entitled to receive the full minimum wage while being on call.

We often see that Employer’s offer an allowance as additional compensation for those Employees who are on call but depending on the level of constraints and responsibilities on the Employee an allowance may not be enough to discharge an Employee’s entitlement to receive the full minimum wage for each hour they are on call.

So how do you as an Employer avoid getting yourself into a position where your ‘on call’ Employees are entitled to receive the full minimum wage? We would caution Employers about the level of responsibility and constraints they put on an Employee who is required to be on call as the greater the benefit the Employer obtains by an Employee being on call, the greater the risk that this time would be considered work. If it is that your Employee is not allowed to drink alcohol whilst on call, has to stay within a defined radius from your businesses home base, must have responded within 10 minutes of getting the call out, and doing all of this provides your business with the ability to be responsive 24/7, then it is likely that this would be considered work given the level of constraints and responsibilities on the Employee and the overall benefit to the Employer. 

Depending on the level on constraints and responsibility on the Employee, in most cases an allowance for being on call would be adequate compensation as simply being on call would not amount to work.

It is crucial that Employers are getting minimum wage entitlements correct, as it is clear from the case law that the Employment Court will not be forgiving to Employers who breach minimum standards. What can you do to ensure your not in breach of the minimum standards? Give us a call, we would be happy to help and discuss whether being on call means at your workplace triggers the minimum wage entitlement and what steps you should take next – 07 838 0018.

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