Covid-19 is unchartered waters for employers. In this article, we explore how employers can rely on the existing New Zealand employment law framework to navigate a global phenomenon.

New Zealand is counting down to the first-ever peacetime nation-wide lockdown commencing at 11.59 pm on 25 March 2020. The unprecedented lockdown, to help stop the spread of Coronavirus COVID-19, has brought uncertainty for many in their workplaces and personal lives.

We have been part of interesting conversations with fellow employment lawyers who are all trying to ensure that there is consistent messaging out there.

The big thing we want to impress upon employers is to communicate and consult with your staff. This crisis does not mean that you can simply make decisions and enforce them on your people.

While the impact of COVID-19 (and similar crises) on New Zealand employment law is still unclear, the mutual obligation of good faith will continue to apply to every employment relationship.

What are my obligations?

As a responsible employer, it is incumbent on you to stay informed and take guidance from the government and the Ministry of Business, Innovation and Employment, for specific questions ask us. We are here to help.

Staying informed is key to remaining flexible and aware of the options available to you in your particular circumstances. Despite these unprecedented times, the obligation remains on employers to do what is fair and reasonable in the circumstances. This includes communicating information to employees and consulting with them around any changes that will affect their employment.

Non-essential businesses – shutdown obligations

As many organisations prepare to shut down, employers and employees must determine in what capacity their employment relationships will continue. Irrespective of which option is best for your organisation, you must in good faith consult with your employees and reach an agreement on how their employment (and remuneration) will be affected.

One of the key questions employers want answered is whether they are obligated to pay their employees during the Level 4 lockdown if the organisation is closed due to government directives. As a starting point, the Holidays Act 2003 does not oblige employers to pay their employees during a business shutdown period (this being different to a ‘closedown period’ which is often used where employers during Christmas time for example). However, the position becomes less clear if employees are ready, willing and able to work but cannot do so due to the mandatory lockdown.

If it is possible given the nature of your work, we encourage employers to ask their employees to continue to work from home. If this is not an option for you, you may wish to consider consulting with your employees on the following:

  • Payment of a period of annual leave;
  • Payment of special leave;
  • Payment of reduced remuneration (with assistance from the COVID-19 Wage Subsidy);
  • Requesting your employees to take unpaid leave;
  • Restructuring; or
  • Redundancy.

Employers are still required to follow a lawful process and reach agreement with their employees when putting any of the above options into effect.

For those organisations that are unable to facilitate their employees working from home, the continuity of their employment agreements may be at risk. If you think this may be the case, contact us for specialist advice on whether specific legal principals of force majeure or frustration of employment contract apply and what a restructuring or redundancy process would entail.

How can I access wage subsidies?

While the lockdown period remains subject to change, we consider a fair and reasonable response to the mandatory shutdown is to apply for the wage subsidy, if you are eligible. The expectation is that this subsidy will be passed on to employees. When applying for the wage subsidy employers must certify that they agree they will, “using best endeavours, retain the employees named in the application in employment on at least 80 per cent of their regular income for the period of the subsidy”.

The COVID-19 wage subsidy is a flat-rate subsidy available to employers who are operating in New Zealand and have experienced a minimum 30% decrease in revenue over the period of one month, compared to the same period last year as a result of COVID-19. More information on eligibility and the application process can be found here.

How do I look after employees who are working remotely?

Employers have an obligation under the Health and Safety at Work Act 2015 to provide a healthy and safe workplace. While the means of assessing this will differ with some employees working from home, we encourage you to maintain channels for hazard reporting and mitigation.

This duty also extends to the mental health and well-being of your employees. We recommend continuing your organisation’s regular pastoral care and support routines, keeping in regular contact with your employees during the lockdown period.

For more information

The uncertainty of a global pandemic will no doubt require employers to adapt and innovate. In doing so, employers should remember to act in good faith and remain communicative throughout any decision-making process. We are available to assist with exploring the range of options available in your particular circumstances.

Please contact us if you need:

  • Tailored advice on wage and leave entitlements;
  • Assistance with consulting employees;
  • Drafting policies and procedures and assistance in managing them if any issues arise.

Contact our Wellington employment law expert Caroline Rieger on 04 495 8908 to discuss your options.

COVID-19 Employers Guide - Morrison Kent