Some Auckland businesses have been forced to close again under the level 3 lockdown. Photo / file
Some Auckland businesses have been forced to close again under the level 3 lockdown. Photo / file
Auckland has been plunged back into a three-day level 3 lockdown, and experts suggest that will mean around 250,000 workers are unable to do their jobs.
For those who can work from home there is also the juggle of managing children as schools remain mostly closed across the city.
Weput some questions to employment law expert Catherine Stewart about what employers can and can't do.
What are an employer's obligations if staff can't work during a lockdown? Does the boss need to pay them?
As a general rule, where employees would be willing and able to work if it wasn't for the lockdown, it is likely that they are entitled to be paid. There may be an exception if there is an appropriately worded "business interruption" clause in the employment agreement, or if the employer and employee reach agreement to vary this general entitlement.
A recent case from the Employment Relations Authority has found that if employees are willing and able to work, the employer is not released from their obligations under the Wages Protection Act, which provides that pay cannot be withheld or deducted without the employee's consent: Raggett & Ors v Eastern Bays Hospice Trust t/a Dove Hospice [2020] NZERA 266.
The employer and employee have an obligation of good faith to each other and should talk constructively to find a "win-win" solution if possible. This might include, for example, the employee agreeing to take annual leave or unpaid leave during the lockdown.
Casual staff (unlike full-time and part-time employees) do not have a guarantee of hours or income in the first place, so their position is largely unaffected.
Can an employer force you to take annual leave if the business has to shut?
An employer cannot "force" an employee to take annual leave without first seeking their agreement. The employer can direct an employee to take annual leave in the absence of agreement as to when annual leave should be taken, but must give 14 days' notice.
However, since the lockdown took effect yesterday, and is intended (for now) to last only three days, that is insufficient time for the employer to invoke this in this particular set of circumstances.
If an employee can't work because schools are closed and they have to take care of their children do they have to take annual leave?
As above, this is an option available to the employee. However, they cannot be forced to take annual leave unless the employer has first tried to reach agreement, and then given 14 days' notice.
In the circumstances we are faced with in lockdown hopefully there will be some "give and take" on both sides to enable employees to reach a constructive solution such as flexible working arrangements which can accommodate extra childcare duties.
What happens if an employee has run out of annual leave? Can they be made to take unpaid leave?
Unless there is a clause in the employment agreement permitting this, an employee cannot be "forced" to take unpaid leave, however they may wish to seriously consider agreeing to do so if there is no work.
Another option is for the employer to allow an employee to take annual leave in anticipation, but the employer is not required to do so.
Catherine Stewart, employment lawyer.
Some businesses (in hospitality and retail) may not have enough in the tank after the first lockdown to pay staff for the next few days if they are closed and can't earn money. What are an employee's rights if the employer can't afford to pay them?
In good faith, employees should "front-foot" this with the employer and talk constructively to try to find a mutually workable solution, such as the employee agreeing to a pay cut or a pay freeze, or asking their employer to invoke a "business interruption" clause if they have one in their contract, meaning that the employment agreement is temporarily suspended until such time as the employer can reopen their business and resume paying the employee for their work.
An employee is not required to agree to a pay cut or other variation of contract, but refusal to do so could backfire on the employee as the employer may then have no option but to commence a restructure/redundancy process. Employees are therefore best advised to take a pragmatic approach.
On the other hand, should the employer decide to commence a restructure and potential redundancy process, the normal procedural requirements to consult and provide employees with all relevant information pertaining to the proposal would still apply as shown by two recent decisions from the Employment Relations Authority: Aviation Workers United Inc & Ors v Gate Gourmet New Zealand Limited [2020] NZERA 275 and de Wys & Anor v Solly's Freight (1987) Limited [2020] NZERA 285.
What conditions will businesses have to meet to apply for the extended wage subsidy?
Businesses cannot apply for the extended wage subsidy until the initial 12-week wage subsidy has completed. Employers cannot receive more than one support payment for the same employee simultaneously either.
The business must have experienced a 40 per cent decline in revenue for a continuous 30-day period, when compared with the closest 30-day period last year. The 30-day continuous period must have occurred during the 40 days before the employer makes the application, but no earlier than May 10, 2020.
The business will also be required to show that it has taken active steps to mitigate the financial impact of Covid-19. This could include, for example, drawing from cash reserves, making an insurance claim, seeking a bank loan.
The business must guarantee that it will retain the employee(s) for whom it is applying for the duration of the extended wage subsidy period, which is eight weeks.
