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.
CHANGES TO TERMS AND CONDITIONS OR STRUCTURE
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. 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.
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.
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.
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 wage subsidy period to your employees. However if your financial situation means that you can’t retain their employment for this full period, then you could include the subsidy as part of their notice period. This applies for both the 12-week subsidy and the 8-week subsidy extension. i.e. for the 12 week subsidy, 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. 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.
Can I apply for the 8 week Wage Subsidy Extension?
This is now 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 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.
My employee/s have been made redundant at the end of (or after) the 12-week subsidy ends; however I now meet the eligibility criteria for the 8-week wage subsidy extension. 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 the 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 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 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 12 weeks.
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.
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?
Under previous Alert Levels, an employee/s could reasonably refuse to carry out work if they reasonably believe doing so would expose them to a serious risk to their health. However now we are under Level 1, if you are meeting all health and safety requirements, then this may be considered unreasonable. You should talk to your employee/s to find out why they don’t want to return and consider and respond to any concerns. If you have acted in good faith and can’t reach a resolution, then you may need to start a disciplinary process.
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, 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.
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.