The New Zealand Government has today announced a package of measures to assist employers to manage the impacts of COVID-19.
This includes providing funding for leave taken as a result of COID-19 and a wage subsidy package designed to assist businesses whose revenue has been significantly affected by COIV-19.
We have addressed this package along with some frequently asked questions we are receiving. Our previous alert on COVID-19 can also be read here.
How do we manage employees who self-isolate, have COVID-19 or are caring for others?
The employee can’t work from home
The Government has announced a COVID-19 Leave Payment which covers full-time, part-time and casual employees, and (interestingly) contractors who:
- need to self-isolate in line with Ministry of Health Guidelines and have registered as needing to self-isolate with Healthline, cannot work from home and their self-isolation is not because they left NZ since the travel restrictions on 16 March 2020 and have since returned; or
- cannot work because they have been diagnosed with COVID-19; or
- cannot work because they are caring for dependents who are required to self-isolate or who are sick with COVID-19.
The COVID-19 Leave Payment will be paid at a flat rate of:
- $585.80 to a person working 20 hours or more per week
- $350.00 to a person working less than 20 hours per week.
The COVID-19 Leave Payment will be available for 8 weeks from today. It will be paid direct to employers but must be passed onto employees in full.
The COVID-19 Leave Payment is available for 14 days for employees who are self-isolating (but may be granted more than once).
The COVID-19 Leave Payment is available for the entire period an employee is sick with COVID-19 (or is caring for a dependent with COVID-19).
There is no requirement that employees or employers first exhaust other leave entitlements (such as sick leave or annual holidays) before they can access the COVID-19 Leave Payment.
However, employers should expect to receive requests that these other forms of leave are used in combination with the COVID-19 Leave Payment. Whether or not the employee is able to access these other forms of leave will depend on the particular circumstances.
The employee is able to work from home
If an employee is still able to work, they should receive their normal pay. If an employee is able to work from home but only partly things can become more complicated.
What if we don’t have work for our employees going forward (or are concerned we won’t)?
COVID-19 Wage Subsidy
The Government has announced a Wage Subsidy for New Zealand employers who are considering having to make employees redundant or reduce hours because of COVID-19.
The COVID-19 Wage Subsidy will be paid at a flat rate of:
- $585.80 for people working 20 hours or more per week
- $350.00 for people working less than 20 hours per week.
The subsidy is paid as a lump sum and covers 12 weeks per employee. The maximum subsidy that can be paid to a single employer is $150,000 and it can only be paid once.
To qualify an employer:
- must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19;
- must have taken active steps to mitigate the impact of COVID-19; and
- must make best efforts to retain the employees the subsidy was paid for (the employer is required to name them in the application) and pay them a minimum of 80% of their normal income for the 12-week period.
A 30% decline in revenue means, a 30% decline in actual revenue; or predicted revenue (e.g. for businesses who have seen a reduction in bookings such as accommodation providers). This decline has to be related to COVID-19.
In terms of an employer’s obligation to mitigate the impact of COVID-19 this could include activating their business continuity plan and seeking advice and support from:
- their bank;
- the Chamber of Commerce;
- a relevant industry association; or
- the Regional Business Partner programme.
The Government has stated that the COVID-19 Wage Subsidy is being implemented on a ‘high trust model’ and that employers will not be asked for verification before the subsidy is approved. However, subsequent verification will occur and if false or misleading information has been provided further steps will be taken including potential prosecution for fraud.
The COVID-19 Wage Subsidy can be applied for using a very simple form on the MSD website. Employers are required to agree as part of the application that they have discussed the application with the named employees, who consent to the information in the application being provided.
We would recommend this should be part of a wider conversation with employees about the impact of COVID-19 on an employer’s business and their employment going forward – even if this is just to emphasize to employees that it is an evolving situation with a lot of uncertainty.
If an employer is concerned that it is not going to be able to pay 80% of an employee’s normal pay (as is required by the Wage Subsidy), an employer will need to undertake a consultation process with employees before making any final decisions. In the first instance, employers might want to engage with employees to try agree any reduction in pay.
Redundancy and Suspension
For some employers, the COVID-19 Wage Subsidy might not remove the need for them to consider more drastic changes to their workforce.
A redundancy process, like it always has, requires engaging and consulting with employees in good faith before coming to any final decision about a proposed course of action. There is no such thing as a ‘force majeure’ event in the employment context and any termination for redundancy has to be justified.
Some employers might also be able to make use of contractual suspension clauses which allow for unpaid suspensions during pandemic outbreaks. Again, no final decisions should be made in relation to this option before engaging in good faith with employees.
Quigg Partners is continuing to support its clients through this unprecedented situation. We have the capability to do so remotely if that is required in the future, while maintaining our high levels of service.
We are advising daily on:
- working remotely
- reduced working hours/days
- health checks
- potential redundancies and suspensions
If you have any queries regarding COVID-19 and its potential effects on your business, please get in contact with one of the members of the employment team.