The principles that underpin the philosophy of current employment legislation are based on a normal ‘business as usual’ working environment. The conditions forced on everyone by the COVID-19 lockdown are anything but normal.

We believe a far more pragmatic approach should be exercised in the decision-making approach to some of the questions raised below. If it can be proved that the underlying intention in making some hard calls are in the interests of long-term job retention for your people, we believe some of the normal time periods for consultation can be reasonably shortened.

This would not mean you could do things unilaterally, but simply mean you need to weigh up the risk of not strictly adhering to timeframes to get outcomes that are genuinely designed within the spirit of providing ongoing sustainability of your business and saving as many jobs as you can.

Below we cover some frequently asked questions from employers.

Due to the rapidly evolving situation, we recommend you check back regularly as we will be updating the answers as more clarification is provided.

Did the Minimum Wage still increase as planned to $18.90 on 1 April?

Yes it did. Here is a useful link that explains the details, such as changes to the training rate, how and when to process the change etc. Employment.govt information.

We are due to have pay reviews now, but we can’t afford any increases, what should we do?

You should firstly check your Employment Agreements and any relevant policies. Some options include:

  • Decreasing your overall remuneration increase budget to what you can afford with a higher % for high performers and critical roles.
  • Putting your pay reviews on hold until later in the year.
  • Deferring any increases until later in the year or next year.
  • Consider non-financial rewards i.e. more leave, continue with flexi working arrangements, more opportunities to collaborate etc.
  • Focusing your budget on short-term incentives against agreed targets.

Whatever you decide to do, communicate and engage with your employees on this. For example, employees may be more accepting of foregoing an increase to their salary this year, if they know that this will save jobs.


It is still going to take some time before I have enough work for all our employees, what should I do?

You should talk to your employees now about the work that you think you will have available, and consider options such as split shifts, which will also ensure that you are providing a safe work environment and meeting your social distancing obligations. You may also have employees who are unable to return to work or opt not to return to work as they may consider they have a ‘higher risk’ of complications linked to contracting Covid-19 due to underlying health conditions/age.

You could also consider consulting with your employees on a reduction in hours and/or pay or reach agreement on them using any annual leave entitlements or unpaid leave during this time.


Can I reduce an employee’s pay and/or hours of work?

Only after following a consultation process with them and we would also recommend recording any agreement you reach in a variation to the employment agreement. You should also clarify how long the pay reduction is anticipated to last and if it is your intention to return them to their current pay rate when things get back to normal.


I don’t think I can keep all my employees on. Can I make them redundant?

If you are considering a downsizing restructure you still need to follow a consultation process as normal, though the timeframes can be compressed. Note that this consultation process should start either at the end or near the end of the period that is covered by a wage subsidy you have received for the employee/s concerned.


I am going to have to make some employees redundant. Can I use the wage subsidy for an employee’s notice period?

As above, you will still need to follow a consultation process. You must ensure that you pay the entire 12 week wage subsidy to your employees. However if your financial situation means that you can’t retain their employment for this full period, then the 12 weeks could include their notice period. i.e. if you have finished your consultation process and you have paid 8 weeks of the wage subsidy period then the balance of the 4 weeks could be used to pay their notice period (if they have a 4 week notice period in their Agreement). If there is still an excess of the wage subsidy for the employee, you could consider paying this to the employee as a lump sum or extending their notice period. You must also meet all your other obligations as outlined in their Employment Agreement such as holiday pay, redundancy compensation etc.


Can I ask my employee to take annual leave?

If the alternative is being on unpaid leave they may wish to do this. Note that if the employee has an annual leave entitlement you could consider giving them 14 days’ notice to take their annual leave entitlement if you can’t reach an agreement, but this does not apply to holiday pay, or leave accrued since their anniversary. You may also both agree for the employee to use sick leave if they have a large accrual. Make sure you have a paper trail of any agreements reached, in case the employee later challenges the use of this leave. Things relating to the Holidays Act can be quite complex, so reach out of you need a hand with this.



Can I apply for the 8 week Wage Subsidy Extension?

This will be available from 10 June to 1 September 2020 and provides support for employers who are still significantly impacted by COVID-19 after the 12 week wage subsidy ends. To be eligible you must have had, or expect to have, a revenue loss of at least 50% for the 30 days before you apply, compared to the closest period last year. The same conditions that you had to meet for the 12 week subsidy will also apply, including retaining your employees for the duration of the subsidy and doing your best to pay your employees at least 80% of their normal pay. For further information and how to apply check here.

My employee has resigned during the period we are receiving the wage subsidy for them. Do we need to pay back the subsidy?

No you don’t need to repay this, but you do need to let MSD know that your employee has resigned. You can use the remaining balance for wages for your other employees.

I have applied for the wage subsidy but I can’t afford to pay my employees any more than this, what should I do?

Please note that you cannot reduce pay unilaterally, you need to consult your employees. In applying for the wage subsidy (unless you applied in the first couple of days) you undertook to use your best endeavours to pay at least 80% of their normal pay. If you are unable to do this, you should keep a record of your endeavours to do this, in case you are questioned later. This could include correspondence with your bank or accountant.


My employee earns less than the wage subsidy, should we pay them the wage subsidy amount which is actually higher than their pay?

No, the government has now clarified this – you can just pay their usual income. The Minister of Finance stated on March 27.

“We still want employers to use their best endeavours to pay employees 80% of their normal salaries. Where this is not possible, we want the value of the subsidy to be passed on. But to be absolutely clear if a person’s income is normally less than the subsidy they can be paid their normal salary. This is particularly an issue for part time employees some of whom normally earn less than the $350 per week. We urge employers to use normal hours in the period before COVID-19 to assess the amount to be paid.”
We suggest that any balance left over is used for other wage-related purposes, such as keeping the person on pay for more than 12 weeks.

As this is evolving so quickly, at this stage we recommend that people check directly with work and income and the government’s COVID-19 Sites.

Work and Income

Government Covid 19


Is the wage subsidy applicable to essential businesses?

On 2 April the government announced a new Essential Workers Leave scheme. The scheme supports those who are unable to work from home and need to self-isolate, or are at higher risk of becoming sick with COVID-19, or have a higher risk person in their bubble. The amounts are the same as the wage subsidy scheme and applications opened at midday on Monday April 6. NOTE you cannot have both subsidies for the same employee at the same time. Also the payment only applies for four weeks, not 12.

More details here: Essential workers leave scheme
And the application form is HERE:


I am topping up the wage subsidy to 80% of the employee’s usual income, should they do full time hours?

This is something that you should discuss with the employee and will also depend on whether you have enough work for them to keep full time hours – you should both be working together to try and ensure the viability of the business.



If I continue paying my employee’s wages, can I expect them to work from home?

Yes, if they have access to the systems that they need to use and you have work they can do. The hours they are able to work and/or the time they are able to do them will depend on their personal situation, e.g. are they caring for young children at the same time? You should discuss and agree what is possible and both sides will need to be flexible.


What happens if my employee isn’t very productive working from home?

Broadly, you should deal with it in the same way that you would if they weren’t very productive while working at their usual workplace. This would include regular communication and feedback, setting clear expectations, regular check ins, etc.


I am part way through a disciplinary process with my employee, what should I do?

If it is performance related, you should set out your expectations of their performance clearly, when they return to work and provide them with the support that they will need. It may also take all your employees some time to readjust to a return to work and any performance targets in place prior to lockdown may need to be reviewed given the changed post Covid-19 environment. If it is a disciplinary issue relating to conduct, e.g. a failed drug test prior to the lockdown, then you should proceed if possible, even though meetings will need to be done via phone, Zoom or Skype.

My employee is on a 90 day trial period, can I terminate them to save costs?

As long as the trial period is valid, i.e. you have less than 20 employees and the agreement was signed before they started. But if their employment has been working out well you might want to explore other options such as putting them on unpaid leave until you have enough work for them, or applying for a wage subsidy. Note that you should not terminate their employment during a period that is covered by a wage subsidy you have received for the employee concerned.


My employee is due to start work with me in the next few weeks but I don’t have work for them, what should I do?

Talk to them about deferring the start date, or you could include them in your wage subsidy application. They are technically an employee, so if you no longer need the position you should consult with them. This one is tricky and there are many variables so seek advice about your specific situation.


What happens if my employee or their dependent gets COVID-19 or they are in self-solation due to close contact with an infected person, what am I obligated to pay them?

If your employee can’t work from home and needs to stay away from work, then you might be entitled to the COVID-19 Leave Support payment. This scheme has replaced the Essential Workers Leave Scheme in operation under Level 4 and now covers all employees for a period of four weeks from the 28th of April. You must meet the employer eligibility criteria detailed here and you can’t apply for the Leave Support and Wage Subsidy payment for the same person at the same time. You will receive the same weekly amount as the wage subsidy for four weeks and you must make your best endeavours to pay the employee/s receiving the Leave support payment at least 80% of their usual salary/wages during this period.

My employee has a serious health condition or has someone in their bubble that puts them at high risk of becoming seriously ill from COVID-19, what am I obligated to pay them?

If you agree with your employee that they won’t work for an agreed period and you meet the eligibility criteria for the COVID-19 Leave Support Scheme, then you could apply for this. If you aren’t eligible then we suggest that you put them on paid sick leave if they have any or else you can offer unpaid sick leave or they may wish to use annual leave.


Some of our business is unable to operate but we do have work for these employees in another part of the business, can I redeploy them there?

Absolutely, as long as it is reasonable in terms of their skills and abilities.


What responsibilities do I have around Health and Safety for someone working from home?

You should check (as best you can remotely) that their workstation set up is as good as possible in the circumstances. Also make sure you check in with them regularly to make sure they are coping and if they need any support. If you think there may be mental health issues brewing, remind them of the support that is available, such as 1737 or MENTEMIA or the many resources that are listed on the Mental Health Foundation’s website and the website