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Lockdown and obligations re employee payments

Lockdown and Obligations to Employee Payments

With seven cases as of 1pm today and the confirmation of the Delta variant of Covid-19 in New Zealand, it is likely we will have a further increase in positive cases over the coming days and with that a potential extension of this initial lockdown period.

Work and Income New Zealand have this morning announced the August 2021 Covid-19 Wage Subsidy- click here for details as they arise: Work and Income NZ August 21 Wage Subsidy

As a result of case law which came out of the ERA following the 2020 lockdown, we now know more about what our obligations are as Employers with regard changing payments to employees.  At the time it felt like a moving target, as we scrambled to hear what new rules and/or "scheme" was in place and then interpret them into our workplaces.

Specifically we learnt that:

  • Any agreement to change and/or reduce the employees’ weekly rate of pay must be in writing with this being signed as being accepted by the employees on an individual basis.
  • If you have union members, the union agrees on behalf of its members.
  • The Government’s previous indication that “an employer should seek best efforts to pay employees at least 80% of their usual weekly earnings” 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 where they have already agreed to a reduction in their regular weekly payments in the event of a lockdown, you are obligated to continue to pay them at the current rates, even where you cannot provide them with work.
  • So if you wish to reduce the pay to your employees, you will then need to embark on a consultation process with staff around a potential reduction in the weekly (or whatever frequency) 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) unless the amount of the subsidy is greater than the employee’s ordinary weekly earnings.

The Government have confirmed that a Wage Subsidy Scheme (WSS) is available to eligible employers across NZ expecting a loss of 40% revenue (an increase on the required 30% of 2020) as a result of a move to Alert Levels 3 or 4 for seven days.

In keeping with inflation, these payments are now increased on 2020 payments.  Businesses will be eligible for $600 per week for a full-time equivalent employee, and $359 per week for a part-time equivalent employee. The WSS will be paid as a two week lump sum and applications open from Friday 20 August 2021.

Therefore, in practical terms, for businesses 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 days of the lockdown.

If the lockdown is then 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 of you will only be able to contact your staff via email or text, so 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 from the employee being deemed to be confirmation of agreement.  Remember to keep these acknowledgements and agreements in case of any dispute further down the track.

During Level 4 our physical office is closed during the lock down period HR Connect staff are working remotely. 

If you have any queries please:

  1. Contact your usual HR Connect consultant directly, they will respond when they are able;
  2. Email admin@hrconnect.co.nz and Bronwyn or Lee will respond to you as soon as possible;
  3. Call the office phone on 07 839 7005 or 0800 131 557 and leave a message, we are able to access your messages during this time.

Take care,

HR Connect Ltd


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