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There is nothing normal about a country in lock-down. So what are you supposed to do when you’re an employer in a business that has been impacted by a government mandated closure of the country?

The simple answer? You adhere to employment law.

Life’s never that simple though is it?

We’ve got an unprecedented (sick of that word yet?) situation of a country that is operational only under the definition of essential services. Financial recession almost certainly impending. Businesses trading. Businesses not trading. And a government paid subsidy to support retention of workers.

So what should a good employer to do?

If you don’t know your obligations then the very first thing I recommend is to get professional guidance (we offer support packages that can be tailored to your specific need) but if your budget doesn’t extend to that, here are some simple steps you can take using free resources:

  • Check Employment New Zealand for answers to your questions and keep an eye on the website for regular updates. If you subscribe to their newsletter you’ll get advised of any pending changes to legislation that may impact you.
  • Check Business.govt.nz (MBIE) COVID-19 information. There are a number of links that contain information by category.
    • Information specific to the wage subsidy is here.
    • Health and safety information is here.

I can’t afford to pay my employees

Sadly, you’re not alone. The very first thing I recommend you do is speak to your employees and tell them that you are facing significant financial issues as a result of this rāhui, this lockdown. If you haven’t applied for the wage subsidy then you should check your eligibility to do so.

If you have applied for the wage subsidy but are still facing significant financial issues, then there are still steps you can take.

  1. Negotiate with your employees to pay them out any annual leave entitlement. You should already have these funds available as they are a liability to the business accounts. Please consult with your accountant for guidance if you don’t have these set aside.
  2. Negotiate with employees to reduce their pay. There is some (mis)information floating around that you can do this automatically because the government has mandated closure of businesses. Please don’t listen to that sort of advice. Employment law is still in place and you can’t just reduce payments to your employees. There are steps to this process so please be very sure of your obligations if this is something you want to do.
  3. Consider restructuring your business. Part of this process may involve redundancy. That’s not nice, but you need to be realistic about what your options are as the weeks tick by without revenue coming into your business..

Community Law are another incredible resource for those that can’t afford legal help. This flow chart is mīharo! It may help you with answers to questions you have that are specific to paying your employees. It’s also a great resource to refer them to.
(Click the image to download).

A flow chart to help make sense of employment situation during the COVID-19 pandemic
Resource from Community Law re COVID-19 and employment

What about PUblic Holidays?

If we’re closed due to lockdown, do I have to pay my staff?

Employees are entitled to be paid on any public holiday provided the public holiday falls on a day that they would normally expect to work.

How much do I have to pay my staff on a public holiday if we’re not able to open?

There are two ways to calculate this. If your staff would normally work the same quantity of hours in a pay cycle, then pay them either their relevant daily pay (RDP) which is the amount they would normally have received if we were “business as usual”. Or, if their total hours day-to-day and week-to-week (wages) vary, you pay them their average daily pay (ADP).

What if we have negotiated a lower wage payment with them?

If you’ve gone to the lower amount of 80% as many have, then apply the RDP calculation of their weekly pay then divide that by 5 to come up with the public holiday payment.

Can’t I just use their annual leave payment?

Not without their permission. You can ask your employees to use up their annual leave but you cannot force them to.
You are required to consult with them about taking annual leave and only after failing to reach agreement can you then require them to use their leave – this requires 14-days notice.

What if we’re open on a public holiday?

If you’re an essential business and open on a public holiday, then any employee who is asked and agrees to work on a public holiday (remember that all employees are able to refuse to work on Easter Sunday 2020) should be paid time a half (T1.5) and be provided an alternative day’s leave to take later at an agreed time.
NB: If your staff are working a lot of overtime in the lead-up to the public holiday, you need to look at a higher rate of pay. ADP (average daily pay) plus T1.5 plus the alternative day may be required.

Employing staff can be hard enough without having to tread new territory.

If the only thing you’re certain of, is that you need help. Get in touch

Contact Number: 021 079 6325 | Email: sel@leighdevelopment.co.nz