The obligation of good faith continues to apply to all employment relationships affected by COVID-19 and employers must consult with you before they make a decision regarding your employment.
Recent measures taken to stop the spread of COVID-19 have had wide-ranging impacts on all types of employees, including those who work full-time, flexibly, remotely or in more than one job. However, one thing is certain – both employers and employees continue to have obligations under New Zealand employment law. The global pandemic and the lockdown in New Zealand has not changed the obligations under the Employment Relations Act. In this article, we answer the most frequently asked questions by non-essential workers.
Will I get paid throughout the lockdown?
As a starting point, your employer should open communications with you around how the period of lockdown may affect your ordinary remuneration, hours or tasks. We recommend engaging in these conversations openly and honestly. Remember, employers have an obligation to consult with you first before they make any decision regarding your employment.
The general principle is that if you are ready, willing and able to work, you are entitled to be paid. However, given the recent shut down of all non-essential organisations, it is arguable some employees are no longer “able” to work, and their employers are unable to offer them work.
Some commentators are claiming that an employer remains obligated to pay guaranteed hours stated in the Employment Agreement because the employer is not able to offer those hours. Our view, is that this is an incorrect analysis, because not only is the employer unable to offer the hours but the employee would be unable to perform those hours had they been offered.
This is where the mutual obligation of good faith kicks in and a fair and reasonable employer should explore any options which will allow them to keep paying their staff. Although it is arguable that employers are not obligated to pay employees who do not work, they should explore options such as requesting staff to take annual leave or passing on the government wage subsidy.
Where does my employer’s wage subsidy go?
Many employers have chosen to apply for the COVID-19 wage subsidy, offered by the government to allow employers to keep their staff on during the shutdown. Employers must apply for the subsidy in respect of each employee who will be receiving it.
The government has confirmed employers receiving the subsidy must:
- Use your best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary, and
- Pay at least the full amount of the subsidy to the employee; but
- Where the ordinary wages or salary of an employee named in the application is below the amount of the subsidy before the impact of COVID-19, pay the employee that amount. What this means is if your wages or salary were less than the amount of the subsidy you won’t get the full amount of the subsidy paid to you.
If your ordinary pre-shutdown pay is less than the amount of wage subsidy, your employer should continue paying you your ordinary pay.
Does my employer have to apply for the wage subsidy?
Your employer does not have to apply for the subsidy.
There are a lot of reasons why an employer may not wish to apply for the subsidy, or they may simply not be eligible. We believe that, if the employer is eligible, it would be a good faith measure for them to apply for the subsidy. However, on Friday 27 March 2020, the Minister of Finance announced a change to the scheme that required Employers to retain staff named in the application for the period of the subsidy. This may be a factor in your employer not applying for the wage subsidy or at least not listing you in that application.
Working remotely – what are my obligations?
Where possible, organisations around the country have transitioned to remote working. For many, this means working from home and settling into a new environment. We recommend keeping in regular contact with your employers around your continuing ability to work from home.
If you are operating at a reduced capacity due to your working from home arrangements, your employer may ask you to reduce your normal hours. However, they are not able to require you to reduce your hours without your agreement. This agreement may come from an informal discussion, or you may be consulted as part of a lawful restructuring process undertaken by your employer.
Will I have a job at the end of the lockdown period?
The extent to which your job may be affected by the lockdown period is dependent on a range of factors, such as your type of employment and your employer’s resources. While many employers will likely try to keep their staff on with support from the COVID-19 wage subsidy, others may embark on restructuring or redundancy processes.
If you are a casual employee, you are only employed during each particular work assignment. Your employer is generally not obligated to provide you with any further work beyond your last engagement. However, in some cases, casual employees may have the same entitlements as permanent employees, depending on the regularity of their work pattern. Please get in touch if you need more information on the rights of casual employees.
Frustration of contract
Other employees and contractors may find their employers try to rely on a force majeure or frustration of contract provision in their agreements. If included in your employment agreement, there is a possibility an employer could rely on such provisions to terminate your employment or engagement, giving the appropriate notice. This has not yet been tested in the context of a pandemic and will depend on the wording of the provision. If you believe this situation could apply to you, we can assist with the review and negotiation of the terms of your employment agreement.
Do I continue to accrue annual leave during the lockdown?
You do continue to accrue leave. The monetary value of that leave will depend on whether and how much you are being paid during that time.
This is analogous to a person on parental leave. They remain an employee and continue to accrued the leave balance (meaning the hours, days, or weeks of leave) but the value if they are unpaid is zero.
For more information
This is just the tip of the iceberg of the questions we are being asked at the moment. We have been part of interesting conversations with fellow employment lawyers who are all trying to ensure that there is consistent messaging out there.
If you are asking any of the above questions, or others, please contact us for tailored advice on:
- Wage and leave entitlements;
- The safety of your workplace (whether you are working remotely or not); and
- Any provisions affecting your continued employment or engagement.