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Leave and pay entitlements during COVID-19 response and recovery

Your rights and responsibilities regarding pay and leave during COVID-19 response and recovery.

Last updated: 11 June 2020

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Employers and employees need to work together to protect New Zealand and keep each other safe during the global COVID-19 pandemic. This means that normal obligations to keep in regular contact and to act in good faith are more important than ever. This is how employers and employees can be kind to one another.

Regular employment law applies to all employment relationships – regardless of the circumstances that we find ourselves in. This includes anything that has been agreed to in an employment agreement.

At each Alert Level, employers and employees should first discuss whether the employee can work normally, how much work is available, and how to work safely at home or at their usual place of work.

If the employee cannot work normally (eg their normal number of hours), the employer and employee should discuss what options are available. This page outlines some of those options.

Employee entitlements to leave and pay

It can be difficult to navigate a complex and rapidly-changing situation such as with COVID-19. One of the key challenges is working out employee entitlements to leave when the worker cannot go to the workplace or work from home.

If a worker is sick with COVID-19, or required to self-isolate under Ministry of Health guidelines for COVID-19, the first consideration for an employer should be to look after people, contain COVID-19 and protect public health.

Employers should not require or knowingly allow workers to come to a workplace when they are sick with COVID-19 or required to self-isolate (as a suspected case, a close contact, or on return from overseas) under public health guidelines for COVID-19. If they do, they are likely to be in breach of their duties under the Health and Safety at Work Act.

The following table provides guidance to employers and employees about these entitlements. Below the table there is a description of how this interacts with the Wage Subsidy Scheme, Wage Subsidy Extension and Leave Support Scheme.

In all options in this table, the employer and employee should seek first to reach agreement in good faith on what approach will be taken.

Employee is:  Leave entitlements for employee Pay entitlements
Employee is working:
  • At home
  • At the workplace
Not applicable as they continue to work. Employee should be paid, as normal, for each and every hour that they work.
Employee is on annual holidays Employees can use their existing entitlements.

Employees can agree to take annual holidays in advance, but they cannot be compelled to do so.
Leave paid in accordance with the Holidays Act.
Employee is sick, or caring for a dependent who is sick Employees can use their existing sick leave entitlements. If paid sick leave is not available, paid special leave should be considered. An employer and employee may agree that other leave is taken. Leave paid in accordance with the Holidays Act.
Employee is not at workplace, cannot work from home, and is not sick Employer and employee should consult their employment agreement and discuss and agree options.

Special paid leave should be considered especially in the short term while you discuss what happens next. Other options that could be considered include:
  • annual holidays
  • leave without pay*
  • long-service leave (if relevant)
  • alternative holidays (if relevant)
  • other payments (even partial payments) by the employer for a certain period of time
  • any combination of the above.

If the desired set of options are not provided for in the employment agreement, it would be necessary to negotiate a variation to the employment agreement.

Note: if an employer considers broader variations are needed to hours or other aspects of the agreement, the employer should read the restructuring guidance.

Leave paid in accordance with what has been agreed, including being compliant with the Holidays Act.
Employee is not at workplace, not working from home, not sick, and has not agreed some form of leave with employer If the parties cannot agree, the employer can direct the employee to take entitled annual holidays with at least 14 days’ notice. Directed annual holidays are paid in accordance with the Holidays Act.
Employee is absent from work without agreed leave. Employer and employee should discuss options available for what happens in this situation, but could include unpaid leave. Employer and employee should discuss options available for what happens in this situation, but could include unpaid leave.

* If the employer is receiving a subsidy from the Wage Subsidy Scheme, Wage Subsidy Extension or the Leave Support Scheme, all named employees must receive a minimum payment depending on their circumstances. See below for further details.

There are many options set out in this table and the implications of those options may vary depending on people’s individual circumstances. Parties are strongly encouraged to seek advice to ensure that the options chosen are the best options in the circumstances available

Wage Subsidy Extension and Leave Support Scheme

Employers may be eligible for support from:

  • A Wage Subsidy Extension payment is available to support employers and their staf who are significantly impacted by COVID-19. 
  • The Leave Support Scheme supports businesses to pay their employees who:
    • can't come into work because Ministry of Health guidelines recommend they stay at home, and 
    • can't work from home. 

Find out more including how employers can apply:

Wage Subsidy Extension – Work and Income (external link)

Leave Support Scheme – Work and Income (external link)

Employer obligations 

Employers must ensure that they are meeting their pay obligations under both employment law and the requirements they agreed to when applying for the Wage Subsidy, Wage Subsidy Extension or Leave Support Scheme.

Employees must be paid the higher of the amount that they are entitled to under employment law or the relevant subsidy requirements:

  • Under employment law, employees must be paid for each and every hour that they work at their agreed wage rate. Employers and employees can temporarily or permanently agree to vary the agreed wage rate. This rate cannot be below the minimum wage rate. Any change requires good faith consultation and written agreement. 
  • Under the Wage Subsidy, Wage Subsidy Extension or the Leave Support Scheme, employers are required to make their best endeavours to pay employees at least 80% of their normal wages or salary. If the employee is continuing to work their normal hours, a reduction in their pay to 80% still requires good faith consultation and written agreement. Employers are required to pass on at least the full value of the relevant subsidy rate except where the employee's normal wages are less than the relevant subsidy rate. In this case, the employee must be paid their normal wages. Employers can use any excess Wage Subsidy to help pay the wages of other affected employees. Any excess subsidy from the Leave Support Scheme can be used for the wages or salaries of other employees in the business. 

Subsidy rates

The subsidy rates for the Wage Subsidy Scheme, Wage Subsidy Extension and the Leave Support Scheme are:

  • $585.80 per week (gross, before tax) for people who normally work 20 hours or more per week (full-time rate), or
  • $350.00 per week (gross, before tax) for people who normally work less than 20 hours per week (part-time rate). 

If the employee has agreed some form of paid leave with the employer, the schemes can be used to cover some or all of that cost. Employers and employees must meet all of their obligations under employment law in relation to agreements to use that leave.

Complaints about the Wage Subsidy, Wage Subsidy Extension and Leave Support Scheme

If your employer has received a subsidy but you haven’t received wages, you don’t think you’ve received the right amount, or you have questions about how the subsidy is being passed on to you, it is important that you talk to your employer in the first instance.

If you have talked to your employer and cannot resolve your problem, or think your employer has behaved fraudulently in relation to the subsidy, you can make a complaint with us. 

Wage Subsidy Scheme: Complaints about employers

Contractors and self-employed people

Contractor arrangements are not covered by this guidance. Businesses and contractors can agree to any payment arrangements they wish to. Contractors and the self-employed are eligible to apply for the Wage Subsidy Extension or the Leave Support Scheme, if they meet the criteria. 

Public holiday guidance

If a public holiday falls on a day of the week that is otherwise an employee’s working day, the employee should be paid for the public holiday. The payment should be Relevant Daily Pay, or if it meets the criteria, can be Average Daily Pay.

Determining whether a day is an 'otherwise working day' should be based on the employee's pre-lockdown working pattern. However, if the employer and employee have agreed to a permanent change, this new arrangement can be used to assess whether the day is an 'otherwise working day'.

Otherwise working day

Employers can use the Wage Subsidy and Wage Subsidy Extension to cover some or all of their employees’ wages, including pay for public holidays.

Employers must pass on at least the full value of the relevant subsidy rate to the employee, except where a person’s wages and salary are normally less than the subsidy amount, in which case they can be paid their normal wages or salary.

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