Employment update: COVID-19 – What employers need to know

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This article was updated on 23 March 2020.

The global pandemic COVID-19 has thrown up some unprecedented challenges to the workplace as we know it. By its nature, the virus itself (and the measures to contain it) affect the people who run our businesses. If your business has suffered an actual loss, or prospective downturn, you might be looking at temporary or longer-lasting options. This note sets out some high-level guidance on the most common questions our clients are asking.

What help is available from the Government?

Wage Subsidy

The Government has put together a COVID-19 Wage Subsidy for employers in all regions.

It’s to support your business if you’re impacted by COVID and face laying off staff or reducing their hours because of COVID-19.

Who can get it

If you’re an employer, contractor, sole trader or self-employed, you may qualify to get the COVID-19 wage subsidy.

To qualify:

  • your business must be registered and operating in New Zealand
  • your employees must be legally working in New Zealand
  • the business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19
  • your business must have taken active steps to mitigate the impact of COVID-19
  • you must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.

How much you can get

The COVID-19 Wage Subsidy will be paid at a flat rate of:

  • $585.80 for people working 20 hours or more per week
  • $350.00 for people working less than 20 hours per week.

The subsidy is paid as a lump sum and covers 12 weeks per employee.

This subsidy is for wages only. It is to help you keep your staff employed while you consider changes that may be needed while the disruption continues, and to ensure the future viability of your business.

The maximum subsidy that can be paid to a business is $150,000. Businesses can only get this subsidy once.

You can find more information about the wage subsidy and how to apply here.

Balancing Health and Safety with a staff member’s right to work

All employers owe duties to address risks to the health and safety of their staff, customers and others who interact with the business. A good barometer for what is fair and reasonable is the current best-practice advice from the Government.

The Ministry of Health has set out broad guidelines about:

  1. things to do in the office (cleaning, disinfecting, remote working etc), and
  2. when staff should self-isolate.

Currently the guidance on self-isolation relates to those who have travelled internationally or who have been in contact with someone who has COVID-19. In those circumstances an employer may keep a staff member out of the workplace for the 14 days recommended.

Staff in a situation not addressed by the Ministry’s guidelines e.g. showing undiagnosed symptoms, having a family member in self-isolation or others, will need to be considered on a case-by-case basis. While you might consider that asking them to stay away might be the right thing for your business, if it is not supported by a good reason the decision may not be seen as fair and reasonable. As with all employment relationships – providing information to staff is an important way to avoid surprises and subsequent negative reactions. Keep everyone in the loop about your plans and how you propose to deal with the risk to the workplace.

Alternative ways of working

The Government announced on Saturday a four level alert system for COVID-19. At the time of writing, New Zealand is currently sitting at Alert Level 2, which encourages alternative ways of working.

Employers need to be practical and sensible but should start alternative ways of working if possible – for example remote working, shift-based working, physical distancing within the workplace, staggered meal breaks and flexible leave arrangements.

Those at high-risk, are advised to stay at home regardless. This includes those over 70, those with a compromised immune system or those with underlying health conditions.

What employers should do

Employers should allow employees to work from home if they can, and start other alternative ways of working.

  • Move to measures like shift-based working, staggered meal breaks and flexible leave arrangements.
  • Encourage physical distancing in your workplace.
  • Stop employees coming to work if they are unwell.
  • Maintain high levels of hygiene in the workplace.
  • Advise your customers and suppliers not to come in if they are sick.
  • Support staff wellbeing, particularly those people with existing medical conditions.
  • Activate business continuity plans. There is a step-by-step guide to getting your plan sorted on the business.govt.nz website(external link)

What about payment?

If an employee is actually sick (with COVID-19 or otherwise) they will be entitled to sick leave. Where paid sick leave is exhausted, the employer can choose a range of discretionary other options or look at unpaid leave.

If you are keeping an employee out of the business for precautionary reasons (rather than under those prescribed by the Government) then you may well be obliged to pay the employee. If an employee is ready and willing to work, and you are preventing them from doing that, then the starting position is that they are to be paid.

Working remotely is a good option if it suits your business, allowing the business to still benefit while you pay the staff member that cannot come into the workplace. You can also ask if the employee will agree to take sick leave, annual leave, or unpaid leave. However, it is important to note that they cannot be forced to agree to that.

You can also apply for a COVID-19 Leave Payment to cover the employee’s period of self-isolation (you can do this more than once). Employees aren’t required to have used any or all their paid leave entitlements before they can receive this payment.

COVID-19 Leave Payment

The COVID-19 Leave Payment is available to support people financially if they:

  • need to self-isolate (as determined by the Ministry of Health guidelines),
  • cannot work because they are sick with COVID-19, or
  • cannot work because they are caring for dependents who are required to self-isolate or are sick with COVID-19.

The COVID-19 Leave Payment will be available for 8 weeks from 17 March 2020. Employers will be able to apply for this more than once.

It will be paid to employers who have eligible employees and they must pass the payment onto their employees in full.

Who can get it

If you’re an employer, contractor, sole trader or self-employed, you may qualify to get the COVID-19 Leave Payment.

COVID-19 Leave Payment covers full-time, part-time and casual employees, and contractors who are legally working in New Zealand who are in the situations noted above.

How much you can get

The COVID-19 leave payment will be paid at a flat rate of:

  • $585.80 to a person working 20 hours or more per week
  • $350.00 to a person working less than 20 hours per week.

Employers receiving the payment for employees who are required to self-isolate can receive it for 14 days. As people may be required to self-isolate more than once, employers will be able to apply for this on an ‘as needed’ basis. It can be paid for the entire period an employee is sick (or looking after a dependent person who is sick) with COVID-19 but the employer must apply every 14 days.

Eligible employers and employees

When applying for the Leave Payment the employer will consider whether:

  • the employee was legally working for their employer at the time they decide to self-isolate, and
  • they were expected to work for the period of self-isolation.

Self-employed people who are legally working in New Zealand are eligible for the payment if they:

  • are usually earning the minimum wage when they decide to self-isolate, and
  • were expecting to work for the period of self-isolation, and
  • cannot draw an income for the period of self-isolation.

Some people aren’t eligible for the payment, including:

  • self-employed people not earning at least the minimum wage
  • people not legally working in New Zealand.

State sector employers cannot receive the payment as it is expected they will pay employees their normal wages through periods of self-isolation. State sector employers include: Government agencies, crown entities e.g. Kainga Ora, ACC.

The following employers can access the COVID-19 Leave Payment:

  • Councils
  • Kindergartens
  • Early Childcare Centres
  • Non-Government organisations
  • Tertiary Education Institutions, e.g.
    • Universities
    • Polytechnics/Institutes of Technology
    • Wananga

You can find more information about the COVID-19 Leave Payment and how to apply here.

What about more serious / permanent options?

Some employment agreements contain “force majeure” clauses which allow for certain steps in the event of outside forces making the agreement impossible to perform. These are usually used in the event of natural disasters and the like, but a global pandemic may well fall within the definition in your agreements.

If there is no force majeure clause, you could look at restructuring your business. That might mean permanent redundancy for staff based on the current uncertainty / prediction of a long recovery period. Alternatively, you could carry out a process to change the terms of their agreement on a temporary basis or to include the ability to suspend. As with any restructuring, whether this is an option will depend on your specific business and how COVID-19 affects you.

How can we help?

WRMK Lawyers has Northland’s largest team of employment law specialists. If you need some help or guidance in this difficult time, please give one of us a call or contact your usual WRMK lawyer for advice.

WRMK Lawyers takes all reasonable care to make sure that the information in this article is up-to-date and accurate at today’s date. It is necessarily general information and not intended as legal advice to be relied upon.