Posted on: Mar 20, 2020
There has been a lot of news coverage and new information released about COVID-19 in the last couple of weeks. Here are some frequently asked questions that we have received from our clients. They may answer some questions you have as an employer or prompt you to get ahead of any potential questions that your employees may come to you with.
Do I have to pay my employee if they have to self-isolate for 14 days because they have been travelling or because they have been in contact with someone who had COVID-19?
If they are still able to work remotely then yes, if not then it would require a conversation about the options for your employee to undertake alternative duties from home, use sick leave, annual leave or discretionary paid or unpaid leave
Can I force my employees to use up their sick leave if they are in self-isolation due to travelling or because they have been in contact with someone who had COVID-19
Employers cannot require employees to use their sick leave if they are not unwell. You should discuss the options available to them, which may vary from person to person depending on their leave entitlements and the type of work they perform. These options may include, agreeing alternative tasks they can undertake from home, agreeing to take annual leave or annual leave in advance, special paid leave, the use of sick leave or unpaid leave.
What if my employee chooses/is required to stay at home because their child is required to self-isolate, but neither the employee nor their child is unwell?
If an employee is looking after a child or other dependant who is required to self-isolate then employers should again discuss with the employee options available to them.
What can I do if I believe an employee is lying about being required to self-isolate after travelling and/or have contact with someone who has COVID-19 but are not actually unwell?
Request information from your employee to enable you to validate their claim as you would with any other concern you had regarding the genuine nature of information provided to you as an employer, and then follow your existing processes where practical. If in doubt, seek advice on how to proceed.
What are my duties as an employer during a pandemic, such as COVID-19?
Your obligations as an employer do not change despite being faced with unusual circumstances. You have obligations under health and safety legislation to ensure a safe and healthy work environment, you also have obligations to act in good faith and in a fair and reasonable way with your employees. Additional limitations may be placed on you as a business which may be beyond your control, such as mandatory restrictions. It is important you continue to apply the principles of acting as a fair and reasonable employer as you tackle each situation. Clear and frequent communication with your employees is the key to ensuring concerns are raised and can be addressed both from the employee and employer perspective.
What communications do I need to engage in with my employees about the pandemic?
Acting as a fair and reasonable employer you should provide regular communication to update the offical Government information relating to COVID-19 and discuss the effects or impact on your employees and the business specifically or industry in general. Provide an opportunity or forum for employees to give feedback to you the employer to enable you to address areas of concern. The amount and type of information will vary dependant on the size and structure of your business. You should also ensure you have a pandemic plan that is particular to your business to ensure everyone knows what will happen and what is expected of them during the pandemic.
How do I cope with matters that are now outside of my control and impact on my employees or business because of COVID-19?
You can only manage what you can control, as an employer you have an obligation to your employees, if your business is impacted and the economic viability is in question, you should communicate the situation and outline the actions you intend to take to address issues as they arise. These actions will vary depending on business sector and size, however they will need to be lawful and will require consultation with your employees.
How do I strike a balance between ensuring employees self-isolate if they are at risk instead of coming to work due to financial pressures and/or a feeling of obligation to come into work?
Communication is the key to striking the optimum balance for employees, communicate your expectations clearly to your employees. The expectations outside of any Government dictated measures will vary regarding on which sector you are engaged in. It is important to communicate how you will support employees if they need to self-isolate and also that if they don’t self-isolate when required, it may be treated as serious misconduct for endangering the health and safety of others in the workplace.
Can I ask an employee to go to the doctor if I believe they are sick?
You can require someone to see a doctor if that is a specific term of their employment agreement. If there is no explicit obligation you can request (not require) that an employee sees a medical professional and you can offer to pay. Alternatively, where an employee does not want to see a doctor and you have reasonable grounds to consider they are not well enough to be in the workplace, you can require them to stay away from the workplace until such time as they provide a medical certificate stating they are well enough to attend the workplace and they don’t pose a health threat to others.
Can I send an employee home if I believe they are sick
Yes, you can and require that they stay away from the workplace until they can provide medical evidence that they are well and safe to be in the workplace. You should discuss with the employee how this period will be treated depending on their entitlement to sick leave, annual leave or other forms of discretionary leave.
What if the employee refuses to go to the doctor or go home?
Your responsibility is to provide a safe and healthy workplace. If you have reason to believe an employee is not well enough to be at work, you can require they remain away from the workplace until they provide medical evidence that they are fit to be at work.
What if the business requires employees to travel but they do not want to?
An employee is able to refuse to follow an instruction if it is unreasonable or unlawful. Where an employee is required to travel to an area that would put their health in danger, it would be reasonable for them to refuse to do so. However, a blanket refusal to travel may not be reasonable if there i s no greater danger to their health than is normally present and where all precautions have been taken to ensure the health and safety of the employee. In this instance, it may be open to an employer to commence disciplinary proceedings for refusing to undertake a reasonable and lawful instruction. However it will be important that the employers take their employees concerns seriously and respond sensitively to genuine concerns as individuals will have varying reactions to this unprecedented situation.
Can I have a closedown period or close the business temporarily if there are cases of coronavirus in the business, employees cannot get to work, or the business is not allowed to open?
Yes, but (if this is not the one regular annual closedown allowed under the Holidays Act 2003) they will need to agree with their employees on how a business closure will be treated and what leave or holiday arrangements will apply. This closure period must be done in good faith. Therefore, as an employer cannot make an employee take annual holidays (unless it is the annual closedown period under the Holidays Act 2003) there should be a negotiation of terms about how the employees will use leave entitlements and the length of the closure. It should be noted that an employer could require the employees to take annual holidays if they have been unable to reach agreement regarding when the employee can take annual holidays, and then give them 14 days’ notice.
Can I have a closedown period due to financial pressure on the business during COVID-19?
Yes, but as per the previous answer, if this is not the one regular annual closedown allowed under the Holidays Act 2003, employers must agree with their employees on how the business closure will operate. This must be done in good faith. However, if you cannot afford to pay. your employees you may have to consider the government packages, redundancy or permanent closure, but permanent closure requires consideration of other rules, such as liquidation or bankruptcy.
Can I tell employees that someone at work has coronavirus?
The Privacy Commissioner suggests that employers should take a “common sense” approach and decide whether it is necessary to tell other employees that one of their colleagues is unwell or in self-isolation. This may mean that you take whatever action is reasonably necessary to ensure you are able to provide a safe and healthy working environment for all your employees. However, the obligations under the Privacy Act are subject to parts of the Health Act 1956 which provides that a medical officer of health may direct individuals and agencies to disclose information about individuals who pose a public health risk.
What information can I request from an employee to determine if they are a risk in the workplace?
As an employer, you must provide and maintain a work environment (so far as is reasonably practicable) that poses no risk to the health and safety of employees or others. The employer is allowed to ask the employee about their health if they reasonable grounds to consider the employee may pose a threat to the health and safety of themselves or others in the workplace. Currently this would include if they have been in contact with anyone who has been disagnosed with coronavirus or who has travelled to a country that has had an outbreak of the virus. It is important that you still take appropriate steps to protect the employee’s privacy.
What happens if I cannot afford to pay people or keep the business open because of COVID-19 and/or self-isolation?
It is important to note that the government has released subsidy support packages for employers. Please see below to learn more about these packages or click here.
However, if you cannot afford to pay staff during this period an employer may either reach agreement with the employees regarding temporary suspension of operations and leave without pay or restructure. However, any redundancies because of COVID-19 must be done in good faith under s 4(1A) of the Employment Relations Act 2000. This requires that an employer:
- Consults with employees while any restructuring plans are a proposal only and before a decision is made
- Provide employees with relevant information to support why such a proposal is considered necessary in all the circumstances – this may include the need to include financial information about the impact of COVID-19 will have on the business
- Keeping an open mind on other options that might avoid termination
- Ensure employees have an opportunity to provide input on the proposed approach before any decisions are made about next steps
- Consider all alternatives to redundancy before notice of redundancy is given
- Ensure contractual entitlements are provided
If you cannot afford to keep the business open, you may consider other options such as liquidation or bankruptcy.
NOTE: It is likely that the existence of the wage subsidy scheme would be a factor to be taken into account by an employer in assessing any justification for dismissal, (by reason of redundancy), during this period.
What if my employees won’t comply with the health and safety policies we are relying on during COVID-19?
Employers are entitled to issue reasonable and lawful instructions to their employees, which employees are obligated to follow. If an employee is not complying with health and safety policies and requirements, then employers will be able to commence a disciplinary process which could result in disciplinary action. It may also be appropriate to suspend an employee if they are a risk to the health and safety of themselves or others in the workplace.
If I allow my employees to work remotely/at home, am I required to provide them with the resources to do so? And if I cannot afford that, do I still have to pay them because they are willing to work?
If you require employees to work from home, you must ensure they have the resources to undertake the work. How the work should be performed can be by agreement. If an employee is unable to work remotely and you require them to stay away from the workplace, you should attempt to reach agreement about the use of leave entitlements. Where no agreement can be reached you may need to consider suspension or even restructure.
Can government imposed restrictions override our polices and procedures that we have put in place?
Yes if the restrictions are mandatory. The restrictions will usually also outline what penalties will apply for people/businesses that don’t comply.
Can I rely on the force majeure clause in my employees agreement during the pandemic?
Yes, but it does not mean an employer can avoid the obligation to behave in good faith as per s 4 of the Employment Relations Act 2000, which naturally takes priority over any contractual provision. This is especially so when the employer is considering disestablishing positions where the Act sets out clear requirements. The effect of the pandemic will be the influence to a business economically. To meet the clause’s high threshold, you must demonstrate with evidence that the no work/customer is caused by the pandemic.
What workers are eligible for the Government’s Leave Payment Scheme?
All employees legally working in New Zealand (through their employers), self-employed person or contractor can be eligible for this scheme if they are unable to work from home. However, these workers must:
- Self isolate in accordance with public health guidance
- Register with Healthline
- Have COVID 19; or
- Cannot work because they are caring for a dependent in either of these circumstances.
Employers must apply to the Ministry of Social Development for this subsidy on behalf of the worker affected and are required to pass on the payment. Self-employed people can apply for themselves. Also, it is important to note that workers who leave New Zealand to travel overseas from March 16 2020 and intend to return and self isolate are not eligible.
Can I apply for the Government’s Wage Subsidy Scheme?
To apply for the scheme your business must:
- Be registered and operating in New Zealand
- Experience 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
- Employers must not make any changes to their obligations under any employment agreement (including rates of pay, hours of work and leave entitlement) without the written agreement of the relevant employee
- Employees must be legally entitled to work in New Zealand.
For the period you receive the subsidy, employers must:
- Use your best endeavours to pay at least 80% of each named employee’s ordinary wages or salary; and
- Pay at least the full amount of the subsidy to the employee; but
- Where the ordinary wages or salary of an employee named in your application was lawfully below the amount of the subsidy, before the impact of COVID-19, you must pay the employee 100% of their normal wages.
My company has shut down and I have applied for the wage subsidy, however I still need to top up my employees’ wages to get to 80%. Can I use holiday pay to top up or do I have to use sick leave first?
There is no requirement for employers to top-up to 80% of normal wages. The wage subsidy requires that employers use “make best efforts to retain employees and pay them a minimum of 80% of their normal income for a subsidised period”.
Where you and the employe have agreed they will take some annual leave, you can use the subsidy to top up their annual leave payment.It is important to remember that annual leave, and any payment that goes with it, is a physical entitlement (for most employees) and cannot just be paid out. Where the employee hasn’t agreed to use their annual leave, then you can give them 14 days’ notice requiring them to take annual leave.
Sick leave should be used where an employee or their dependant is actually sick. You may agree to use their sick leave in the lockdown but there is no requirement for you to do so.
If there is an agreement between the employer and employee to use part of the employee’s holiday pay, along with the government wage subsidy, does that mean my employee technically has to take leave?
Yes – if you and your employee have agreed to use any form of paid leave (e.g. annual leave) entitlements to cover their period of self-isolation they would have this time deducted from their leave balances. NOTE: employees are not required to have used any or all of their paid leave entitlements before they can receive the wage subsidy payment.
How do I know if my business is an essential service?
To determine if you’re an essential service, call the helpline: 0800 377 388 or visit covid19.govt.nz.
Do my employees have to use sick leave first before I can access/apply for the subsidy?
No – as above, you and your employee can agree to use any form of paid leave (e.g. annual leave) to cover their period of self-isolation. However, employees are not required to have used any or all their paid leave entitlements before they can receive this payment.
I have two groups of workers, one group who can work from home, another group who cannot. Can we pay those employees who cannot work from home just the government subsidy but pay up to 80% for those employees who can work from home?
You could do this only if it is agreed with each employee or you have conducted a genuine restructure process. However, as your employee is, in theory, ready, willing and able to work and is only prevented from doing so because of the government, employers are obliged to continue to pay employees 100% of their wage for this period. This is regardless of whether or not they can work from home, but in those situations where employees can work from home, you are clearly obliged to pay 100% of their income.
Where it is not realistic for the business to continue to pay employees their full wage/salary, assuming the business does not choose to close down on a permanent basis, the employer has two distinct options:
- Reach an agreement with your employees to pay a reduced amount over the period, (consider options of using leave, reduce hours, reduced pay etc…). Ensuring that if you are receiving the wage subsidy, this is passed-on in full to individual employees.OR
- Restructure the business to reduce headcount to a level that is sustainable for the business which may result in employees’ roles becoming redundant. An employer must still follow a fair process and observe its obligations of good faith, procedural fairness and substantive justification for its actions and decisions.
Generally, when faced with options of retaining a job, albeit on reduced wages for a period of time, as an alternative to redundancies, employers and employees can reach innovative agreements that address needs of both parties.
I am applying for the wage subsidy; how can I gain consent from my employees when we are working from home?
Given the restrictions now in place at Alert Level 4, people are having to think differently about how we record “agreements” between people. You have for some time been able to accept electronic communications as binding on the parties where they agree to acceptance on this basis. Electronic confirmation may be in the form of email or text or other methods of electronic communications where it can be recorded and stored, and the parties agree to the method of communication.
The Wage Subsidy qualification requirements state that employers must undertake “best endeavours” to top up the subsidy to 80% of an employee’s normal income. What would be regarded as “best endeavours”?
The government has yet to provide further clarity on what is required of employers in making best efforts. Our view is that the employer has signed a declaration, as part of the wage subsidy application and if not ensuring the employees’ wages are no-less-than 80% of their normal income, should be able to answer “why wouldn’t the employer be able to top-up to 80% of the employees’ normal income?”
Employers need to be able to demonstrate they have taken reasonable steps to try to pay the 80%. They should be able to demonstrate what those steps are which may include:
- Applying for wage subsidy
- Talking with their banks/financial advisors to secure credit or additional cash-flow – important employers retain evidence of these discussions
- Seeking relief from any ongoing fixed-costs – e.g. asking their landlord for reduction in rents?
- Looking at deferring any tax payments in line with the government support package requirements – communications with IRD or financial advisors regarding these efforts
- Discussing with banks access to the government guaranteed loan for businesses where applicable.
Simply stating “I can’t afford it”, without being able to evidence that they have put some effort in to seeking alternatives to provide the necessary cash, is inadequate.
Ultimately, there is no one-size fits-all answer for these questions as it will vary depending on what industry, size of business and structure you have as an employer. However, we are available to help when it comes to advice or discussions about how this pandemic will impact your business.
It is also important to note that if you want to stay up to date with the latest announcements on government advisories, schemes and information about the virus, please visit https://covid19.govt.nz/.
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.