Are NZ businesses obligated to pay for minimum hours, even if rostered time falls short? Legal implications of guaranteed pay in employment contracts.
COVID-19 / COVID LOCKDOWNS
Employers and employees need to work together to protect New Zealand and keep each other safe during all COVID-19 alert levels. This means that the obligations to contact workers on a regular basis and to act in good faith are more important than ever.
Employment law still applies to all employment relationships, regardless of the circumstances that we find ourselves in, including during a pandemic or a natural disaster:
Your employer must have a written employment agreement (employment contract) for every employee, and employers and employees must do what that agreement calls for.
- Your employers must keep each written employment agreement up to date, including documenting in writing any changes to any terms and conditions of employment you have agreed.
- Employers and employees must meet all employment law and any other relevant contractual conditions to change any employment arrangements.
- Employers must engage with union representatives, where a union represents the employees, before any changes are made to collective employment agreements.
- Employers must comply with all minimum employment standards and with the Employment Relations Act 2000.
At each alert level change, employers and employees should first talk about whether the employee can continue to work normally and how the employee can work safely at home or at their place of work.
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In Raggett & Ors v Eastern Bay of Plenty Hospice Trust t/a Dove Trust [2020] NZERA 266, the employer reduced its employees’ pay to 80% once it received the Government Wage Subsidy, without obtaining agreement. The employer argued that it was entitled to reduce wages to 80%, because the employees were not, “ready, willing and able” to work, due to the COVID-19 restrictions.
The Authority noted that, but for the COVID-19 restrictions and/or the employer’s ‘decision’ that they not attend work, the employees would have worked and were therefore ‘ready and willing’ to work. The Authority did not expressly consider whether that meant employees were ‘able’ to work.
The Authority found that, unless there was agreement to a reduction in wages, or, possibly, a force majeure clause in the employment agreements allowing for a pause in the obligation to pay wages, the employees were entitled to payment in full, pursuant to their employment agreements and the Wages Protection Act 1987.
This case has attracted considerable controversy and has been appealed to the Employment Court. In the interim the safest approach is to abide by its principles.
Insert Above: Courtsey of Lane Neave
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Health and Safety
I have been told to self-isolate. Can my employer make me come to work?
No. Your employer must not make you come to your workplace if you are sick with COVID-19 or have been required to self-isolate under public health guidelines for COVID-19. If they do, they are likely to be in breach of their obligations under the Health and Safety at Work Act.
I am worried about catching COVID-19. Can my employer expect me to come to work?
It depends. If you are in the higher risk group of contracting COVID-19 (as per the Ministry of Health's advice), you may be able to work if you and your employer agree that the risks of you being at work can be appropriately managed.
Can I tell my boss that I am not going to go to my place of work?
You may say no to work at your usual workplace if you believe that being at your place of work would expose you, or anyone else, to a serious risk of being infected with COVID-19, or any other health or safety risks. If this is not the case, please be aware that your employer may consider that the Employee has abandoned their work.
Leave and Pay
Do I get paid if I have to stay home during Covid alerts?
If the Employee is working from home, as instructed by their Employer, the Employee must be paid at the same rate in their employment agreement.
If the Employee is sick, the Employee can take sick leave.
If the Employee cannot work from home and needs to stay at home, your employer may be able to apply for financial support to pay you if they meet certain criteria.
If the Employee cannot work normally (e.g. your normal number of hours), the Employee should discuss with the employer what options are available.
Does an Employee get paid if their shift gets cancelled due to a different Covid alert level?
If the Employee’s employment agreement has their shift hours and/or days of work, then an employer can’t change them without the Employee agreeing to it.
If the employment agreement says that the employer can cancel or move your rostered shift, the employer must have a shift cancellation clause that tells the Employee:
- how much time in advance they have to give you before they cancel that shift, and
- what is the financial compensation if the employer can’t give you a reasonable advanced notice about the cancellation.
If the employer does not give the Employee enough advance notice, they have to give the Employee reasonable compensation.
Also, the employer has to make sure that cancelling a shift doesn’t breach the Employee’s employment agreement.
There are some guidelines about what reasonable cancellation time and reasonable compensation are.
The employer may be able to apply for financial support to pay you if they meet certain criteria.
Can the Employer make the Employee take annual leave?
The law about annual leave has not changed because of COVID-19. In general, the employee and the employer should agree when annual leave is taken. If you can’t agree, the Employer can make the Employee take annual leave in some situations.
An Employer can instruct as Employee to take Annual Leave by giving the Employee 14-day’s notice. Typically, this is used where a company may be seasonal, or the Employee has excessive Annual Leave accrued, or the business has an annual shutdown. However, this last point is usually written into the Employee's Individual Employment Agreement.
Leave and COVID Lockdown.
Firstly, we would note that every situation is different so it is not possible to provide a response to every scenario that may occur while a region, or the country, is in a COVID lockdown.
If an Employee is currently on Annual Leave, and wishes to cancel that leave and return to work (actual workplace, or working from home), then the Employer needs to act in good faith and determine what is ‘fair and reasonable’. It may be reasonable for the ‘Employer’ not to accept that request if the Employee is on leave out of town, or if they return and they are unable to work from the actual place of work or from home.
If the Employee has ‘leave planned’, over the next few days or weeks, and there is a chance that we may be in ‘lockdown’ at the time the leave is to be taken, the Employer may choose to accept cancelling the leave, or not. Situations that may influence the decision one way or another may include (note: this is not an exclusive list):
- We will all have had a situation in the past where we had leave planned, and for one reason or another, we cancelled that leave due to a change in circumstances. In the majority of instances, the Employer would have accepted this and not expected the leave to be taken.
- If the Employee had a trip planned, and was unable to travel due to lockdown, it may be reasonable for the Employer to accept that the Employee wishes to cancel their leave, and grant that request.
- If the Employee has built us excessive leave and has leave planned and approved, and then we enter into ‘lockdown’, it may be reasonable for the Employer to expect the Employee to take that leave (again, this may depend on what the Employee had planned). Alternatively, the Employee could request that a week’s leave is ‘cashed up’ and paid (as allowed by law).
- If the Employee's approved leave is taking place during a ‘seasonal’ (or other) low/quiet time for the business, and the country then enters into lockdown, it may be reasonable for the Employer to expect the Employee to take that leave.
- If the Employee has leave planned, and then requests to cancel that leave as we are in lockdown, and the lockdown may be extended, but the Employee is unable to work from their usual place of work, or home, then the Employer may accept the request to cancel leave if the Employer is eligible for the STAP (Short Term Assistance Payment) from the Government.
As you will see, there are many situations that could arise, which may influence an Employer's decision one way or another. This is why both parties need to act in ‘good faith’ and determine what is ‘fair and reasonable’. The decision made for one Employee needs (in most cases) to be consistent, where possible, with other Employees.
Please refer to your HR Today Consultant if you are considering actioning this.
Can an Employee cancel approved annual leave during different Covid alert levels?
It depends. If the Employee wants to cancel their annual leave, the Employee should talk to the Employer (or visa versa). Both the Employee and the Employer could agree to move the annual leave to another date, cancel it or reduce the number of days to be taken. However, the employer does not have to agree to it. Any changes to holiday arrangements should be in writing. Both parties should act in good faith in this scenario.
Workplace Changes
Can the Employer make the Employee do tasks that are not in my job description, or change the hours, days or my wages?
An employer cannot make changes to your employment agreement, including hours of work, wages or salary, or make you do tasks that are unrelated to your job, without talking to you in good faith and you agreeing to it. Any changes must be in writing.
During COVID19, there may be changes where an Employer needs the Employee to perform ‘other’ or ‘different’ tasks in order to operate or keep people productive. Both parties must act in ‘good faith’ and be ‘fair and reasonable’ in this case.
Can the Employer make me redundant due to their financial difficulties?
Any proposal that involves redundancy must be consulted in good faith and comply with other employment law obligations, including doing what the employment agreement says.
In some situations, such as financial, commercial or economic problems, or a genuine need to restructure the business (for example, moving to an online environment rather than a shop front), the employer may consider workplace change. This may include changes to an employee’s job description, a change to when or how work is done, or reducing an employee’s hours or wages. However, an employer should consider other alternatives first. Redundancy should be the last option and only be considered if there are no suitable alternative arrangements, following a good faith process.
In a job offer, can an employer include a clause in the employment agreement that reduces the hours of work or places the employee on unpaid leave?
Employers may be able to, but should seek legal advice and remember to act in good faith. Such a clause in the employment agreements requires employees’ informed consent. All employment standards and obligations also continue to apply. For example, employers cannot offer zero-hour contracts where employees have no guaranteed hours of work but must be available to work if required.
Question and Answer
Q -When can I apply for the wage subsidy?
A- From Friday 20th August 2021 at 9.00am
Q- What is the criteria to receive the Wage Subsidy payment?
A- If you are expecting a 40% loss of revenue since the rise to Level 4 compared to a typical trading period of the last 6 weeks from 6th July to 16th August.
Q- Do I need to keep any records to show this loss of revenue?
A- Retain support documentation as it may be requested at any time.
Q- What is classified as Part time?
A- 19 hours and under.
Q- Can I pay my staff 80 % if I get the wage subsidy?
A- The wage subsidy is to help the business to pay the full amount of the wages. These payments do not override Employment Agreements. To pay 80% of wages you would need to have a written agreement with your employee.
Q- Can I apply for the Resurgence Support Payment and the Wages Subsidy?
A- Yes, you can apply for both if you meet the criteria.
Q- How quickly will it be paid to the business?
A- It will be paid within 3 working days.
Resurgence Support Payment
Q- What is the criteria to receive the RSP payment?
A- Expect a 30% decline of revenue over 7 days from 17th August compared with 6 weeks prior of normal trading.
Q- When can I apply for this payment?
A- From 8.00am on the 24th August 2021 and it will remain open for one month after a national return to alert level 1.
Q- How long does it take to receive the money?
A- Payment within 48 hours on a working day.
Q- When I log into apply for the RSP it shows past employees and missing new employees - what do I do?
A- Remove the past employees and add the new employees.
Q- How can I gauge a loss in revenue if I only invoice monthly?
A- You can apply if you can prove that there was a 30% decline in revenue based on billable time through your timesheets.
Q- If we are in Alert level 4 for 3 days can I still apply?
A- If you have met the criteria that there was a drop over 7 days even if you are back trading after 3 days.
Q- If a shareholder is paid a shareholders salary at year end can they be counted as a Full time Employee for the RSP?
A- Yes, if the Shareholder plays an active part of operating the business.
Q- Is the drop in revenue based on cash basis or invoiced basis?
A- Either, as long as it reflects your current accounting practices.
Q- Will we have to pay it back if you realise that you are not eligible?
A- Yes, you will have to pay it back if that was the case.
Q- Can I claim the RSP for loss of revenue not due to a increase in levels e.g weather?
A- No, the RSP is only in place for support for alert Level changes.
The Wage Subsidy - Available to all employers if they expect a loss of 40 percent of revenue as a result of the Alert Level increase yesterday. Businesses will be eligible for $600 per week per full-time equivalent employee, and $359 per week per part-time employee. The Wage Subsidy will be paid as a two-week lump sum. Applications open on Friday 20 August with the first payments usually available after three days.
A Resurgence Support Payment is available if firms incur a loss of 30 percent of revenue as a result of the Alert Level increase. The RSP is worth up to $1500 plus $400 per full-time equivalent employee, up to a maximum of 50 full-time employees (so up to a total of $21,500).