Lockdown – Now What?

Shine Lawyers New Zealand - Right Wrong

Written by Pieter Venter. Pieter sat down and answered some of the important questions employees are asking during COVID-19 lockdowns.

As an employee, what should I look at first when faced with work related issues in this difficult time?

The first port of call is so obvious but generally overlooked, your Employment Agreement. Most employees have a written Employment Agreement. Its terms and conditions generally still apply. You should get a copy if you do not have one, read it and know its contents.

If you seek legal advice, you will be asked for a copy of the agreement because it will be the first document referred to and discussed. Look for the clauses that deal with pay, hours worked, leave, notice period, redundancy, frustration of contract and force majeure. Don’t worry if you don’t understand all the terms or if they don’t make sense. We can help you with that.

What is the purpose of the government’s Covid-19 wage subsidy and how do you qualify?

The subsidy enables employers to continue to pay their workers (and keep their business) for the shutdown period. To qualify, the business has to show a 30% decline in revenue when compared to the same period in the previous year. It can also project such a decline. The subsidy amount ($585.80 / week per full time employee and $350/week part-timers (less than 20 hours per week) is paid provided the employer makes its best efforts to:

  • Retain its employees; and
  • Pays a minimum of 80% of their normal income for the period (the so-called “top-up”).

The top-up does not apply if an employee earned less than $585.80. Wages are payable as per the employment agreement. If the business has no activity (no one is working) and it cannot match the top-up, it should give the employee the benefit of the whole subsidy amount.

Best efforts will therefore include instances where the employer cannot afford the top-up but makes best efforts to do so. If you need help understanding this or you are unsure of your obligations, contact us and we can help you.

Can my employer force me to take holiday leave in this period of lock-down?

Only if there is an agreement. If you cannot agree, the employer generally has to discuss it with you (this implies acting in good faith, considering alternatives that are reasonable) and give you 14 days’ notice (which makes this a less practical solution). Generally, this leave should be with pay. It would be unreasonable to expect you to take leave if you can do work from home. If your ability to be productive working from home is reduced, it can in turn be reasonable to expect you to take leave. It all depends on individual circumstances, so contact us if you need help or guidance.

Can my hours and pay be reduced by my employer?

Yes – you can agree with your employer for reduced hours and reduced pay. It is always advisable to take legal advice before agreeing to this. Talk to us and we can help you navigate your way through this.

Can my position be made redundant?

Only if the employer can show that the general rules of redundancy apply and meet the criteria – the employer must show the business can continue without you more efficiently (sometimes referred to as operational requirements in an intended restructure) or that it cannot keep you as an employee (the employer cannot survive the lockdown period without making the proposed changes and that immediate cost-cutting will enable its survival). But – in discussing the intended restructure/redundancy, the employer still has to act in good faith (as always) and other reasonable alternatives to avoid redundancy will have to be considered. Some of these alternatives that should be considered are those discussed here, like the wages subsidy, leave, reduced hours and reduced pay.

We urge you to contact us for legal advice if faced with a redundancy situation. We can often help people negotiate a better deal.

If my employer sends a notice of a planned restructure as a result of COVID-19 (e.g. the notice is received on a Monday and it is expected there would be a reply and final decision by the Wednesday), is this allowed and is the procedure the same?

The times that we find ourselves in may justify a quick turnaround time, but such notice should include at least a notice that you are entitled to legal advice and a support person. Such support person, although not physically able to be present, can be accommodated by alternative means (like Skype) to attend any (virtual) meetings, which would include meetings with yourself.

Employers cannot just generally blame COVID-19 and use it as an excuse to restructure. There still has to be justification for the restructure and the process followed, specifically because there is a duty on an employer to act in good faith. For example, the employer should consider applying for the wage subsidy and seek other methods that should reduce the need for any drastic measures in the employment relationship. It is important to remember that the employment relationship is still ultimately governed by your employment agreement.

What does the term force majeure mean and can my employment agreement be terminated as a result?

Force majeure is a term used to describe a change in circumstances as a result of some superior force that is beyond human control that cannot be reasonably anticipated or controlled. This change affects the agreement and its performance.

There are usually general clauses in employment agreements dealing with Force Majeure. The wording of such a clause is important to interpret, to see if it can be applied as a result of the COVID-19 virus’ impact. If your employer wants to rely on force majeure or alleges something with a similar effect (that affects performance of the agreement), we can help guide you through the interpretation of the relevant clause, whether it is applicable and the way forward. We find ourselves in stressful uncertain times and we know that an employment problem can cause more unwanted stress and uncertainty. If we can help relieve that, we will gladly do so and welcome any enquiries.

If you have any questions about your employment, or wish to dispute your employment rights, contact our team for assistance.


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