Finance Minister Grant Robertson has reactivated the Wage Subsidy Scheme but it seems not everyone is playing by the rules. Photo / Mark Mitchell, File
Finance Minister Grant Robertson has reactivated the Wage Subsidy Scheme but it seems not everyone is playing by the rules. Photo / Mark Mitchell, File
Opinion
OPINION
The Government has restarted the Wage Subsidy Scheme to help protect jobs and income during Covid-19 restrictions.
Other support – such as the Covid-19 Resurgence Payment - has been provided to help businesses with fixed costs. Support is also available through the Short-Term Absence Payment and the Covid-19 LeaveSupport Scheme to help cover incomes while waiting for Covid-19 test results.
During the first lockdown experience in 2020, many legal questions were raised about how the rights and obligations of working people would continue under lockdown conditions. Many of these questions have been settled, either through the courts or through guidance from government departments, removing any doubt about how to proceed lawfully as an employer under lockdown and accessing government support.
Yet, despite this, employees are telling us that some employers are attempting to unilaterally reduce wages and conditions. This is against the law and very concerning.
New Zealand employers have never had the lawful right to unilaterally vary the terms and conditions in a worker's employment agreement. The Wage Subsidy Scheme has never given employers this right.
One source of possible confusion is the declaration employers sign to qualify for the Government's Wage Subsidy Scheme. The declaration provides that employers receiving the subsidy make their "best endeavours" to pay employees at least 80 per cent of their "ordinary wages or salary".
It seems some employers view qualifying for the scheme means that you can automatically reduce a worker's pay to 80 per cent of their agreed rate.
Employers have no right to unilaterally reduce pay. The declaration also requires employers to take positive steps to pay at least 80 per cent of their workers' pay. An employer's best "best endeavours" should be demonstrable. It should show the employer is prioritising employees; not prioritising profits or running the business without disruption.
The mention of "80 per cent" is also not intended to establish a new default wage rate when using the scheme. The declaration makes it clear that "at least" 80 per cent should be paid due through best endeavours, meaning that if best endeavours can deliver more than 80 per cent of a worker's pay, then that is what should be expected from an employer.
The declaration contains a lot of information that employers should carefully review.
For example, in signing the declaration, employers acknowledge that the subsidy "does not override" existing obligations under the Employment Relations Act 2000, the Minimum Wage Act 1983, and the Health and Safety at Work Act 2015.
The declaration also states the employer "will not make changes to their obligations under any employment agreement" which includes pay rates, leave entitlements and hours of work - without written agreement from the worker.
The declaration also states employers have duties to notify employees of any application for the wage subsidy scheme on their behalf. Employers must discuss any application for the scheme with their staff, and "inform the named employees of the outcome of your application and the conditions that apply to your receipt of the subsidy". Staff must have consented "to the information about them provided to the Ministry of Social Development with respect to this application".
In the wake of the last lockdown, the question of employers being relieved from ordinary legal obligations has been tested in the Employment Relations Authority. The response has been plain; minimum statutory rights and obligations remain and, contractual obligations including rates of pay can only be varied by mutual agreement.
As with the last lockdown, some employers are also directing working people to take annual leave. This is unlawful, and annual leave is not meant to be used in this way.
The provisions in the Holidays Act 2003 remain in place, and an employer cannot unilaterally direct a worker to take leave without first attempting to agree with the worker over leave usage.
Where agreement cannot be reached, an employer may direct a worker to take some leave but must give at least 14 days' notice and must act reasonably in doing so.
In essence, all fundamental aspects of employment law remain intact.
Richard Wagstaff. Photo / Supplied
The agreement between employee and employer is the basis of any employment relationship. An employer cannot change the terms of an employment agreement unilaterally without employee consent. However, that is not to say there can be no change.
There is nothing to stop an employer and employee agreeing to a temporary change in terms and conditions to cover a lockdown but this must be the product of a fair and open negotiation in the context of the "good faith" fundamental to all employment relationships.
An employer who qualifies for the wage subsidy must take care to meet their obligations under employment law. While failing to fulfil their ordinary obligations may expose employers to conventional employment law liability, breaching a declaration and unlawfully receiving money will also expose employers to additional criminal and civil liability.
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