First Case on Availability Provisions

28 September 2017

The case of Fraser v Carrick Holdings Limited (a McDonald’s franchisee), has been decided in the Employment Court. 

In essence the Court decided that provided employees are not required to work more than their minimum guaranteed hours, an employer may operate a roster system (where employees do not have certainty as to their times and days of work), without including an availability provision in the employment agreement.

The essential hours of work provisions were as follows:

  • At the time of hiring the employee’s initial minimum (security of hours) was specified as 16 hours per week.

  • The employee’s employment agreement provided for 80% security of hours up to a 32 hour weekly cap, based on the average of the previous fixed quarterly worked hours.

  • The employee also completed an availability form to show the times and days the employee would be available to work if work was available.

  • Subsequent rostering was based on this availability with the roster changing depending on a number of factors such as expected customer demand for each hour of store opening.

  • The employment agreement also provided that from time to time employees may be requested to work hours in addition to their work schedule.

  • Once the roster was posted the employee had 24 hours to advise whether they were able to work the additional hours – ie those over and above the security of hours number.

The Court said the decision to be made in this case was whether the employee was compelled to be available for the hours included in the periodic rosters, over and above the guaranteed hours.

The Court accepted that there was no single example of compulsion. The word “requested” in the work scheduling provisions meant what it said: employees could be asked, but not compelled to be available for the hours rostered beyond the guaranteed or “security of hours”. Otherwise, the word used would be “required”.

Mr Cranney, counsel for the employee, also argued that the high availability indicated by the employee was a valuable commodity to McDonald’s and the franchisees for which they were not paying so that there was a breach of the provisions of the Act. He argued that the ultimate goal of the statutory provisions was to force employers to pay for all availability hours beyond guaranteed hours; and that this would result in such a high cost to employers that they would then be more likely to require workers to work according to a fixed-hours schedule rather than the flexible-hours schedule, which, for the purposes of increased profitability, this rostering scheme was designed to achieve.

The Court did not accept that line of argument.  In this case the prospect of wide availability with the possibility of employees being able to arrange substitutes to work their shifts introduced flexibility for them. The evidence establishes that many of the employees are students or transitory workers who may also be working in alternative employment. These arrangements were as much to their advantage as they were to the employers. Accordingly, there was no disproportionate advantage to the employers as the Union submitted. Nor, did the Court consider there was an element of compulsion arising from the method of quarterly rostering of hours adopted by McDonalds.

The Court summarised the position as follows. 

McDonald’s and its franchisees operate restaurants where peaks and troughs in demand occur, as is well known. They employ a large number of workers in the restaurants, the majority of whom are likely to be young and transitory. In order to maintain flexibility in the way it rosters employees for the purposes of maximising profit by reducing wage overheads, it introduced a system which it insists is in compliance with the statutory regime. This is not a case where the employer laid down mandatory hours of availability unilaterally, but rather where it requested potential employees to indicate in advance when they would be available to accept rostered hours. Within those periods of availability indicated by the employees rather than mandated by the employer, McDonald’s and the franchisees then establish a roster for the employees which includes periods of guaranteed hours as required, but also nominates additional hours within the periods of pre-indicated availability with the employees having the right to reject the additional hours if they wish. A reasonably lengthy notice period is required if the additional hours are to be rejected. That is not unreasonable in view of the fact that the employer (if the extra hours are rejected) needs to arrange employees in substitution to perform the work.

For these reasons, the Court was not prepared to make the declaration which the plaintiffs were seeking and said the individual employment agreements do not contain an availability provision. While, if an alternative decision had been reached, further issues of remedies would have needed to be considered, there is no need in this case to go on and consider such remedies.

So we’re still none the wiser about some of the key issues in this matter, such as the quantum of an availability payment or the process to establish one.

The Court also commented that if the agreements do not contain an availability provision as defined in the Act, there would be no need to provide guaranteed hours. Section s 67C(2) defining hours of work does not make the inclusion of guaranteed hours of work in an employment agreement mandatory. If the parties chose not to agree to an availability provision, they could nonetheless set out mutually agreed rostered hours.

You can read the full case here.