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Lockdown - Getting it Right for You and Your People

Well, here we are again in yet another lockdown. While this lockdown is currently only for seven days, businesses should have planned for this eventuality so hopefully you have been able to quickly implement your business continuity plan.

One thing that appears certain, is that this yo-yoing in and out of lockdown may not be the last time we do this. There is also always the possibility that a lockdown could be extended.

While Auckland is in Level 3 with greater restrictions in place than the rest of the country, a Level 3 lockdown could easily occur anywhere in the country.

The Government has stated that its Wage Subsidy Scheme will be in place if there is an escalation to Alert Levels 3 or 4 anywhere in New Zealand, for 7 days or more.

Payment rates will be:

  • $585.80 for people working 20 hours or more per week (full-time rate)

  • $350.00 for people working less than 20 hours per week (part-time rate).

Support will be provided in two-weekly payments and total support will match the duration at Alert Level 3 or 4 rounded to the nearest fortnight. Information on other Government support is available on COVID-19 financial support for businesses - Work and Income.

As with the COVID-19 Wage Subsidy paid earlier this year, the payment is to support employers (or self-employed people) to pay their employees and not for other business expenses. If you receive the wage subsidy it must be passed onto your employees.

It is important to remember that the wage subsidy does not mean that all you have to pay your employees is whatever level of wage subsidy they are eligible for. Your Employment Agreement continues to apply, and COVID-19 does not overwrite or unilaterally change the rules when it comes to what you pay your staff. Your staff continue to be eligible for 100% of their contractual wage/salary. If, due to financial difficulties, you need to vary what you pay your staff, then you must seek their agreement to do so. If your argument is financially based, then in good faith, you must be prepared to share the relevant financial information with your staff.

You cannot compel your staff to take or use their annual leave, unless you give them a minimum of 14 days notice.

So, talk to your staff and seek to gain their agreement. If you cannot get their agreement, you cannot unilaterally reduce their wage/salary. You must use any change management provisions in your Employment Agreement. This will require you to consult with your staff and seek their feedback / input on your proposal. You are also required to give genuine consideration to their feedback / input before you make a final decision. Using this approach, you don't need to reach agreement, and you can, after considering all feedback, make an informed decision on what, if any, reduction will apply, including for how long.

If your staff are still working during the lockdown, including working from home, then you need to ensure that any reduction that is proposed and/or agreed does not result in any employee being paid less than the minimum wage, which is currently $18.90 per hour (going up to $20 per hour on 1 April 2021). Remember, if your staff are able to work their normal weekly hours, they should still be paid their normal weekly wage/salary. You must still pay your staff for each and every hour you require them to work during lockdown. This may mean topping up the wage subsidy from your own finances to ensure staff receive their correct entitlements.

If you do not require your employees to work during lockdown, then you may be able to pay them the wage subsidy. A recent Employment Court decision involving Gate Gourmet NZ Ltd found that when employees not required to work stayed at home, they were not working for the purposes of the Minimum Wages Act, therefore the Minimum Wages Act did not apply and no statutory minimum wage entitlements arose. See our January blog for more details. If you think this situation might apply in your business, seek legal advice before making any decisions that result in staff being paid less than the legal minimum wage.

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