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 restrictions from COVID-19 are anything but normal.
We already seeing a few cases concerning COVID-19 employment issues through the Employment Relations Authority (ERA) and there will be a lot more, along with possible appeals on decisions made at the Employment Court. Therefore, caution should be exercised when making any future decisions about employee’s terms and conditions in consideration of any recent changes to your specific regional alert levels.
However, it may be that you will still need to take a pragmatic approach in the decision-making approach to some of the questions raised below. This does not mean you can do things unilaterally, but you may need to make decisions in order to get outcomes that are genuinely designed within the spirit of providing ongoing sustainability of your business and continuing to save as many jobs as you can.
Below we cover some frequently asked questions from employers.
Due to the rapidly changing situation, we recommend you check back regularly as we will be updating the answers as more clarification and updates are provided.
CHANGES TO TERMS AND CONDITIONS OR STRUCTURE
I don’t have enough work for all our employees due to current Alert Level restrictions, what should I do?
You should talk to your employees now about the work that you think you will have available and whether or not they can work from home. You could 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. Or if you already have this arrangement in place, you could consult with them about extending this.
If I continue paying my employee’s wages, can I expect them to work from home while we have Alert Level restrictions?
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.
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. Note that this consultation process should start either at the end or near the end of the period that is covered by the period of any wage subsidy you have received for the employee/s concerned.
We are considered an essential service but my employee doesn’t want to work as they have a dependent or partner at home who might be vulnerable to COVID-19, what do I do?
Talk to the employee about their concerns and make sure you are taking enough steps to keep them safe. You may want to involve your Health and Safety representative if you have one. If they are still unwilling to work and can’t do their work remotely, then you can look at the options of unpaid leave, sick or annual leave. Ultimately, if your instruction is clearly a reasonable one and their refusal is not, you could enter a disciplinary process, but that’s not recommended at this time unless the situation is really serious. This is a complex area and you will need to call us to discuss this as the facts of the case will determine our advice to you.
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 once you have more work available for them. Any reduction agreed should not take their wages below the minimum wage. This is the view of the Employment Authority on the recent case of Sandhu v Gate Gourmet NZ. We would recommend that you reduce their hours of work rather than their pay rate if that works for the business.
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 and if you have obtained the wage subsidy, then you need to make your ‘best endeavours’ to retain your employees. Note that this consultation process should start either at the end or near the end of the period that is covered by the period of any wage subsidy you have received for the employee/s concerned.
Can I ask my employee to take annual leave?
If the alternative is being on unpaid leave they may wish to do this. This might also be a good opportunity to reduce annual leave entitlements balances while you are not as busy. 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.
Who is entitled to the 2 week Resurgence Wage Subsidy?
This subsidy was made available on 21 August. It is available nationally for employers (including self-employed people) who have had, or expect to have, a revenue drop of at least 40% due to the resurgence of COVID-19 in August. This needs to be for a continuous 14 day period between 12 August and 10 September 2020, compared to a similar period in 2019.
You can’t receive more than one COVID-19 payment for the same employee at the same time. If you have applied for any previous Wage Subsidy or Leave Support Scheme for your employee/s, you will need to wait until those payments are finished before you can apply for the Resurgence Wage Subsidy.
Applications are only available until 11.59pm on 3 September 2020, so if you think you qualify, you should look into this asap.
You won’t be entitled to the Resurgence Wage Subsidy for an employee if you are still receiving any of the Wage Subsidy, Wage Subsidy Extension or the Leave Support Scheme for an employee on 3 September 2020. There are obligations in how you use the subsidy to retain and pay your employees so you could check here first.
Can I apply for the 8 week Wage Subsidy Extension?
This is still available until 1 September 2020 and provides support for employers who are still significantly impacted by COVID-19 after the 12-week wage subsidy ends. You should obtain permission from your employees to apply as you will need to provide their personal details to Work and Income. To be eligible you must have had, or expect to have, a revenue loss of at least 40% for a continuous 30 day period. This period needs to be in the 40 days before the application (but no earlier than 10 May 2020), compared to the closest period last year in 2019. 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.
Can I still apply for the 8 week wage subsidy extension or the 2 week resurgence subsidy, if I didn’t apply for any other subsidies?
Yes, you can even if you haven’t applied for any previous wage subsidy for your employees before and meet the criteria for each subsidy. For further information check here.
My employee/s have been made redundant at the end of (or after) the period that the 12-week subsidy ends; however I now meet the eligibility criteria for the 8-week wage subsidy extension and/or resurgence payment. Can I extend my employee/s notice period?
If you have already given your employee their redundancy notice, you need to withdraw this notice before applying for any further wage subsidy for your employee/s. If you decide to do this, then you will need to reach agreement with your employee that the notice will be withdrawn. We can let you know the best way to do this.
My employee has resigned during the period we are receiving a wage subsidy payment 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 a wage subsidy payment 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 you need to show that you have undertaken 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 than the period that the subsidy covers.
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.
Am I eligible to apply for the Leave Support Scheme?
You may be eligible if your employee/s can’t work from home and can’t come into work because they are in one of the affected groups and Ministry of Health guidelines recommend stays at home.
To be eligible your employee/s must have;
• Tested positive for COVID-19; or
• Have had contact with someone who has COVID-19; or
• At higher risk (or someone in their household is at higher risk) if they get COVID-19;
This is a 4 week payment and is calculated at the same rates as the wage subsidy payment.
Since 21 August at 1pm, you no longer have to show that your business has been financially impacted to be eligible for this scheme. However as with the wage subsidies, you can’t receive more than one COVID-19 payment for the same employee at the same time. For further information on eligibility check here.
My employee/s wants to continue working from home permanently, rather than coming back into the office to work. Should I agree to this?
If this works for both you and your employee/s then you can agree to this. Many employers are using this opportunity to provide more flexible working arrangements and this can be beneficial to both parties. You may also want to consider ensuring your employee is reimbursed for work-related costs such as internet use etc. and you should also ensure that you can meet your ongoing Health and Safety obligations.
Your employee/s can also request a flexible working arrangement under the Employment Relations Act or if they are affected by Family Violence, they can also request a short term variation of their working arrangements. Therefore, you need to consider all these requests carefully and talk to us to understand your obligations and the process for this.
My employee/s is refusing to return to our workplace. What should I do?
You should talk to your employee/s to find out why they don’t want to return and consider and respond to any concerns. You should act in good faith and try reach a resolution. Dependent on the alert level for your region and if you are meeting all health and safety requirements, this may be considered unreasonable and you should seek advice on next steps.
What responsibilities do I have around Health and Safety for someone working from home?
Your obligations are just the same as if they were in your workplace. You should check that they have an appropriate workstation set up and that they have a suitable environment to work from. You should ensure that you have regular check in’s with them and that you have the appropriate communication channels in place and opportunities to remain connected with your employees.
My employee/s are finding it challenging returning to the workplace environment and are not coping well, what should I do?
Check-in with your employee/s regularly to assess how they are coping and whether they need any support. You may consider options such as a progressive return to work, providing them with access to EAP services and ensuring that their workload is manageable. If you think there are mental health issues brewing, remind them that support is available, such as 1737 or MENTEMIA or the many resources that are listed on the Mental Health Foundation’s website.
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, or they (or a member of their household) are at higher risk, 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. You must meet the employer eligibility criteria detailed here and you can’t apply for the Leave Support and any 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.
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.
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.