By Max Shin and Tina Hwang

What we previously saw in movies and news abroad has struck Kiwi homes (literally) as COVID-19 has now reached New Zealand. This particular strain of the corona-virus has impacted our businesses, finances, social movements, and our livelihoods.

Employers and employees may struggle to make sense of the new norm as the pandemic brings uncertainty. The New Zealand Government recently escalated the situation to a “level 4” lockdown requiring all businesses to close unless they qualify as an “essential business”. This historic event will change how we conduct business in New Zealand, but what does it mean for employers?

Starting Point

The starting point for any contractual relationship is the contract itself, so please ensure you review your individual contract for any express provisions that may apply. This will be important to determine an employer’s obligations when workers are in self-isolation, infected, sick and/or unable to work because of the lockdown. The contract may also dictate terms that apply when workers work during the lockdown period, whether at home or at their normal place of work as an essential business. Even workplaces that resume work will not be able to continue “business as usual” with heightened health and safety requirements. The Employment Relations Act 2000 (“the Act”) will be fundamental. The cornerstone principles of the Act, being good faith and due process, will always prevail. Good communications with staff will be paramount, and there has been a rapid increase of employers moving to the cloud and using video-conferencing products to keep in contact with its staff.

As most businesses have now closed, many staff have been directed to work from home where possible. Changes to working arrangements will reveal several issues for the employers to consider including health and safety at home, monitoring and controlling workflow and deadlines, and maintaining communications. Many staff working in front-line construction sites, for example, have not been so lucky and will be unable to work during the lockdown at all. Flexibility, continual contact, and keeping abreast with the constant updates from the relevant ministries will be key.

Financial Support

The government’s announcement to release $12.1 billion to support Kiwis is largely aimed at protecting workers through wage subsidies. Businesses affected by the lockdown will likely qualify for wage subsidies and business tax changes. The subsidy will be for qualifying businesses on a ‘per staff’ basis for a 12-week period. Businesses will need to prove a 30% decline in their revenue due to COVID-19, and this must be paid to their employees as wages. The employer must try to pay staff at least 80% of their normal wages during the subsidised period. There is also COVID-19 leave payment schemes and self-isolation support available for workers.

The following links may be useful:

https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html

https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/wage-subsidy

Restructure and Consequences

As a result of these unforeseen circumstances, many businesses may need to restructure, which may, unfortunately, result in redundancies. Also, some employees may have their hours reduced or be forced to take leave (paid or unpaid leave) consequent on the lockdown. As stated above, the Act and the principles of good faith and due process will continue to apply during this crisis, so employers need to be careful that they do not simply terminate or detriment their staff without notice, because they assume the COVID-19 crisis is self-explanatory. There can be no set rules for such restructuring from this pandemic as each case will be different. We therefore strongly recommend employers seek legal advice before making any decisions or commencing any of the processes. Otherwise, employers may find a raft of personal grievance claims heading their way, or actions by the Ministry of Business, Innovation and Employment (“MBIE”) for breach of minimum rights or non-compliance with the Employment Relations Act 2000. Any such non-compliance will affect an employer’s ability to sponsor work visas in the future as well as future accreditation applications or existing application status earned with Immigration New Zealand.

Contact Us

Where you are unsure or require any assistance, please do not hesitate to contact the experts at Queen City Law. Max Shin and Tina Hwang can offer employment assistance and tailored legal advice for you.

We have taken care to ensure that the information given is accurate; however, it is intended for general guidance only and should not be relied upon in individual cases. Professional tailored legal advice should be always be sought before any decision or action is taken.