Coronavirus (COVID-19) FAQs for Employers

Coronavirus (COVID-19) FAQs for Employers

The government has announced New Zealand will move into move to COVID-19 Alert Level 4 at 11.59 pm on Wednesday 25 March 2020.  The Level 4 lockdown will be for a minimum period of four weeks.

Businesses are faced with assessing their business continuity plans for the foreseeable future, during the initial four-week lockdown period, and beyond.

Employers should have already implemented policies in respect of Level 2 and Level 3 alert conditions over the past week.  The Level 4 means that many businesses are significantly impeded in being able to continue any business operations.  Employers need to understand their obligations as employers.

What businesses can continue to remain open?

If employees are able to work from home, then the business can remain in operation with a working from home policy.

Employees need to remain at home, unless they are working in “essential businesses”.

How do I know if my business is an “essential business”?

The government has provided a list of essential businesses that can continue to operate.  This list will evolve over time.  The government is planning on setting up an 0800 number to call to find out whether your business might qualify as an essential business.  Every business needs to know whether it can remain operating as an essential business after Wednesday 25 March 2020 or not.  The following link provides the most updated information about this qualification criteria https://covid19.govt.nz/government-actions/covid-19-alert-level/#essential-businesses

How can my business get a Wage Subsidy?

The subsidy is open to all employers, contractors, sole traders, self-employed people, registered charities and incorporated societies. 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.

The subsidy for each employee is $585.80 if working 20 hours or more per week, or $350.00 if working less than 20 hours per week.

The subsidy is for a maximum of 12 weeks per employee, and is paid as a lump sum.

This subsidy was initially capped at $150,000 per business.  This cap has now been removed.

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

Does the business need to retain their employees for 12 weeks if they get a wage subsidy?

As part of the application for a wage subsidy, the business will need to declare a number of things, including that:

  1. it agrees to make “best efforts” to:
    • retain the employees the subsidy was paid for, for the 12 weeks, and
    • pay those employees a minimum of 80% of their normal wage or salary
  1. the employee consents to their information being used as part of the application
  2. the employer is aware that they may be audited, and if they provide false or misleading information, they may be investigated for fraud
  3. the employer will notify if circumstances change that affect their eligibility
  4. the employer will repay any amount to which they are not entitled

What amount does the business pay their employees if they get a wage subsidy?

As part of the application for a wage subsidy, the business will need to declare that it will make best efforts to pay the relevant employees a minimum of 80% of their normal wage or salary.  The wage subsidy is in effect, a reimbursement of part of that payment.

Can a business automatically reduce the employee’s salary to 80%?

No.  An employer cannot automatically unilaterally change an employee’s salary.  Any change for a reduction in contract hours that is proposed by the employer due to financial constraints, must be agreed between the employer and employee.

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 about sick leave?

The government has announced a COVID-19 Leave Payment for any employee who:

  • needs to self-isolate
  • 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 Leave payment is for 14 days. 

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

Can we tell staff if an employee is isolating or sick?

Employers are limited in what they may disclose to staff in respect of an employee’s personal information, under the Privacy Act 1993.  However, staff will need to be informed if employee’s are sick, or working from home.  We recommend any employer consults with any employee as to what information is provided to staff about any leave or sick leave.

What can the business do if there is no work for employees to do working from home?

Each business will need to assess the ongoing financial viability of continuing.  The above options of access to wage subsidies, leave payments, and other government assistance packages have been developed to assist businesses in the short term to avoid immediate redundancies.  Some businesses may be able to task employees with alternative duties working from home.

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

For any proposed restructures or redundancies, you will need to follow proper consultation.  We can step you through this process and provide template letters and advice for your business to ensure you follow your employment law obligations.

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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