COVID-19 – Level 3 Update

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COVID-19 Newsletter #4 – Moving to Level 3 – What you need to know

New Zealand is (currently) moving to Level 3 at 11.59pm on Monday 27 April. The guidance from the Government on this Level indicates that there are some businesses that may reopen if they can operate safely.

The Government has also indicated that some preparation to reopen at Level 3 can occur during Level 4, but only if that preparation occurs in accordance with the requirements of Level 4.

We provide further guidance on what this may mean for you below, and keep in mind that the situation (and industry guidance) is constantly evolving.

Can I reopen under Level 3, and how?

Whether you can reopen depends on the risk of spreading the virus associated with your business. WorkSafe has released guidance to assist you in conducting your own risk self-assessment, which requires you to consider how you can:

  • address the risks associated with COVID-19, as well as risks that may arise due to a return to operations; and
  • understand the practicalities of changing work arrangements; and
  • be confident that new health and safety practices will enable your staff and their families to remain well.

A quick guide on the kind of self-assessment you need to undertake can be found here: file:///C:/Users/emmarose/Downloads/839WKS-5-HSWA-identifying-assessing-managing-work-risks.pdf

If you’re planning on reopening, you will need to complete a written safety plan. More information about that can be found here: https://worksafe.govt.nz/managing-health-and-safety/novel-coronavirus-covid-19/your-covid-19-safety-plan/

The Government has released some general guidance for specific industries and has indicated there is more to come. Industry organisations may also release specific guidance for certain sectors and kinds of workplaces. We have collated some general guidance in the table below.

Note that if you reopen or are open, regardless of your industry, you must record who is working together, limit interaction between groups of workers, disinfect surfaces, ensure that staff keep at least one metre away from each other, and maintain high hygiene standards. Most workers will not require PPE to stay safe at work (if you haven’t already had to use PPE): this especially applies to retailers, manufacturers and the service industries.

Type of Business Reopen Required Measures  
Businesses with limited necessary customer contact, such as hospitality or retail.   Yes May be open for only delivery and contactless pre-ordered pick up. Customers cannot enter stores. Paying with cash is strongly discouraged and only if there is no alternative.  
Real Estate agents Yes May enter homes but customers are not allowed into offices, open homes are prohibited.  
Businesses with necessary, sustained, close customer contact, such as hairdressers, massage therapists, door to door salespeople, domestic cleaners, personal trainers, and gymnasiums   No  
Construction workers   Yes Strict hygiene measures must be put in place.  
Tradespeople for in-home repairs or installations Yes Must always maintain 2 m distance, handwashing and sanitary measures.  
Office staff No Staff who can work from home should continue to do so.  
Supermarkets, dairies and petrol stations, pharmacy or permitted health service.   Yes Continue to allow customers into their stores, with the same restrictions and measures in place as already in Level 4.
Recreational activities, such as libraries, cinemas, food courts, markets No  
Call Centres Yes Call centres may run from premises where staff cannot work from home and must always maintain 2 m distance, handwashing and sanitary measures.  
Removal or furniture moving companies Yes Must always maintain 2 m distance, handwashing and sanitary measures.  

Can I undertake some preparation to reopen, and how?

If you need to, for instance, prepare for reopening by unpacking and preparing stock, you may undertake this kind of work but only if you observe the current rules for Level 4.

The requirements for operating under Level 4 can be found here, and can be understood as strict social distancing and stringent hygiene measures: https://covid19.govt.nz/alert-system/current-covid-19-alert-level/

Does this affect the wage subsidy?

No, if you have applied for and received the wage subsidy your obligations to your employees remain the same, regardless of whether you are open, reopening, or neither.  

Is there anything else I need to know?

If you are unable to open under Level 3, you may be able to reopen under Level 2. The Government has indicated that at Levels 1 and 2, for instance, retail and hospitality may open for customers to come into the physical store, subject to the public health measures required at those alert levels. Restrictions on gatherings will also apply.

We recommend that if you’re unsure about what operating safely under Level 3 will look like for you, you keep an eye out for Government guidance in the following days, contact any industry organisations who may have more specific guidance, or reach out to us with your questions.

The advice provided here is general and may not apply to your own situation. For specific advice, we recommend you talk to one of our experts (all currently working from home). You can call us on our mobile numbers listed below, or contact us via email, and please stay safe:

Paul McBride (Partner) – paul@mdjlaw.co.nz or 021 614 215

Guido Ballara (Partner) – guido@mdjlaw.co.nz or 021 782 891

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz or 021 237 7811

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz or 021 557 236

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz or 021 751 247

Disclaimer – this newsletter is necessarily brief and general in nature.  You should therefore seek professional legal advice before taking any action in relation to any matter addressed above.  © McBride Davenport James

COVID-19 – Essential Workers Leave Scheme

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COVID-19 Newsletter #3 – Essential Workers Leave Scheme – What you need to know

The Government’s COVID-19 response has introduced new support for essential businesses to pay their employees who cannot work. We outline the main features of this scheme below as a general guide. This information is correct at the time of issue, however as this is a dynamic and constantly evolving environment, the position should be confirmed prior to substantive action. Applications can be made here:

https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html

What is it?

Some employees working in essential services, who cannot work from home, may need to stay away from work because:

  • They or someone they live with may be sick with COVID-19;
  • They may have had close contact with someone who has COVID-19 (self-isolation);
  • They may be at a higher risk of severe illness if they contract COVID-19 and have agreed with their employer that they will not work.

The Essential Workers Leave Scheme is designed to support public health goals and financially assist workers.

Eligible employers will be paid:

  • $585.80 per week (gross, before tax) for each full-time worker (where they usually worked 20 or more hours a week before COVID-19), or
  • $350.00 per week (gross, before tax) for each part-time worker (where they usually worked fewer than 20 hours a week before COVID-19).

Employers should pass on to the relevant workers:

  • The full subsidy, if the workers’ usual income before COVID-19 exceeds the relevant subsidy rate, and in that case also make best efforts to pay at least 80 percent of the workers’ usual income before COVID-19; or
  • Their usual income before COVID-19 if this is less than the relevant subsidy provided.  Any surplus funding from the leave payments provided must be used to fund essential business workers’ wages where possible.

The Essential Workers Leave Scheme will be available for at least the period while the nation is at Alert Level 4.  The subsidy covers a four-week time period, with the option for organisations to re-apply for those same workers after four weeks, if necessary.

Eligibility

Employers and employees should work together to identify if they are eligible for the scheme. This is consistent with the duty of good faith which requires parties in an employment relationship to be communicative.

Employer Criteria

Employee Criteria

  • Workers who are sick with COVID-19 who are required to remain in isolation until advised by a health professional that they can be released from isolation.
  • Workers who are in self-isolation due to close contact with an infected person. For example, a worker identified as possibly infected through contact tracing.
  • Workers with dependents who are either sick with COVID-19, or whose dependents are self-isolating as a close contact. This does not include regular/routine childcare.
  • Workers who have serious health conditions themselves, or in their household, that put them at higher risk of becoming severely ill from COVID-19, and who agree with their employer that they will not work for an agreed period.

In each case, employers may apply for the Essential Workers Leave Scheme based on information provided by the employee. Neither the employee nor the employer needs to provide medical evidence to MSD.

Who is at higher risk?

The best place for information on this comes from the Ministry of Health:

https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-novel-coronavirus/covid-19-novel-coronavirus-health-advice-general-public

Generally speaking, people with chronic lung disease or moderate to severe asthma, serious heart conditions, immunocompromised conditions, severe obesity, diabetes, chronic kidney disease, people undergoing dialysis, liver disease, or those over 70 years of age, fall into this category.

Some observations

It is important to note that this does not just apply to a worker but also to workers who have people in their household (bubble) at a higher risk. Again, we emphasise that workers and employers need to have a conversation to first see whether any risks at work can be appropriately mitigated. Underlying that conversation is the duty of good faith towards employees and the obligation to keep workers safe. If that conversation reveals an agreement that the employee cannot continue working safely, the parties should agree on what the leave arrangements will be before the employer then applies for the scheme.

Best Efforts to pay at least 80%

While there may be some instances where the leave scheme applies where otherwise no wages are due, as with the wage subsidy scheme, an employer must use their best efforts to pay at least 80% of an employee’s normal wages. However, any reduction in regular pay must be done lawfully, for example by agreement between the employer and employee.

Proof of Eligibility

As noted above, neither the employee nor the employer needs to submit proof to MSD to gain entry into the scheme. However, employers are within their rights to ask for some form of proof from their employees. While a request of this nature may be met with some resistance, a pragmatic approach could be to get the relevant employees to sign a declaration, attesting to their eligibility. That way, an employer has a record to return to in the event of a future audit.

Wage Subsidy and Leave Scheme?

Employers cannot apply for both schemes at the same time for the same employee. Where an employee is eligible for both schemes, preference should be given to the wage subsidy scheme as it lasts for longer duration. The leave scheme only applies to the period under level 4 lockdown.

The answers provided here are general and may not apply to your own situation. For specific advice, we recommend you talk to one of our experts (all currently working from home). You can call us on our mobile numbers, or contact us via email, and please stay safe:

Paul McBride (Partner) – paul@mdjlaw.co.nz or 021 614 215

Guido Ballara (Partner) – guido@mdjlaw.co.nz or 021 782 891

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz or 021 237 7811

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz or 021 557 236

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz or 021 751 247 Disclaimer – this newsletter is necessarily brief and general in nature.  You should therefore seek professional legal advice before taking any action in relation to any matter addressed above.  © McBride Davenport James

COVID-19 – SUBSIDY UPDATE

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NEWSLETTER #2 – EMPLOYMENT IN the COVID-19 ERA

Changes to COVID-19 Subsidies – What you need to know

The Government’s COVID-19 response has evolved since our last newsletter on this topic dated 18 March 2020. We’ve put together some FAQs to guide you through the changing landscape.   This is correct as at time of issue, however in a fast moving environment, with regular changes, the position on each point should be checked:

Can we dismiss an employee for misconduct during the subsidy period?

There are no apparent changes to established employment law regarding dismissal (including dismissal for misconduct/serious misconduct). That means a dismissal must still be justified as a course of action open to a fair and reasonable employer in all of the circumstances at the time, including the process followed in making the dismissal. One applicable ‘circumstance will be the current lockdown.   Another consideration might be practical inability to recruit/replace.  ‘We also note the possibility that the Government may reclaim a portion of any wage subsidy paid out relating to a dismissed employee.

What do we do with subsidy funds if the employee employment is terminated within the 12 weeks?

WINZ has emphasised that, where wage subsidy applications have been made after 4pm on 27 March 2020, employers will be in breach of their obligations under the subsidy if they do not retain those employees over the 12-week subsidy period.

In receiving the subsidy, employers also agree to repay the subsidy or any part of the subsidy paid if they fail to meet any of the obligations about how they must use the subsidy. It is not crystal clear whether repayment is required in cases of termination for misconduct (see above) but funds received for employees who are made redundant inside the 12 weeks are, in our view, likely to be reclaimed by the Government. The safest view is that while the subsidy is payable to the employer, it is ultimately for the benefit its employees, and so not for the employer to distribute or withhold in any manner it otherwise considers appropriate.  The sole exception to that seems to be where the subsidy received exceeds the usual wages of the employee (in which case the excess can be used for other wage costs).

Can we submit another claim if we find we have not claimed correctly or the rules have been subsequently modified?

Yes, additional applications can be made for employees not already covered by previous applications. (You cannot however apply for the same employee more than once).

What if staff refuse to work based on a fear of contracting COVID-19?

Only ‘essential’ staff may work at all during the level 4 lockdown (other than remotely), so we confine our answer to that. You can check if your business is essential here:  https://covid19.govt.nz/government-actions/covid-19-alert-level/essential-businesses/

Staff may refuse to work under the Health and Safety at Work Act 2015 if they believe, on reasonable grounds, that carrying out the work would expose them (or any other person) to a serious risk to their or the other person’s health or safety arising from an immediate or imminent exposure to a hazard.

Staff can also refuse to work by way of a (lawful) strike under the Employment Relations Act 2000 if they have reasonable grounds to believe such action is justified on grounds of health and safety. The assessment of risk made by staff must be “real and not far-fetched,” and must be sufficiently serious as to justify participation in such a strike.

These are high thresholds for staff members to satisfy. Given this, a staff member’s subjective, generalised fear is not likely to satisfy the high threshold required.

That situation may change.  For example, if the rate of the virus’ spread within New Zealand increases, there is widespread non-compliance with the lockdown, or should the circumstances change at any workplace (any staff member at that workplace contracting COVID-19, for example). Changes by Government could also impact.

For you this means that, if the risk remains generally low in New Zealand, and specifically low in your workplace, our view is that you are not required to pay essential staff who refuse, on a generalised basis, to work and have not agreed to use any of their leave entitlements to cover their absence (notwithstanding the requirements of the wage subsidy, see the FAQ below).

There are however reasonably practicable steps that you can and should investigate taking to lower the risk (such as PPE, hygiene procedures, and arranging shifts to limit any spread).  We note also that an employee’s refusal to work where a specific issue is raised but not addressed, could very well mean payment was still required.  Worksafe’s general guidance on potential steps can be found here: https://worksafe.govt.nz/managing-health-and-safety/novel-coronavirus-covid-19/workplace-preparedness-for-novel-coronavirus

We also recommend that before taking any steps not to pay essential staff, you discuss this further with them, with a view to their understanding what steps you have taken, and the consequences of refusing to work (in terms of payment).   Ultimately there are very real practical  issues: what can you realistically do in this environment if staff maintain refusal?  Legal action or disciplinary action (even if possible) are unlikely to achieve a motivated / committed workforce.  Discussion and seeking to accommodate any real issues is more likely to maintain staffing.

Can we claim the Wage Subsidy for all full-time workers regardless of their sector worked in? i.e. can we claim for staff being paid in full who are still working in essential services?

Yes, you can apply, subject to the eligibility requirements.  The subsidy is based on the financial effect of the virus on the business overall, not on whether employees are still able to work.

How do we claim for, and pay, casuals or part-time employees who only work for a few hours per week? i.e. if a worker only works up to $100 worth of hours in a week, what do we pay them via the subsidy?

The wage subsidy is a flat rate, and for those working less than 20 hours per week, the subsidy is $350 per week (gross) (up to 12 weeks).

What to pay part-timers is now also relatively clear – you will need to pay any part-time worker the full subsidy or if their normal weekly wage is less than the subsidy, that lesser amount.  “Normal” may though create calculation problems, in which case WINZ currently suggests (if hours are “variable”) averaging the worker’s hours each week over the last 12 months (or if employed for less, over the period of employment).

Casuals WINZ currently says are to be approached in the same way, but the guidance indicates that to be eligible, the worker would have to have been ‘expected to work’ during the time you will receive the wage subsidy. If so, and if after averaging they qualify for the full-time subsidy rate (over 20 hours), you will then need to pay them accordingly.

Note though, for any worker, if their usual pay is less that the applicable wage subsidy rate, you just pay usual pay (and can retain the rest of that week’s subsidy in your ‘wage bucket’ for use towards other wages payable).

Leave Subsidy?

The Government has announced folding the Covid ‘leave’ payment into the wage subsidy scheme. You can no longer apply for this subsidy. Finance Minister Grant Robertson has said: “We are working on arrangements for those in essential work who require sick leave due to COVID-19.” We recommend that you check for updates on how this may be addressed. 

Issues also arise for non wage subsidy qualifying employers, who had previously been able to rely on leave payments.   Government is considering these issues.

We have applied for the wage subsidy. Can we pay an employee only 80% of their normal pay if they are not available to work due to the current ‘lock-down’?

You cannot make unilateral changes to your employee’s pay. The Government has confirmed that your usual legal obligations to staff remain unchanged by the lockdown. That means that any change from a staff member’s current entitlement requires an established legal basis. You cannot unilaterally reduce hours or pay; agreement is ordinarily required. This will be complicated if staff are part of a collective agreement, because you cannot agree anything inconsistent with a collective agreement.

Next, and ordinarily speaking, you are not required to pay staff who are not able to work (other than through fault by the employer) and not on some kind of leave.

However, the Government’s wage subsidy has changed that landscape. The stated intention of the wage subsidy is to keep staff paid and in employment during the lockdown, regardless of their specific scenario. That means you are required to use your best endeavours to pay your staff at least 80% of their usual pay, and only if you are unable to do this, the full value of their applicable subsidy (whether full or part-time, or lesser if usual pay is lesser). This is therefore essentially a new type of government subsidised leave. It does not affect any staff member’s entitlements to annual or sick leave.

We view this subsidy as an obligation to pay staff during the level 4 lockdown at least the value of the applicable wage subsidy (unless usual pay is less, in which case you can pay less), regardless of whether they are not able to work for personal reasons (such as childcare requirements, or they are in self-isolation), or cannot work because you are not operating. The Government has indicated that audits following the lockdown will address any employer non-compliance.

Changes to the Minimum Wage – What you need to know

Minimum Wage increase

The Minimum Wage increased with effect from 1 April 2020.  MBIE’s guiding on that (relative to COVID-19) can be found here.  https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/covid-19-minimum-wage/

The key point is that the minimum wage relates to hours actually “worked”; it does not relate to hours where no work can be done.   MBIE appears to adopt a similar view to our own of the (absence of) legal obligation to pay wages where no work can be done, however an obligation to pay the wage subsidy and 80% of usual as a part of that.

Where businesses are unable to process the increase due to the lockdown, they should communicate that openly and clearly to employees. Employers will need to backdate pay at a rate of $1.20 per hour worked since 1 April 2020.

The answers provided here are general and may not apply to your own situation. For specific advice, we recommend you talk to one of our experts (all currently working from home). You can call us on on our mobile numbers, or contact us via email, and please stay safe:

Paul McBride (Partner) – paul@mdjlaw.co.nz or 021 614 215

Guido Ballara (Partner) – guido@mdjlaw.co.nz or 021 782 891

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz or 021 237 7811

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz or 021 557 236

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz or 021 751 247

Disclaimer – this newsletter is necessarily brief and general in nature.  You should therefore seek professional legal advice before taking any action in relation to any matter addressed above.  © McBride Davenport James