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Employment Law FAQs with the experts – and some free legal advice for our insureds

We know that many of our insureds are worried about how to deal with employment issues arising out of the current Covid-19 situation. 

The Delta claims team is gearing up for the likelihood that the number of Employment Practices claims will increase, but in the meantime we have teamed up with Duncan Cotterill Lawyers to provide some practical help.

You can find the answers to some frequently asked questions on Covid-19 employment issues and advice on restructuring and redundancy processes below.

We’ve also created a legal helpline for all of our insureds to get a free 15 minute consultation with Duncan Cotterill’s specialist employment lawyers so that they can get specific advice on their own situation.  They just need to dial 0800 500 028 to get straight through to an employment lawyer.

If the problem needs more than 15 minutes’ advice, Duncan Cotterill are offering a reduced hourly rate should any of our insureds wish to receive additional advice.

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COVID-19: Lockdown FAQ

Do I have to pay my employees during the lockdown?

This is an issue that is somewhat ambiguous, and many employers are having to grapple with this question.

Our view is that if an employee’s role is not part of an essential service, and they cannot perform their role from home, they are not entitled to payment during the lockdown. This is because the employee is not ‘ready, willing and able to work’. 

However, if the employee can perform their role from home and is willing to do so, and it is simply a matter of the employer being able to provide them with sufficient work, then we consider that the employee is still entitled to their full pay during the lockdown unless the employment agreement includes a ‘business interruption’ clause (which would allow the employer to place the employee on unpaid leave when the business cannot operate). If an employer wishes to pay the employee less than this, it will require the employee’s agreement.

Even if an employee is not necessarily entitled to payment during the lockdown, the employer should still explore alternative options which will enable the employee to receive some payment, including applying for the COVID-19 wage subsidy (if eligible) or allowing the employee the option of using their annual leave entitlements.

My business is receiving the wage subsidy. Am I obligated to top up employee pay to 80% during the lockdown?

The wage subsidy requires employers to use their best endeavours to top up the subsidy so that an employee receives 80% of their normal pay. In short this means that if the business can afford to top up employee pay to 80%, it should. If the employer genuinely cannot afford this the Government has made clear that a smaller top up, or paying just the wage subsidy will be acceptable. 

Some of my employees can work from home but their work will run out in two weeks. What should I do?

The starting point is that these employees are entitled to full pay as they can continue to work during the lockdown. This remains the case, even after their work runs out, unless the employer and employee agree otherwise.

Possible options employers should consider if they have employees who may run out of work include:

  • Seeking to negotiate a reduction in hours (and remuneration) which may keep the employee busy for longer;
  • Negotiating a reduction in the employee’s remuneration when the work runs out;
  • Trying to reach agreement that the employee will use their leave entitlements or go on unpaid leave when the work runs out;
  • If agreement cannot be reached around if or when an employee will use their leave entitlements, directing the employee to use their annual leave on 14 days’ notice.

Can I apply for the wage subsidy for employees who are still able to work during the lockdown period?

Yes. Provided the business satisfies the eligibility criteria to apply for the wage subsidy, it can apply for all of its employees regardless of whether they can or cannot work during the lockdown. Where employees are working, the subsidy will form part of the employee’s normal pay.

For more information, please contact Kirsty McDonald or Olivia Lund. Their details are on the Duncan Cotterill updates below.

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COVID-19: Restructuring and Redundancies

COVID-19 will undoubtedly have a significant impact on businesses in New Zealand and will naturally result in many employers needing to look at restructuring and redundancies.   

Government COVID-19 Wage Subsidy

The Government is offering a wage subsidy to assist employers who are struggling with the financial impact of COVID-19. While employers are being encouraged to make use of the scheme ahead of making any decision regarding restructuring and redundancies, it is recognised that the wage subsidy scheme will not shield businesses from the full impact of COVID-19. Ultimately, if employers cannot afford to retain staff for the full 12-week subsidy period, they are not obliged to do so. However, any termination on the grounds of redundancy must be substantively justified and procedurally fair, in all the circumstances.

There is an exception to this for employers who applied for the wage subsidy after 4 pm Friday 27 March 2020. Employers who fall into this category are required to retain those employees for the duration of the 12-week subsidy period meaning that staff cannot be made redundant during this period (although notice of termination can in our view still be given to employees before the end of the subsidy period). This change to the wage subsidy declaration is not retrospective in its application meaning it does not apply to employers who applied for the subsidy before 4 pm Friday 27 March 2020.

A genuine reason?

A significant downturn in sales/revenue, a loss of customers/suppliers, and/or a shift in market requirements, could amount to a genuine reason for restructuring or redundancies. However, it’s important to ensure that an employer’s business case and reasons are documented, with supporting evidence. Further guidance is available at the Government Employment website.

A fair and reasonable process?

In all their dealings, employers and employees must deal with each other in good faith.

Employers must follow a fair process, which includes:

  • complying with the terms of employment agreements and policies (“step 1” for employers should be to review employment agreements and policies, and particularly any provisions regarding restructuring and redundancy);
  • being open, communicative and constructive;
  • documenting the employer’s business case, reasons and proposals;
  • providing all relevant information to employees;
  • giving employees a reasonable opportunity to consider and respond to any proposals;
  • considering alternatives, which could include:
    – reaching a mutual agreement with employees to vary the terms of their employment;
    – considering whether employees may be willing to take unpaid leave or work reduced hours;
    – considering whether any employees are subject to a 90-day trial period, and can be dismissed in reliance on that;
    – accessing the wage subsidies and other support offered by the Government (see further information at Duncan Cotterill); and
    – genuinely taking the employees’ responses into account before coming to a decision.

What’s a reasonable process in the light of COVID-19?

Whilst we would ordinarily recommend consultation meetings with employees during the process, the reality is that such meetings may not be possible, particularly if employees are working from home or in isolation.  

Ultimately, an employer must be able to show that its actions were “what a fair and reasonable employer could have done in all the circumstances at the time”.  

In the current situation, that may mean:

  • communicating with employees via videoconference, telephone, or in writing; and
  • if change is particularly urgent, working to shortened timeframes during the consultation process.

If you are unsure about what is reasonable in the circumstances, or would like guidance throughout the process, we’re happy to assist.  

For more information, please contact Kirsty McDonald or Olivia Lund. Their details are on the Duncan Cotterill updates below.

Lockdown FAQs on Employment Law
Restructuring and Redundancies

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