Once upon a time 'a days pay for a days work' applied to daylight hours only. However, after the Court of Appeal's decision in Idea Services Ltd v Dickson, this is all going to change.
On 16 February the Court of Appeal in Idea Services Ltd v Dickson unanimously held employees who are required to sleepover on premises as part of their job, considered to be "working" for the duration of the time they are there. Thus entitling them to the minimum wage for every hour they work.
This may include babysitters, ambulance officers, homecare workers, campground managers, and teachers at school camps.
However, when deciding whether sleepovers constituted "work" for the purposes of section 6 of the Minimum Wage Act 1983, the Court said three factors must be taken into consideration.
3 Factors Determining whether sleepovers constitute "work"
The nature and extent of responsibilities placed on the employee;
The benefit to the employer of having the employee perform the role; and
The constraints placed on the freedom of the employee, including the fact that:
They may not leave the premises during the period of the sleepover;
They may not consume alcohol or have visitors; and
If they sleep, they must be available to be woken to respond to an incident.
The Court claimed that "the greater the degree or extent to which each factor applied (i.e. the greater the constraints, the greater the responsibilities, the greater the benefit to the employer), the more likely it was that the activity in question ought to be regarded as work". Thus, because entitlement is based on these significant restrains, because of the work, casual, or on-call work may not qualify.
What Does This Mean For Employers?
This case has raised some concern from many organisations. This decision has led two IHC subsidiaries (Idea Services Ltd and Timata Hou) to get statutory management from the Government at their request, because they claimed they could not afford to pay their workers. At the time, the companies said they faced a $176 million liability.
While the Government may bail out the IHC, other organisations may find themselves footing a large bill. Health Minister Tony Ryall said paying overnight staff to sleep would cost more than $500 million over three years.
However, the ECCC recommends employers exercise caution for the moment and not react hastily, as this may not be the end of the story. Idea Services Ltd may appeal the decision and the Government has indicated it is considering legislation to minimise the implications of this decision. Parliament may consider following the UK's definition of 'work' – which specifically excludes time spent sleeping. In addition to this, Parliament will also need to decide whether to legislate with retrospective effect to avoid the considerable liabilities for arrears of wages that this case has created.
Until Parliament responds, employers should be mindful of this decision. Employers need to take the time now to assess the extent of their liability and review their contractual arrangements to determine if they are obligated under this new ruling.
Sleepy Employees - Beware!
On the flipside to the above decision, if you are not entitled to being paid while sleeping on the job – beware! A reasonable belief that you are sleeping on the job is now sufficient to fire you.
In the case of Dee v Air New Zealand Ltd, the Air New Zealand Boiler Operator was dismissed for sleeping on the job. While Mr Dee was on a night shift, it was alleged that he was found asleep on the floor. He challenged his dismissal on the basis that the employer could not prove he was asleep.
The Employment Relations Authority determined that 'a fair and reasonable employer can conclude serious misconduct has occurred in a particular factual situation, even where the specific allegation cannot be proved'. It was held that the employer had "reasonable belief" that an employee had been sleeping on the job and was justified in dismissing them.
While the US National Transportation Safety Board is calling for 'controlled naps' to be built into night shifts after a string of incidents involving workers falling asleep, it has not been determined whether New Zealand will consider following this. Thus, as the ruling currently stands, sleepy workers should avoid the temptation to nod off.