“Unite Against COVID 19” “Be Kind” “Stay Home” “Save Lives” “Wash Your Hands”
Here in New Zealand, we have all received plenty of messages to keep ourselves and others safe.
Despite the clear messaging provided from the government and health professionals (and some of the mixed messages on where our exercise bubble begins and ends from the Police) there remains a sense of confusion about what employers and employees are required to do to keep businesses and jobs safe.
Examples of how businesses have reacted in the last week, due to this confusion, include:
- employees (essential workers) being called in and the employer declaring they will all be on zero-hour contracts,
- dismissing employees on the spot because there is no work,
- requiring employees to work from home with no assessment of the resources needed, the appropriateness, or the safety of these new work arrangements.
Many employees have just accepted, wrongly, that they will no longer have a job.
Nothing has changed in the world of employment law, with the underpinning obligation to deal with each other in good faith remaining firmly in place.
While people are adamant everything has changed in the world, nothing has changed in the world of employment law, with the underpinning obligation to deal with each other in good faith remaining firmly in place.
Good Faith Keep Jobs
A 12-week pause – keeping jobs
In my view, the clearest message that has come from the government (and sneaky corporates trying to boost their goodwill credit in the community during the national lockdown) has been “we are all in this together”.
Many businesses can remain viable entities and many jobs can be protected over the next 4-12 weeks if we slow down, follow the requirements of employment law, and access the subsidies the government is providing, to get us all through this, together.
While the funding provided by the government’s COVID-19 Leave Payment (which ceased on Friday 27 March) and COVID-19 Wage Subsidy will see some workers falling through the gaps, it allows the majority of the business and employment “system” to be paused for a period of 12-weeks.
The financial package, in essence, allows the majority of businesses to retain all employees on a minimum wage of $585.80 (gross) per week for employees working 20 hours or more and $350 (gross) per week for those working less than 20 hours. [Note: Rates as at 29 March 2020]
The Wage Subsidy can be paid in the usual pay cycle or in a lump sum to affected employees, subject to all of the usual deductions.
Employers will receive the 12-week, lump sum payment, per employee if they:
- show an actual or predicted 30% loss in revenue related to COVID-19 (for many this may be relatively straight forward due to the requirement to close on or before 25 March), and
- retain their employees, and
- try their hardest to pay their employees up to 80% of their usual wage, and
- take active steps to mitigate the impact of COVID-19 such as getting business and banking advice. Every single business owner should be doing this, finally realising the wisdom of having at least 3 months of financial reserves, and a plain language business continuity plan to weather any storm, pandemic or other crisis.
New businesses, businesses already failing or on a knifes edge financially prior to the lockdown, are naturally at a higher risk of needing to close shop permanently or reduce employee numbers and therefore accessing the subsidy may be an exercise in futility.
A few important areas of current employment law – in short
- I am considering making team members redundant:
An employer must consult with affected employees (providing a proposal, and allowing a reasonable period for feedback on that proposal) before making a decision to dismiss.
- I am looking at changing pay or hours of work:
Changes to any terms and conditions of employment must only be agreed in writing with individual employees. Note: Zero-hour contracts remain unlawful.
Acting in good faith – no changes to employment law
Employers may have further obligations to meet (those set out by the government through the Wage Subsidy) before they can alter the terms and conditions of employment for anyone, let alone let employees go.
- Did the employer act in good faith if it did not apply for the Wage Subsidy (e.g using the current situation to get rid of employees despite needing them after the lockdown)?
- Did the employer seek business advice from their bank or other professionals before deciding they would not pay up to 80% of an employee’s salary?
- Before employee’s returned to work after the lockdown, were they consulted about the need to reduce pay and hours? Was agreement reached with individual employees?
- Was the employer active and constructive in maintaining a positive employment relationship during the time of COVID-19?
- Was the employer responsive and communicative to the employee, answering their concerns and queries?
Before an employer decides to dismiss anyone from employment, in the time of COVID-19, they will need to consult with affected employees as follows:
- provide all of the relevant information before the employer makes a decision, and
- allow the employees an opportunity to comment on that information.
Before an employer decides to dismiss anyone from employment, in the time of COVID-19, they will need to consult with affected employees.
This does not mean employees can gain unfettered access to commercially sensitive information (such as the financial “books” of an organisation). However, it could well mean clarifying what actions the employer took to preserve jobs over the 12-week period the government has offered assistance, and what the employer did immediately after the lockdown.
Love and Work in the Time of COVID-19
Welcome to fear and uncertainty in your business, job, life! The current rights and obligations of employers and employees remains unchanged.
There is a legal requirement that employers will continue to deal with their employees in good faith, and, in my view, a reasonable expectation they will make efforts to retain all of their employees over the lockdown period (currently 4 weeks) and for up to 12 weeks, given the support provided through the governments Wage Subsidy.
“Unite Against COVID 19” “Be Kind” Good Faith Keep Jobs