COVID-19 Considerations for Employers


The COVID-19 lockdown is back.  Employers are again being forced to assess their businesses and make hard calls regarding their employees.

If you have applied (or are thinking about applying) for the wage subsidy, there are some key things you must remember when assessing your business.

Applicant businesses still have to use best endeavours to pay their staff at least 80% of their normal wages for the subsidy period, but if that’s not possible then they have to at least pass on the money received under the subsidy.  The exception is for any employees who earn less than the subsidy amount, and in that case their employer business can use the balance of money for the payment of other staff wages.  Surpluses cannot be used for other non-wages related expenses.

Remember, nothing in the wage subsidy scheme overrides normal employment requirements.  Indeed, this time round the wage subsidy declaration specifically requires an employer to acknowledge this.

Both employers and employees must act towards each other in good faith.  This means that employers have to consult with their staff about the subsidy, the provision of information about them to the government for the application, and about any reduction in hours and/or wages.  The Employment Relations Authority made it clear in 2020 that a lockdown does not give employers the ability to unilaterally reduce hours and wages.  It must instead only be done by agreement, or through a formal process following normal employment law requirements.  In line with this, the wage subsidy declaration now requires that any change to an employee’s rate of pay, hours of work and leave entitlements only be done with written agreement.

If you’re an employer, talk to us.  We recommend good written records of this process be kept so you don’t get in trouble later either by way of wage subsidy audit or a personal grievance.

Businesses are also currently considering whether to make staff redundant.  Under pressure, some businesses may be tempted to move quickly and without carrying out a proper consultation process.  That would be a mistake.  Even if a business has a good reason for redundancy, skipping a consultation process or not doing it properly can result in costly personal grievances for unjustified disadvantage or dismissal.  Alternatives should be worked through.  Further, if you have applied for the wage subsidy, you have to declare to the government that you will keep your subsidy staff in employment for the wage subsidy time period.

We know these are stressful times, but taking advice as to process is still important.  Our litigation employment team are happy to help. 

Contact Hilary Max on DDI 371 1031