Last updated: 29 March 2020
On this page:
- Deal with each other in good faith
- Financial support
- Hours of work reduced
- Annual leave while workplace temporarily closed
- Working from home
- Modifying or terminating employment agreements on ‘frustration of contract’ grounds
COVID-19 is a rapidly evolving situation, and the government is making tough decisions to make sure we can contain the virus by going hard and going early.
All of us have a role to play in stopping further spread. Fundamental to New Zealand's response is not putting yourself or others at risk if you are unwell – don't go to work or be out in public if you are sick.
Deal with each other in good faith
Employers and employees must discuss in good faith the implications of COVID-19 on their working arrangements.
Where changes to current working arrangements are proposed by an employer, there are specific good faith requirements that must be followed.
Employers and employees may be considering changes that involve workplaces closing temporarily or reductions in hours. These changes require additional good faith or other process arrangements.
Access to financial support
Wage Subsidy Scheme
To provide support to businesses experiencing a significant downturn because of COVID-19, the Government announced details of a Wage Subsidy Scheme. The subsidy is to be paid to qualifying businesses on a ‘per worker’ basis for a 12-week period.
Work and Income benefits
The Government has also removed the stand-down period to access main benefits effective 23 March 2020. This means you can apply for a main benefit (for example, if your workplace has temporarily closed, you have had a reduction in hours of work, or have been made redundant) and once your application is approved you may start to receive your main benefit sooner.
Hours of work reduced
Example: Agreeing to a temporary reduction in hours.
Generally, if an employment agreement has the employee's hours of work, then an employer can’t change them without the employee's agreement. If the employment agreement says that an employer can change the hours of work, the employer still has to act fairly and reasonably before they do.
Annual leave while the workplace is temporarily closed
Businesses should consider the Government’s Wage Subsidy Scheme.
All businesses, including those using the Wage Subsidy Scheme, must follow legal requirements when making decisions about leave. They cannot unlawfully require or compel the employees named in their application to use their leave entitlements.
Employers and employees may agree to annual leave for during temporary closures of a workplace due to COVID-19 such as during a Level 4 lockdown. If an employer and employee cannot agree, an employer may direct annual leave be taken if they have first discussed this with the employee and provided 14 days’ notice before the annual leave is to be taken. Annual leave must be paid at the employee’s contracted rate of pay.
Working from home
For many businesses and workers, there is a lot of work that can still be done to done from home while on Alert Level 4. If an employer asks an employee to work from home, the employee should consider this request in good faith, bearing in mind the circumstances at home and particularly whether they can safely do the work. A worker may need to ask the employer to provide equipment, or other support to help them to work from home safely.
A worker may need to refuse, for instance if they cannot work safely given their home circumstances. They may also refuse if the work cannot be safely done in terms of the health and safety of the other people who are required to be in their home during the lockdown period.
Employers and employees should be aware of, and discuss the risks that might arise from working from home, for a worker, the people in the home, or any others. Most of the risks will relate to the person doing the work, and can be managed easily, for instance with simple changes to work processes to reduce fatigue, or changes to the ensure furniture is ergonomically sound.
If you’re a worker from home, you should keep in open communication with your employer and act in good faith and be honest with your employer about how you are feeling and any concerns you have.
If you’re an employer with workers from home, you should ensure there is open communication with your workers, listen to any issues they raise or concerns they have, and act in good faith.
Modifying or terminating employment agreements on ‘frustration of contract’ grounds
In many cases, workers will still be able to undertake the majority of their usual duties by work from home. In those cases, an employer would not be able to terminate the employment for frustration.
There will be circumstances where the restrictions under Alert Level 4 has disrupted businesses in such a material manner that the employer would be unable to determine with any certainty how they may be able to resume operations. Whether this would amount to a sufficient justification for termination of the contract would depend on the specific instances of each agreement, and the practical requirements of the job.
That is why the Government introduced the Wage Subsidy Scheme. We want to be able to support employers to keep their workers employed wherever possible. The wage subsidy will relieve the financial burden on the employer and support employment arrangements to stay in place (even if the employee is unable to work temporarily).
We are encouraging employers to make best endeavours to at least pay their employees 80% of the normal wage. If that is not possible, the employer can simply pass the subsidy through and maintain the employment relationship.
Employers must still follow good faith and other employment law obligations in making proposals on how they will manage reductions in work or hours, if they are only passing on the wage subsidy or a reduction in pay. This can occur on an expedited basis if the employer needs to make rapid adjustments to cope with their circumstances under the Alert Level 4 restrictions, but should at a minimum involve a clear proposal being communicated to all staff, with an opportunity to comment or respond, and the employer must consider all such comments or responses. This could be done under a very tight timeframe. Any unions present in the workplace must still be engaged with as part of this process.