CORONAVIRUS / COVID-19 AND THE WORKPLACE - Q&A ON PUBLIC HOLIDAYS AND ANNUAL LEAVE

7 Apr 2020
Author: DTI Lawyers
 

With Easter fast approaching and many employees having booked additional annual leave for over this period, this article aims to address frequently asked questions regarding public holidays and annual leave during the Level 4: lockdown period.

What do employees get paid over Easter?

You will still need to pay your employees in accordance with the Holidays Act, as those legal requirements still apply. Even if agreement is reached between an employer and employee that deviates from the Holidays Act, it is unlawful to contract out of the minimum requirements it provides.

This means firstly, you will need to be clear whether the public holiday would 'otherwise be a working day' for the employee. An employer must pay an employee "not less than the employee's relevant daily pay or average daily pay for that day".

Relevant daily pay is the amount the employee would have received if the employee had worked that day. It includes additional payment such as overtime and bonus payments. This calculation is used where an employee works a regular pattern of work. Average daily pay is used where an employee's pattern or work is irregular. It is calculated by dividing the gross yearly earnings by the number of days on which the employee earned the gross earnings.

If an employee would normally work on a day a public holiday falls, they will be entitled to be paid their “relevant daily pay” or "average daily pay". 

If an employee works on a public holiday, they are entitled to their relevant daily pay or average daily pay, plus time and a half. They are also entitled to a day in lieu.

If there has been consultation and agreement to different days of work, shifts or other working arrangements during the lockdown, this can be relied on to determine whether there has been a valid variation to whether a public holiday would 'otherwise be a working day' for the employee.

What does an employee get paid if a reduction has already been made to their pay or they are only receiving the wage subsidy?

Common scenarios to consider may be:

  • If an employer (with valid agreement by the employee) has already reduced an employee’s earnings, then it is arguable that this then becomes the “relevant daily pay”.
  • If an employee is not working, but being paid during the lockdown, the employee will (generally) not be entitled to payment for the public holiday because it was not otherwise a working day.
  • If an employee is not working but is being paid a portion of usual pay, i.e. they are receiving the Wage Subsidy, the day may otherwise be a working day and should be paid accordingly.

Although there were signals that this issue would be considered, there has not been guidance from the Government that any changes to Holidays Act obligations for the Easter period will occur.

Can an employer make staff take annual leave?

The requirements of the Holidays Act still apply. The starting point is that an employer and employee should reach agreement on how an employee’s entitlement to annual leave is met in accordance with the terms of their employment agreement. If you are unable to reach agreement, by lawful direction you can require an employee to take annual leave with at least 14 days’ notice. It is important to remember that in all of these circumstances you are required to act fairly and in good faith, which means having discussions with your employees.

The Government Wage Subsidy declaration now requires the employer to declare (among other things) that:

you will not unlawfully compel or require any of the employees named in your application to use their leave entitlements for the period you receive the subsidy in respect of those employees.”





Do employees continue to accrue annual leave even during the lockdown?

Yes, but the monetary value will change depending on whether and how much your employees are now earning, much like parental leave. 

What if an employee wants to now cancel annual leave they have booked over Easter?

Planned annual leave cannot be cancelled without mutual agreement between the employer and employee. Given the current situation, an employer could agree to defer the annual leave, as opposed to cancelling it. However, depending on the circumstances, an employer may want an employee to take annual leave now as planned. For example, this allows an employee to rest. It is important to remember that there is a mutual obligation to act in good faith.

For further guidance on the impact of COVID-19 and annual leave, see our article link below [1].

Can an employer pay an employee the wage subsidy and then propose to use an employee’s annual leave to top them up to 80%?

Yes, but only if after consultation with the affected employee(s), they agree to this. If, after consultation, an employee does not agree to using their annual leave to top their pay up to 80%, an employer can require an employee to do this after having given at least 14 days’ notice. However, the wage subsidy scheme only requires an employer’s “best endeavours” to top an affected employee’s pay up to 80%, so if an employee does not wish to use their annual leave and be paid the wage subsidy only, this is not necessarily cause for concern.

If staff want to take sick leave to look after vulnerable family members or they are unable to return to work because they are vulnerable, can they take sick leave?

If a staff member is not sick, nor is their dependant, they will not technically be entitled to sick leave. However, an employer could agree to treat this as sick leave. If there is agreement, we recommend that this is confirmed in writing. 

If a staff member is an essential worker and is unable to return to work because they are vulnerable (per the Ministry of Health guidelines) and they cannot work from home, employers are now able to apply for the Essential Workers Leave Support scheme. For more information around this, we have written a separate article on the scheme.[2]

We encourage employers in this situation to discuss with the individual their concerns, and what it can reasonably do to accommodate that person. 

 

We encourage you to continue to review our website for regular updates, including any further direction provided by the Government on the impact of the lockdown on employee entitlements under the Holiday Act.   


If you have any further questions the specialist employment law team at DTI Lawyers can be contacted on 07 282 0174.