If you run a small business, you probably know that staffing needs can change quickly. Some weeks you need extra hands on deck, and other weeks things are quiet.
That’s usually why business owners ask about zero hour contracts - can you hire someone without guaranteeing any hours, and call them in only when needed?
In New Zealand, the short version is: so-called “zero hour contracts” are heavily restricted, and the old-style setup (no guaranteed hours, but the employee must be available) is generally not allowed. But there are still lawful ways to build flexibility into your workforce - you just need to do it properly, in a way that’s fair and compliant.
This guide breaks down what zero hour contracts mean in NZ, what you can do instead, and how resignation notice works (including what to do when an employee resigns without giving you much warning).
What Do People Mean By “Zero Hour Contracts”?
In everyday business talk, “zero hour contracts” usually means an arrangement where:
- you don’t guarantee any minimum hours of work,
- you offer shifts when you have them,
- the employee is expected to be available,
- and if there’s no work, the employee simply doesn’t get rostered (and doesn’t get paid).
This kind of arrangement became controversial because it can leave workers stuck - they might feel like they can’t say no to shifts, can’t take other work, and can’t predict their income.
That’s why NZ employment law now puts real limits on “availability expectations” and requires more certainty around hours (including rules about how availability can be required and how employees must be compensated).
Are Zero Hour Contracts Legal In New Zealand?
Traditional “zero hour contracts” are not generally lawful in New Zealand in the way many people understand them (i.e. no guaranteed hours, but the employee must be available).
Reforms introduced through amendments to the Employment Relations Act 2000 significantly limited an employer’s ability to require availability without meeting strict requirements (including genuine reasons and compensation).
Practically, that means if you want an employee to be on your books, you generally need to provide at least one of the following:
- guaranteed hours (even if it’s a small number), or
- a lawful availability provision (with strict conditions), or
- a correctly structured casual employment arrangement where there’s no ongoing expectation of work.
If your employment agreement says “0 hours guaranteed” and also implies the worker must be available, you’re in risky territory.
Why “Zero Hour” Setups Get Employers Into Trouble
Even if your intention is simply flexibility, a poorly structured agreement can create several legal and operational problems, such as:
- Availability disputes (e.g. employee says they’re being penalised for not accepting shifts)
- Wage and hour complaints (e.g. employee claims they should have been paid for being “on call”)
- Permanent employee arguments (e.g. “I’ve worked regular hours for months - I’m not casual”)
- Personal grievance risk if rostering or hours are used in a way that looks like punishment
It’s usually cheaper (and far less stressful) to set up the arrangement correctly from day one, using a properly drafted Employment Contract.
If You Need Flexibility, What Can You Use Instead?
Most small businesses don’t actually need “zero hour contracts” - they need a lawful way to manage fluctuations in demand.
Here are the most common alternatives in NZ.
1) Guaranteed Hours (With Additional Hours By Agreement)
A common approach is to set:
- a minimum guaranteed number of hours (for example, 5–10 hours per week), and
- a process for offering extra shifts when available.
This gives your business a stable baseline (you know what you’re committing to), while still allowing you to scale up in busy periods.
Tip: Be careful about “guaranteed” hours that don’t match reality. If the employee is consistently working much higher hours, you may need to review the agreement so it reflects the true working pattern.
2) Casual Employment (Where Work Is Truly Irregular)
Casual employment can be a good fit where:
- there is no firm commitment from you to provide ongoing work, and
- there is no expectation from the worker that work will continue, and
- shifts are offered and accepted on an “as needed” basis.
The key is the reality of the relationship - not just the label. If a “casual” employee ends up working regular rostered hours for months, they may start to look like a permanent employee in practice.
If you’re hiring casuals, it’s worth using a tailored Casual Employment Contract so expectations are clear and defensible.
3) Availability Provisions (Only When You Truly Need Them)
In some businesses (like hospitality, healthcare, emergency maintenance, or seasonal operations), you may want an employee to keep certain days/times available.
NZ law allows availability provisions, but they have rules. Generally, to include an availability clause, you need to ensure:
- you have genuine reasons based on reasonable grounds for needing availability, and
- you provide reasonable compensation for the employee being available, and
- the clause is drafted clearly (what hours, what notice, how compensation works, and whether the employee can refuse).
This is one of those areas where “template” contracts often fall short. If your availability clause isn’t compliant, you may end up paying for it later through disputes or backpay arguments.
4) Shift Cancellation Rules (Don’t Forget This Part)
When you roster staff and then cancel shifts, NZ law can require you to pay reasonable compensation depending on what the employment agreement says and how much notice was given. Specific rules can apply where a shift is cancelled within a certain timeframe, and what’s “reasonable” can depend on the circumstances and what the contract provides.
So if you’re trying to build flexibility by “putting shifts on, then cancelling if it’s quiet”, you should make sure your agreement deals with:
- how rosters are set
- how far in advance shifts can be cancelled
- what compensation (if any) is payable
This is also relevant if you’re changing rosters frequently or looking at Reducing Staff Hours during quieter periods - you’ll want to manage it in a way that’s contractually permitted and procedurally fair.
What Should Your Employment Agreement Include If Hours Vary?
If your hours aren’t the same every week, the goal isn’t to avoid obligations - it’s to make sure your agreement is clear, lawful, and workable in the real world.
A well-drafted agreement should usually cover:
- Guaranteed hours (if any) and how they’re scheduled
- Days of work and whether shifts can fall on weekends/public holidays
- How rosters are issued (and how far in advance)
- How additional shifts are offered (and whether the employee can decline)
- Availability expectations (only if lawful, and with compensation where required)
- Cancellation policy for shifts and any compensation payable
- Pay details (hourly rate, overtime if applicable, payroll cut-off dates)
- Notice periods for resignation and termination
It’s also smart to align your contract and your actual rostering practices. If the contract says “hours are offered on an as-needed basis” but you roster the person every Monday–Friday at the same times, you’re creating confusion - and confusion is where disputes start.
If you’re unsure what your agreement should say (or whether your current arrangements still fit your business), a quick review by an employment lawyer can save a lot of back-and-forth later.
How Much Notice Must An Employee Give When Resigning In New Zealand?
Now to the second part of the question small business owners often ask: how much notice must an employee give you when they quit?
In most cases, the notice period comes down to:
- what the employment agreement says, and
- what’s considered reasonable in the circumstances (if the agreement is silent or unclear).
If The Contract Has A Notice Period
If your agreement says (for example) “the employee must give 2 weeks’ notice”, that’s usually the starting point.
Common notice periods you’ll see in NZ small businesses include:
- 1 week (often for entry-level roles or shorter tenure)
- 2 weeks (very common)
- 4 weeks (more common for senior staff, keyholders, managers)
This is why it’s worth getting your notice clause right in the initial Employment Contract - because when a resignation lands during a busy period, it’s too late to renegotiate terms.
If The Contract Doesn’t Say (Or It’s Vague)
If the employment agreement doesn’t include a clear resignation notice period, the law may imply a requirement to give reasonable notice.
What’s “reasonable” depends on factors like:
- the employee’s role and seniority
- how long they’ve been employed
- how hard it is to replace them quickly
- industry norms (for example, hospitality vs professional services)
From a practical standpoint, vague notice obligations can be frustrating for small business owners - and they can create risk if you try to enforce a notice period that isn’t clearly supported by the contract.
What If An Employee Resigns Without Notice?
It happens: an employee texts “I’m not coming back” or simply stops showing up.
From a legal risk-management perspective, your best next steps are usually to:
- Check the employment agreement to confirm the notice clause and any process requirements.
- Confirm the resignation in writing (politely) and ask them to clarify their final date.
- Work out final pay carefully (including any outstanding holiday pay and entitlements). Be cautious about making deductions from final pay - wage deductions are regulated and you generally need a lawful basis (often written consent) before deducting things like training costs, unreturned property, or overpayments.
- Document everything (shift offers, messages, attempts to contact, handover issues).
Whether you can recover losses or withhold pay depends heavily on the situation and the contract terms (and in many cases you can’t simply “withhold” pay as a penalty), so it’s worth getting advice early.
If you’re dealing with a difficult exit and you’re considering paying out notice instead of requiring them to work it, Payment in Lieu of Notice is another area where getting the details right matters (including what the contract allows and how final pay is calculated).
Can You Require An Employee To Work Their Notice Period?
You can generally expect an employee to work their notice period if the agreement requires it - but in real life, forcing the issue can be messy if the relationship has broken down.
Many businesses handle notice periods by:
- agreeing on an earlier finish date by mutual agreement, or
- reassigning duties during notice to manage risk (for example, limiting customer lists, stock access, or admin permissions), or
- paying out notice where appropriate.
Just make sure whatever approach you take is consistent, fair, and aligned with the contract, especially if the employee is leaving in sensitive circumstances.
What If You Rely On A “Casual” Workforce - Do They Have To Give Notice?
This depends on the casual agreement terms and how the relationship operates in practice.
Some casual arrangements are genuinely shift-by-shift, meaning there may be no “notice” as such (because there’s no ongoing commitment). But many casual agreements still include a short notice period, especially where the person works frequently or is rostered in advance.
If you’re seeing regular patterns emerge, it may be time to consider whether you should move the person into a more stable arrangement - similar to the issues raised when Changing From Casual To Full-Time (or part-time) becomes the practical reality.
Key Takeaways
- “Zero hour contracts” aren’t completely banned in New Zealand, but they’re heavily restricted - in particular, you generally can’t require availability while guaranteeing no hours unless you meet strict legal requirements (including genuine reasons and compensation).
- If you need flexibility, you can usually use guaranteed hours plus extra shifts, a properly structured casual arrangement, or a lawful availability provision (with genuine reasons and compensation where required).
- Your employment agreement should clearly cover hours, rostering, cancellations, and availability so you don’t end up with disputes when business is quiet or when shifts change.
- An employee’s resignation notice period usually comes from the employment agreement; if it’s not clear, a “reasonable notice” standard may apply depending on the role and circumstances.
- If an employee resigns without notice, you should confirm the resignation in writing, calculate final pay carefully, and keep records - and get advice early if things are contentious.
If you’d like help setting up flexible (but compliant) working arrangements, or you want your employment contracts reviewed so your business is protected from day one, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
