Coronavirus / COVID-19 and the workplace - Employment law update 29 March 2020

29 Mar 2020
Author: DTI Lawyers

The past week has seen rapid developments in New Zealand’s response to the COVID19 pandemic, and we have been working with both employers and employees to help them navigate these unchartered waters.  Employers and employees are having difficult conversations, in different ways than are normal, and we are hopeful that these are being held in a respectful way. 

Given the pace at which the Wage Subsidy Scheme was implemented, and in some cases, paid out, Government clarification has been necessary. We set out below information related to the Wage Subsidy Scheme, as it currently stands (29 March 2020).

Employer Obligations

The Employment Relations Act 2000, in particular, its object to build productive relationships through the promotion of good faith in all aspects of the employment environment and of the employment relationship has not been amended.

Good faith (not doing anything to mislead or deceive or is likely to have that effect and being active and responsive in communication) remains the fundamental pillar of employment relationships. Employees are entitled to information about the continuation of their employment.

An employer is required to be fair and reasonable in all the circumstances at the time of its actions. What this requires is that you consult with your employee about any decisions you are proposing to make, this includes any proposal which would mean a reduction in duties and responsibilities and/or remuneration.

An employer has no ability to ‘opt out’ of its obligations pursuant to the Holidays Act 2003An employer is required to be paid leave accurately, using the calculations set out in the Act. We have previously provided commentary related to requiring employees to take annual leave during the Lockdown Period. That is summarised as:

The starting point, is that an employer and an employee should reach agreement on how an employee’s entitlement to annual leave is to be met. If they are unable to reach agreement, an employer must give no less than 14 days’ notice of the requirement to take annual leave.

The Wages Protection Act 1983 defines wages as: "salary or wages; and includes time and piece wages, and overtime, bonus or other special payments agreed to be paid to a worker for the performance of service or work; and also includes any part of any wages." 

Both the Employment Relations Act 2000 and Human Rights Act 1993 set out the prohibited grounds of discrimination in employment: sex, marital status, religious belief, ethical belief, colour, race, ethnic or national origins, disability, age, political opinion, employment status, family status, sexual orientation.

Put simply, it is unlawful to treat an employee differently from another for any of the reasons set out above. 

The employment agreement will be your guiding document, alongside any policies the organisation has. Be realistic and open about any changes you need to make to processes in the current environment (e.g. timeframes may be stipulated in agreements and/or policies, but may necessarily be shortened in the current environment). An employer does not have a right to unilaterally vary or assert new terms of employment, even in the current environment. However, they may given employees reasonable directions with regard to work, and employers may consult about proposed changes.

The Wage Subsidy Scheme

The Wage Subsidy Scheme is designed to:

  • support employers who have been adversely affected by COVID19, to assist them to continue to pay their employees; and
  • support workers to continue to receive an income, even where they are unable to perform their work (i.e. workers who do not have the ability to work from home).

Eligibility for the Wage Subsidy Scheme:

  • Business registered and operating in New Zealand;
  • Has experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared to the same month last year (January – June), or a reasonably equivalent month for a business operating for less than a year, which is attributable to the COVID19 outbreak;
  • Taken active steps to mitigate the financial impact of COVID19 on the business;
  • Employer will make ‘best endeavours’ to retain the named employees and pay them 80% of their usual wages/salary for the duration of the subsidy; 
  • Obtain consent from employees to pass their information to Work and Income.

If your business receives the Wage Subsidy payment, you must pass on the subsidy to the named employees, and use your best efforts to pay employees named in the application at least 80% of their usual wages. 

If it isn’t possible to pay 80%, you must pay the full subsidy rate unless your employee’s usual wages are less than the subsidy rate, then you must pay them their normal wages.

Current advice from Work and Income is that any difference (between the wage subsidy and usual pay) should be used towards the wages of other staff, as the subsidy is designed to keep employees employed.

Practical guidance

The starting point is that if an employee is able to perform the duties and responsibilities of their role from home, they are entitled to be paid their wages/salary as if they were attending the workplace. 

If that is not possible, i.e. there has been a reduction in the work available, or they simply cannot work from home, then you need to consult with those employees about reduction/rescoping of roles and/or remuneration. 

You also need to consult with your employees about paying them the Wage Subsidy, where they would ordinarily earn more in their ordinary weekly pay. Be open and transparent about this, although for most, the reasons will be apparent, your obligations as a good employer continue (as do your employees’ obligations to act in good faith and be responsive and communicative). Where, for example, a business (e.g. restaurant, shop etc.) has closed its doors, has ongoing outgoings but no incomings, we consider that as long as you have consulted with your employees (and are passing on the Wage Subsidy), that minimises risks associated with a claim for unpaid wages in the future. You should be able to demonstrate this information to employees when seeking their input, and, it will form the basis upon which you are able to lawfully sign the declaration required when applying for the Wage Subsidy.

Be objective about selection criteria regarding rescoping of roles/remuneration and potential restructures/redundancies. For example, do not make assumptions about a person’s ability to perform work. Be mindful of the prohibited reasons for discrimination, and ensure that you are acting lawfully. 

Vulnerable workers

There is currently a lack of clarity with respect to those who are over 70, immune-compromised and/or have respiratory conditions (or those who have these people in their bubble) who work in essential services, and what an employer is obliged to pay those employees, if they have been advised by their medical practitioner not to attend the workplace, or do not want to place themselves or their bubble at risk. The starting point, of course, is that if the employee has been advised by their medical practitioner, they are unable to work, then they are entitled to sick leave entitlements. When those are exhausted, we encourage employers and employees to discuss how this will be managed, and whether the employer can pay sick leave in advance, annual leave or paid discretionary leave.

We are expecting a further Government announcement on this in the coming days. One option is that it may extend the COVID19 leave payment, which has now been brought into the Wage Subsidy Scheme, to those employees. After all, we are collectively trying to protect those in the community who are vulnerable, with the intention that our hospital and emergency services do not become overwhelmed by the number of those who contract COVID19. In the meantime, we encourage employers and employees to talk to each other about their concerns and seek to agree. 

Where there is a known health and safety risk to the employee, and concerns are expressed about that employee being able to work, businesses should discuss how this will be managed with their employees, and consider their ability to pay sick leave in advance or paid discretionary leave where possible), as set out above. 

Please feel free to contact us for any clarification on the above. Be Kind. Stay Safe. He waka eke noa. 

The specialist employment law team at DTI Lawyers can be contacted on 07 282 0174.

The information contained in this article is accurate as of the date of publication, but please note in this rapidly moving environment, you should review the DTI Lawyers website, or contact our team, to ensure it remains up to date.