FAQ: the COVID-19 resurgence and its impact on businesses

The resurgence of COVID-19 in New Zealand’s community has raised some new (and old) questions for businesses as they try to navigate levels 3 and 2 again. We’ve put together some answers for some of the issues businesses most frequently tell us they’re grappling with:


If an employee lives outside of the Auckland “border” and is unable to get to the workplace in Auckland or work from home, what options are available to the employer?

It is important that employers act in good faith and have a conversation with the employee to discuss the situation and options available before making any changes.

The employer should try to determine whether the affected employee can actually perform some work at home or if they are absolutely unable to work from home. If it is the latter, the employer should explore alternative options with the employee such as whether the employee is able to obtain a travel exemption from the Ministry of Health, whether the business can access the leave support scheme to support qualifying employees of if the employee can take annual leave.

If none of these options are viable, then the employer is not required to pay the employee and should inform their employee of this. However, to re-emphasise, the employer should act in good faith and try to reach agreement with the employee in the first instance. Where agreement cant be reached, it is important to consult the employee and consider their feedback prior to making a change.


Do employers need to pay employees if they require a COVID-19 test?

If the employer requests the employee to take a test for work, then the time spent taking the test should be considered “work time”. It is important to remember that employees may refuse to take a test, in which case, where the employer has reason to believe that having the employee in the workplace is likely to negatively affect the health and safety of others in the workplace, they can be put on sick leave until they are able to provide medical clearance to return.

If the employee is being tested for COVID-19 test because they have symptoms and/or have been directed to get a test by the Ministry of Health, then there is no obligation for the employer to pay the employee. However, it should be noted that the employee may be able to take sick leave if they are actually sick, or it is agreed sick leave is appropriate and the employer may be able to access the leave support scheme to pass on to those employees who meet the Ministry of Health requirements.

To read more about the leave support scheme, click here.


What should businesses do regarding their employees if it needs to be closed during Level 3 lockdown?

The employer should consult employees to determine whether the employees can work from home or work from the workplace but while complying with the health and safety restrictions. If work can still continue under these circumstances but the employer predicts that there will be reduced revenue as a result of these restrictions, it may be appropriate for the employer to see if the business is eligible for a wage subsidy and/or seek agreement from employees for reduced wages and time.

If work cannot continue as usual, then the employer must still act in good faith and engage in discussions with employees to find other alternatives than not paying the employee. If not suitable alternative can be found, then the employer may need to restructure which may result in redundancies. If the employees are not ready, willing and able to work then wages are not due and payable. However, the Employment Relations Authority has found employees in the first lockdown remained ready, willing and able even though they were unable to work. This interpretation of “able” is controversial and has not been tested in the courts. A safer route is to restructure where agreement can’t be reached.


If an employee was due to take leave but can now no-longer do so because of the COVID-19 restrictions, can the employee cancel their annual leave and return to work or can the employer require them to still take it?

Once annual leave has been granted, it can only be changed by agreement. The employer does not have to agree to cancel the annual leave after it has been approved. However, the employer can choose to agree with the employee’s request.

Although it may seem a hard-hearted decision, there are a number of circumstances where an employer may have made arrangements in response to the leave. For example, if an employer has re-organised the workload to cover for an employee taking leave, there may be a significant financial impact for the employer to now have to alter these arrangements.

For employers who may face this situation, it is strongly encouraged that they discuss with their employee what they are considering and why before making their decision, to maintain a good faith and working relationship.


For more information about government schemes and to get the latest updates on COVID-19, go to: https://www.workandincome.govt.nz/covid-19/index.html or https://covid19.govt.nz/


This post was last updated on 21 August 2020.


This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

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