Business continuity planning response to COVID-19 for non-essential businesses

Business continuity planning response to COVID-19 for non-essential businesses

It is very difficult for businesses to consider the commercial viability of their ongoing operations, particularly given the uncertainty around how long the Level 4 lockdown may continue for.

As the situation evolves, businesses will need to revisit their assessment of ongoing commercial viability of retaining employees.  An initial assessment can involve the following considerations:

Which employees are affected?

You will need to consider your wider business needs as a whole:

  1. How many employee roles can continue via working from home?
  2. How many employee roles might be able to continue at a reduced number of hours by working from home?
  3. How many employee roles have zero ability to continue working from home?

What options are available to avoid redundancies?

If your business is suffering a significant decline, there are some options for businesses to avoid immediate redundancies:

  1. If employees agree to reduced hours
  2. If employees agree to use any annual leave they have accrued
  3. Wage subsidies of $585.80 per employee per week for 12 weeks, if the employee is working 20 hours or more per week

Can employers make any of these changes immediately?

Employers are not entitled to unilaterally change any terms of an employment contract without consultation with the employee.

Any proposals for change should be presented to employees so they are given an opportunity to provide feedback on any proposed changes.  Employers are obliged to consider all feedback, before any decision is made.  Employees may propose alternative duties or roles which the employer may not have considered.

Do employers need to ask employees before applying for wage subsidies?

Yes.  If your business is applying for any wage subsidies, you must get written permission from each employee to include their details in your application.

The criteria for the wage subsidy, and application details can be found at COVID-19 employer support .

How much do employees get paid if the employer receives a wage subsidy?

The employer is obliged to make “best efforts” to retain the employees the subsidy was paid for, for the 12 weeks, and to pay those employees a minimum of 80% of their normal wage or salary.

What “best efforts” means is unknown at this stage, although it is likely to depend on each business. 

Some business may be able to continue paying their employees a minimum of 80% of their salary for some weeks, others may not.

Some businesses may only be able to pay their employees the amount of the wage subsidy ie $585.80 per week.

Employers are required to notify the government as soon as any circumstances change in respect of how much each employee is being paid.  The employer agrees that it will repay any amount of the wage subsidy to which they are not entitled.

Can employees be asked to use their annual leave?

If an employee has accrued annual leave, under section 18(3) of the Holidays Act the employer and employee are to agree when an employee’s annual leave is to be taken.  If they cannot agree, then an employer can give the employee 14 days’ notice of when the annual leave is to be taken (section 19 of the Holidays Act).  However, you will need to check each employee’s contract to see if there is any clause relating to when annual leave can be taken, or any other leave provisions.

This would need to be discussed and agreed with each individual employee, and will depend on whether that employee has accrued annual leave available.

What if we need to make roles redundant?

Employers will need to re-assess their financial position on a regular basis as the situation evolves, in particular further information around how long New Zealand remains in Level 4 lockdown. 

After exploring other options of government assistance packages, some businesses may need to follow the restructure and redundancy process.

We can step you through this process and provide template letters and advice for your business to ensure you follow your employment law obligations, so as to reduce any risk of a personal grievance claim.

Further queries?

Our specialist senior employment lawyer can assist with any queries you may have regarding employment issues and ongoing business continuity. 

Please contact Catherine Pendleton on catherine.pendleton@turnerhopkins.co.nz or

02111 55 302

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