Updated: Dec 18, 2019
Our workload requirements are very changeable. We operate a weekly roster system to cater for this but sometimes staff requirements can change at short notice. We feel that we are sometimes overstaffed. We don’t want to under-roster because it is really important we have sufficient staff there if we need them. But we want to ensure staff are as fully utilised as possible in case workload needs reduce. Is it lawful for us to cancel shifts that we have rostered without needing to pay staff?
It potentially is, but there are a number of things that will need to be in place to allow you to do to this. You would need to address this issue in your employment agreements and set a minimum reasonable period of notice of cancellation and comply with that notice period to avoid having to pay compensation for cancelling a shift.
If you would like to have the ability to cancel shifts at any time it is necessary for the employment agreement with your employees to specify certain matters in relation to such cancellation. Under the Employment Relations Act 2000 (the Act) it is unlawful for an employer to cancel a shift unless the employment agreement specifies the following:
a reasonable period of notice that must be given before the cancellation of a shift, and
reasonable compensation that must be paid to the employee if the employer cancels a shift without providing the specified notice (s 67G(2)).
Therefore if you want to be able to cancel shifts you will need to have it set out in your employment agreement, and you will need to comply with the terms you set out in that agreement (s 67G(3)).
The requirements under the Act focus on reasonableness and do not give a specific number for what constitutes reasonable notice or compensation. Rather the Act focuses on a number of principles to determine these issues. What constitutes reasonable notice and reasonable compensation don’t appear to have been tested yet, which is likely because the legislation has only been in effect since April 2016. On the one hand, the lack of clarity is unhelpful. On the other hand, it is helpful that you are not faced with rigid inflexibility which could have been the case if a specific notice period and amount of compensation had been specified under the legislation.
The Act sets out a range of principles to determine what will constitute reasonable notice, which must be based on all relevant factors including the following:
the nature of the employer’s business, including the employer’s ability to control or foresee the circumstances that have given rise to the cancellation
the nature of the employee’s work, including the likely effect of the cancellation on the employee, and