Can employers change employee work hours?

Every business experiences busy periods and quieter times. As operational needs change, employers may wonder whether they can change an employee's working hours to better suit business requirements.

For permanent employees, changing work hours is not always straightforward. An employee's hours of work are generally a fundamental term of their employment and are often governed by their employment contract or Collective Agreement.

Can an employer change an employee’s work hours?

An employer cannot unilaterally change a permanent employee's contracted hours of work.

For full-time and part-time employees, working hours and work patterns are typically express terms of employment. Changing these hours without the employee's agreement may constitute a breach of contract and could expose the employer to legal risk.

However, employers may be able to make certain changes where:

• The employment contract expressly allows for particular variations to hours, start times or finish times.
• A Collective Agreement permits the change.
• The employee agrees to the change.
• The change relates to rostering arrangements, and all relevant consultation and notice requirements have been met.

The specific circumstances of each workplace should always be considered before implementing any changes to employee working hours.

Can an employer reduce employee hours?

For permanent full-time and part-time employees, employers generally cannot reduce guaranteed hours without the employee's agreement.

The number of ordinary hours worked is usually a fundamental condition of employment. Unless an employment contract or Collective Agreement specifically permits the change, reducing an employee's contracted hours will generally not be lawful.

This means employers cannot simply reduce permanent employees' hours as a way to lower labour costs or respond to changing business conditions.

Business reasons for reducing employee hours

While reducing contracted hours without agreement is generally not permitted, there are some circumstances where changes to working arrangements may occur lawfully.

Employee agreement

The most common and practical option is for the employer and employee to mutually agree to vary the employment arrangement.

For example, during an economic downturn, an employee may prefer a temporary reduction in hours rather than facing potential redundancy.

Any agreed change should be properly documented in writing to avoid future disputes.

Genuine restructure - The process you must follow before changing work hours

If the employee does not agree, and you have a genuine business reason for changing hours of work, you may need to embark on a restructure process with the employee before implementing the change.

In addition, employers will often be required to consult with employees before making significant changes to rosters or ordinary hours of work.

If hours are being reduced, the change must be supported by a genuine business reason, and you should follow a fair and reasonable consultation process. That includes:

• Providing employees with information about the proposed change.
• Explaining the likely impact of the change.
• Giving employees an opportunity to express their views an opportunity to comment on that information
• Genuinely considering those views and feedback before a final decision is made.
• Genuine business reasons for the reduction of hours include genuine financial, commercial or economic problems.

Genuine redundancy

Where a role is no longer required to be performed by anyone due to operational changes, restructuring, changing business needs, or business acquisition, an appropriate course of action may be a genuine redundancy process.

Employers should ensure they follow all consultation requirements, consider redeployment opportunities where possible and provide employees with any applicable notice and redundancy entitlements.

Notice requirements for roster changes

Although there is no fixed minimum notice period requirement for changing a roster, Employment New Zealand outlines adopting a process of good faith and providing reasonable notice. This could be between two and four weeks.

The appropriate notice period may depend on:

• Whether the change is temporary or permanent.
• The employee's classification and employment type.
• The operational reason for the change.
• Any specific workplace circumstances.

Agreeing to changes

Changes to working hours can sometimes benefit both employers and employees.

For example:

• Different start and finish times may assist employees with family or caring responsibilities.
• Flexible working arrangements may improve productivity and workplace satisfaction.
• Reduced hours may provide employees with greater work-life balance.

Where an employee voluntarily moves from full-time to part-time employment, accrued entitlements such as annual leave and sick leave are generally retained.

Any agreed variation should be confirmed in writing and retained in the employee's personnel file.

When an employee does not agree

If an employee does not agree to a proposed reduction in hours or change to their employment status, employers should proceed carefully.

Generally, employers cannot make the following changes without agreement or without a genuine business reason after following a consultation process:

• Reduce a permanent employee's contracted hours.
• Convert a full-time employee to part-time employment
  
• Convert a permanent employee to casual employment without agreement.
• Remove entitlements or protections attached to an employee's employment status.

Employers must also ensure any decision is not made:

• To avoid paying employee entitlements.
• For discriminatory reasons.
• Because an employee has exercised a workplace right.
• For any other unlawful or prohibited reason.

Failure to comply with workplace laws may expose employers to claims including breach of contract, adverse action, discrimination or unjustified dismissal.

What about casual employees?

Casual employees generally do not have guaranteed ongoing hours of work. As a result, employers can usually vary the number of shifts offered to casual employees based on operational requirements.

However, employers must ensure decisions about offering or reducing work are not made for unlawful reasons, such as because an employee has made a workplace complaint, exercised a workplace right or is protected under anti-discrimination laws.

Need help managing changes to employee working hours?

Before making changes to employee hours, employers should seek advice to ensure they understand their legal obligations.

For specialist advice on changing employee work hours and managing workplace obligations, speak with Peninsula today.

This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.