Knowledge In simple terms, the premise of an employment relationship is that an employer pays an employee for work performed. So, it should be easy to define what ‘work’ is, right? Throw in on-call requirements, ‘zero hours’ contracts and a pandemic and the answer is no longer clear cut.
In this article, we look at the recent decision in E Tū Incorporated v Mount Cook Airline Limited in which the Employment Court was asked whether part-time cabin crew ought to be paid for their overnight stopovers. This case has far-reaching implications for all employers wanting to stay on top of their payment obligations.
E Tū Incorporated v Mount Cook Airline Ltd
The employees in E Tū sought to be paid for stopovers – that is, when they finish work in a location that is not their ‘home base’ and they must stay overnight before starting their next shift. However, the Employment Court ruled these overnight stopovers were not ‘work’ within the meaning of the Minimum Wage Act 1983 (“the Act”), and therefore minimum wage was not payable for the time the employees were away from home overnight.
What is work?
As ’work’ is not defined under the Act, a three-factor test has been developed to determine what can be considered work. The three factors are:
- The constraints placed on the employee.
- Responsibilities of the employee.
- Benefit to the employer.
When the Court assessed these factors in E Tu, it found that no constraints were placed on the cabin crew due to being in a location other than their ‘home base’, they did not have any responsibilities, and were not to be contacted by the employer during this time. These factors outweighed the benefit to the employer of having the employees in the correct location to run its scheduled flights.
This enquiry is heavily dependent on the facts of the case. When the same test was applied to other fact scenarios, employees were held to be working (and therefore were entitled to be paid) where:
- the facility could not function without their presence, in the case of an employee of a residential community home[1]; and
- a ten-minute response time was required of a medical professional during their on-call hours[2].
Comparatively, the part-time cabin crew in E Tū had no work responsibilities after their shifts ended. The Court noted that any constraints on the employees, such as the contractual rest period and prohibition on alcohol consumption 10 hours before a shift, were in place regardless of location and were not linked to their absence from home.
Where to from here?
The decision of the Employment Court lines up with the principle that an employee will not be entitled to payment during a time in which the employee is merely inconvenienced (as opposed to having responsibility), and when that inconvenience provides only a marginal benefit to the employer. However, it also serves as a reminder that the situation is not always clear cut.
Get in touch with the team at Black Door Law if you have questions or concerns around minimum wage obligations and entitlements.
[1] Idea Services Ltd v Dickson [2011] NZCA 14.
[2] Sanderson v South Canterbury District Health Board [2017] NZERA Christchurch 37.
Disclaimer: This information is intended as general legal information and does not constitute legal advice. If you have a specific issue and wish to discuss it get in contact with the Black Door Law team.