As a result of the Government announcement on Wednesday 17th of August, NZ was plunged back into a Level 4 Lockdown; Auckland and Coromandel for seven (7) days and the rest of NZ for a three (3) days.
With the Delta variant having been confirmed there is a real potential for the lockdowns to be extended.
Based on case law emerging from the Employment Relations Authority following the 2020 countrywide lockdown. We are now in a better position to know what is acceptable and what is not with regards to employee payments.
The key points are:
- Any agreement to reduce the employees’ weekly rate of pay must be in writing with this being acknowledged and being accepted by the employees on an individual basis.
- The Governments previous indication that “an employer should see best efforts to pay employees at least 80% of their usual weekly earnings”. It is not an automatic right for an employer to impose this reduction on their employees without their written agreement.
- Unless you already have a signed agreement in place with your staff, whereby they have already agreed to a reduction in their regular weekly payments in the event of a lockdown. You are obliged to continue to pay them at the current rates, even where you cannot provide them with work.
- In the absence of a pre-signed agreement you must commence a consultation process with staff around a potential reduction in the weekly rate of pay.
- Where a Government Wage Subsidy is available, this must be passed on in full to the employee (as part of their usual weekly earnings). The only exception here is if the amount of the subsidy is greater than the employee’s ordinary weekly earnings.
The Government have confirmed that the Wage Subsidy Payment will be available for businesses affected by the lockdown of greater than seven (7) days. They have raised the threshold for those businesses who must now be able to show evidence that they have sustained a loss of at least 40% of revenue as a result of the lockdown period coming into place.
For those businesses that do qualify for the Wage Subsidy, the rates have been adjusted from 2020. Now they are set at $600 per week for full-time equivalent employees and $359 per week for part-time staff. Full time being an employee working 20 hours a week or more; Part-time working less than 20 hours per week.
What does it all mean?
In practical terms (for business outside of the Auckland region) unless you already have a signed Lockdown Wage Reduction Agreement in place; you will be obligated to pay the employee 100% of their usual earnings for the first three (3) days of the lockdown.
If the lockdown is extended beyond this initial period, you are entitled to consult with your staff (in writing) regarding a proposal to reduce their ordinary weekly earnings – with an agreement to this reduction being confirmed in writing by the employee.
Many employers will only be able to contact their staff via email or text, the message must contain sufficient information to enable the employee to make an informed decision (and should still advise them of their right to support and representation) with a text or email acceptance or acknowledgement for the employee being deemed to be confirmation of the agreement.
In doing this, please ensure that all communications are saved to provide evidence of the employee’s acceptance in the case these are needed at a later date.
If you require assistance please contact us.
Key sites for further information: