Client Update – June 2022

Client Update – June 2022

Finally, we bring you a client update that does not canvass COVID-19 related issues:

New whistleblowing legislation

The Protected Disclosures (Protection of Whistleblowers) Act 2022 comes into force on 1 July 2022.

‘Serious wrongdoing’ now includes behaviour that is a serious risk to the health and safety of any individual.  Also, the protections in the Protected Disclosures Act will apply to the person making the disclosure even where the person is wrong, and there is no serious wrongdoing, unless the disclosure is made in bad faith.

The protections in the Act extend to someone who discloses information in support of, or relating to, a protected disclosure (again unless that is knowingly false or the person is acting in bad faith).

Contracting out – any provision in an agreement that stops someone from disclosing information that could support or relate to a protected disclosure will have no effect.  This would presumably include confidentiality clauses in settlement agreements.

Disclosure can now be made directly to an appropriate authority at any time.  There are a number of other changes – we recommend that you seek advice if you are unsure of the implications for you.

Engaging independent contractors

Changes to the Fair Trading Act 1986 come into force in August 2022.  Those may have consequences to businesses engaging independent contractors.  “Trade” in this legislation includes (but is not limited to) any business, industry, profession, occupation etc relating to the supply of goods or services.

Protections against unfair contract terms have been extended to cover standard form small trade contracts.  ‘Standard form’ means ‘take it or leave it’ contracts with no opportunity for negotiation.  ‘Small trade contracts’ are between parties engaged in trade (not a consumer contract) where the value is less than $250,000 annually, from when the relationship first starts.  Unfair contract terms might include a contract that allows one party to terminate, or vary the terms, but not the other.  There is also a new prohibition against unconscionable conduct and various other changes.

Potential employment law changes

Employment law bills

The Employment Relations (Extended Time for Personal Grievance for Sexual Harassment) Bill is currently before Select Committee.  If enacted, this would extend the timeframe for raising a personal grievance for sexual harassment from 90 days to 12 months.

The Fair Pay Agreements Bill is also before Select Committee.  This provides a framework for collective bargaining for fair pay agreements for minimum terms and conditions of employment across industries or occupations, rather than just between unions and particular employers.

A new bill that would remove the restriction on trading and selling alcohol on Good Friday and Easter Sunday had its first reading in late May.

Restrictions on restraints of trade for lower-paid workers?

There are a number of employment related bills in the Parliamentary ballot.  One to watch out for is MP Helen White’s Employment Relations (Restraint of Trade) Amendment Bill.  This would restrict the use of restraint of trade clauses for lower-paid workers.  If enacted, restraints of trade would have no effect if an employee earns less than three times the minimum wage.  Employers would be required to pay half the employee’s weekly earnings for each week that the restraint of trade remains in effect, and the maximum duration for any restraint would be 6 months.

Compulsory redundancy compensation?

The Government is considering public submissions on the proposed Income Insurance Scheme, designed by the Government, Business New Zealand and the New Zealand Council of Trade Unions.  If introduced, permanent employees made redundant or who have to stop working because of a health condition or disability, would get four weeks’ notice, and their employer would continue to pay wages for four weeks at 80 percent of their usual salary when the job ends.  After this second month, the income insurance payments would begin, again at 80 percent of their usual salary, up to the current ACC cap. The payments from the employer would be in addition to any other redundancy provisions in an employment agreement.

The scheme would be administered by ACC, and funded by levies on wages and salaries, with both employers and workers paying an estimated 1.39% each.  The proposal includes up to twelve months of support for re-training.

Case law

Employees vs volunteers:  the Employment Court’s recent decision involving the Gloriavale Christian Community examined whether three people born into the community, who began working at the age of six, were in fact employees.

The question of whether an employment relationship exists involves looking at the real nature of the relationship – the label used by the parties to describe the relationship is not determinative.  Each case will depend on its own particular facts.

The defendant argued that work done by the plaintiffs between the ages of six and 14 were chores, that work done when they were 15 was part of their schooling, and work undertaken from 16 years of age was done on a voluntary basis.  The Court disagreed, and held that from the age of six, the plaintiffs were employees.   The work undertaken as children was strenuous, difficult and at times dangerous, was for the benefit of Gloriavale’s commercial activities, and were performed over a long period of time. It could not be considered chores.  At age 15, the work undertaken could not be described as educational work experience, and for other reasons, the work undertaken from the age of 16 could not be considered volunteer work.

There are a range of arrangements that sometimes call into question whether there is in fact an employment relationship, for example, students, trainees, interns, independent contractors, volunteers, and people following a spiritual calling.  We recommend seeking advice if in any doubt about whether an employment relationship exists: significant consequences in terms of wages, leave, and other minimum entitlements can arise.

Restraint of trade: earlier this year, the Employment Relations Authority issued its determination in Tova O’Brien v Discovery New Zealand Limited.   Ms O’Brien left Discovery for a new role at Mediaworks.  She argued they were not in competition as they both operated in different media formats and targeted different audiences, and therefore her restraint should not apply.   Discovery succeeded in upholding the restraint but lost on the duration of the restraint.  The notice period was taken into account – the notice period, plus the restraint period, together came to 6 months which was longer than necessary to protect Discovery’s proprietary interests. The restraint of trade period was reduced to 7 weeks (on top of the 3 months’ notice period).

Holidays Act 2003: for those that may have missed it, the Court of Appeal overturned the Employment Court’s decision in Metropolitan Glass & Glazing Ltd v Labour Inspector, Ministry of Business and Innovation and Employment.   The Court of Appeal held that Metropolitan Glass’ short term incentive bonus scheme was a discretionary payment and did not form part of the “gross earnings”.  The incentive scheme was not part of the calculation for annual leave holiday payments.New Zealand Law Awards 2022

Nominations for these awards are now open.  We would be grateful if you have the time, and are prepared, to nominate us for the employment law category of the firm awards.  If so, the link is below:

https://keymedia.eventsair.com/PresentationPortal/Account/Login?ReturnUrl=%2FPresentationPortal%2Fnew-zealand-law-awards-2022%2Fnzla22firm

For any advice from our employment law specialists, please contact us via email or by mobile:

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

Alec Nash (Solicitor) – alec@mdjlaw.co.nz or 021 352 288

 

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 Update – May 2022

Changes to the COVID-19 Public Health Response

Over the past month, several changes to the COVID-19 public health response have taken effect, including moving to the ‘Orange’ light setting of the COVID-19 protection framework, changes to gathering sizes, face mask requirements, vaccination mandates, and the opening of borders to allow international visitors from approved countries to enter New Zealand without isolating.

Two key provisions that affect workers and employers are:

COVID-19 Public Health Response (Protection Framework) Order 2021

Medical grade face masks are still mandatory for some workers under the ‘Orange’ light setting of the COVID-19 protection framework.  This mandatory requirement applies to all workers who work with members of the public, customers, or clients, on premises that are open to the public, where they are:

  • A worker at a food and drink business or service; or
  • A worker at a close-proximity business or service; or
  • A worker at an event.

Employers must have systems and processes in place to ensure, as far as is reasonably practicable, that:

  • workers at the workplace wear a face mask, or a medical grade face mask; and
  • mitigate, as far as is reasonably practicable, the risks of spreading COVID-19 where workers are unable to wear a face mask in certain circumstances.

Note that face mask requirements have also changed for the ‘Red’ light setting, which we will cover in a future update if New Zealand moves back into ‘Red’.

COVID-19 Public Health Response (Vaccinations) Order 2021

The Government mandate to be vaccinated, and for the employer to hold records of that vaccination, no longer applies to workers at:

  • an education service;
  • a food and drink business or service;
  • a gym;
  • a permitted event; or
  • a close proximity business or service.

If you are uncertain of what your obligations are as an employer or worker, please discuss your circumstances with us.

Case Commentary

There have been a number of Court cases on COVID-19 related matters over the past few months, including last week’s High Court case where Grounded Kiwi Group successfully challenged the ‘lottery’ system used for spaces in MIQ.   We expect to see more decisions from the Courts, including in the employment jurisdiction.

Two recent cases dealing with vaccine mandates include:

Yardley v Minister for Workplace Relations and Safety [2022] NZHC 291

This decision of the High Court focused on whether the vaccination mandate that applied to workers in the New Zealand Police and the Defence Services was a justifiable limitation on the right to refuse medical treatment under s 11 of the New Zealand Bill of Rights Act.  The reason given by the government for the mandate was to ensure the continuity of the public services provided by these agencies, due to the risk of absenteeism caused by the pandemic, instead of being aimed at limiting or stopping the spread of COVID-19.   The difficulty for the government was that the Police and Defence already had existing vaccination policies in place requiring their staff to be vaccinated against COVID-19.

The Court found that as the existing vaccination policies had led to a high rate of vaccination in the workforce, the mandate applied only to a small group of employees, and was therefore an unjustified limitation.  There was no evidence that such a small group of employees being vaccinated would materially affect the ability of the Police or Defence Services to provide continuity of services.

The mandate was subsequently set aside by the Court.

NZDSOS Inc v Minister for Covid-19 Response [2022] NZHC 716

As with Yardley, the Court was asked to determine whether the vaccination mandate was a justifiable limitation on the right to refuse medical treatment for workers in the health and education sectors.

In the education sector, vaccination mandates were justified in October 2021, with the Delta variant in the community.  The mandate was necessary to reduce the spread and risk of infection.   When Omicron started spreading in an uncontrollable way, the justification for the mandate became less apparent (and in fact the vaccination mandate for the education sector was removed on 4 April 2022).  Despite this, there was a justifiable reason for the vaccination mandate.

For the health sector, the Court found that a zero-tolerance approach was required given that members of the public accessing critical health services will frequently be vulnerable and often unable to make choices about the healthcare they access. It found that the public could reasonably expect that all steps reasonably taken to minimise patient exposure to COVID-19 had been taken.  The justification for mandates existed based on inhibiting the spread of COVID-19.  The government has since stated their intent to review the scope of the mandate for the health and disability sector.  If the mandate is not reduced in scope, it may become unjustified.

Justice Cooke did note that even a more limited mandate for the health and disability sector would need an assessment as to whether it is truly necessary.  Following the reasoning in Yardley, hospitals and aged-care facilities are likely to have high vaccination rates, and an ability to impose vaccination requirements on staff.

Sick Leave during COVID-19

The Omicron outbreak has led to many employers asking if they need to pay employees who are required to self-isolate.  The COVID-19 Leave Support Scheme is available to employers in this circumstance, but does raise some key issues.

The Leave Support Scheme (LSS) was updated on 14 March 2022.

The LSS is available to employers to support employees (or to self-employed people) who must isolate if directed to do so (for a wide range of reasons). This includes those who have COVID-19, or who are household contacts of someone who has COVID-19.  However, this does not include what used to be called a “casual contact” of someone who has COVID-19, or someone who is isolating due to a belief that they are at greater risk of harm.

Requirements for Support

The employee must be isolating for at least 4 consecutive days.  It does not matter if these days are working days.

From 14 March 2022, employers can only apply for the LSS payment within 8 weeks of the day that the employee’s self-isolation period ends, if the period ends on or after 14 March 2022.  Employers can still apply for the LSS for the employees whose self-isolation period ended before 14 March 2022.

If the employee is required or advised to self-isolate for longer than 10 days, or again at a later date, the employer can apply for a further LSS payment.

What can I get?

$600.00 a week for full-time employees (20 hours per week or more) and $359.00 a week per part-time employee. Use the average hours worked each week over the last 12 months to calculate.

The employer will receive 1 payment for the first 10 days, and then 1 payment for each additional 7 days thereafter that the employee is required to isolate.

If you have any remaining subsidy, after the employee has been paid their usual wages or salary, this can be used to pay other affected employees.  If you have no other affected employees, or they’re already being paid normal wages, the LSS must be repaid.

Sick Leave

The LSS is silent on whether employees should have sick leave deducted at the same time that the employer receives the LSS.  However, the purpose of the LSS is to assist employers with the costs of paying for employees who, because of COVID-19, are required to self-isolate.  If the employee is sick, sick leave should be deducted as normal, subject to usual rules about the use of sick leave.  The situation is different if the employee is not unwell during their period of self-isolation.  We recommend employers obtain advice specific to their situation.

 

For any advice from our employment law specialists, please contact us via email or by mobile, and 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
And a warm welcome to our new team member, Alec Nash (Solicitor) – alec@mdjlaw.co.nz or 021 352 288

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

The Australian bubble – what happens if the bubble bursts?

Client update – June 2021

The Australian bubble – what happens if the bubble bursts?

All Australian states and territories are participating in quarantine free travel with New Zealand; however, an outbreak or border closure at either end could occur at short or no notice, which we have seen already.  That may leave travellers stranded in Australia, or quarantining in New Zealand, and if they are employees on holiday, fast running out of planned (and/or paid) leave.

Assessing holiday requests

The starting point, for both the initial request to travel overseas, and for an unplanned extension to time off work because the bubble has burst, is that the timing for taking annual holidays needs to be agreed between the employer and employee.  Next, and as part of that, it would be possible to agree that the employee was to bear part or all of the risk of a bubble bursting while on leave.  Once agreed, and if the relevant circumstance then arises, the parties would each have clarity about what to do.

Employers are also able to withhold agreement for an employee to take leave where reasonable.  This could conceivably be done when, for example, there was an inability for a business to cover the risk of an extended absence by an employee. However, an assessment of that would (again) need to be reasonable, and case by case.

We suggest it is sensible to have considered the possible scenarios and how those will be managed ahead of those arising.  This is useful in setting the scene in terms of expectations for both sides.  We are happy to assist you with preparing a policy, or to provide advice on managing this overall issue.

A border closure – does an employer need to pay?

The starting point is that if an employee is “ready, willing and able” to work, then yes.  So, in the event of stranding, if an employee can work remotely, and is willing to do so, they need to be paid.  The details of all of that will however be important to assess – again a good reason for an employer to look at this in advance.  Where an employee cannot work remotely while stranded in Australia or in isolation in New Zealand, a period of unpaid leave can be considered. 

However, if an employee is travelling for work, an employer is most likely going to have to treat the matter differently, because (generally speaking) but for work there would have been no travel – again a good reason to address this in advance. 

Holidays Act change

Recent changes to the Holidays Act have increased minimum sick leave entitlements.  After 24 July 2021, whenever an employee next becomes entitled to their sick leave entitlement, that entitlement will be to 10 days for each qualifying 12-month period (rather than 5 days).  Employees will also only be able to carry over 10 days per year, to a maximum entitlement of 20 days per year (which is the same as the maximum now).  The statutory change will override any wording to the contrary in existing employment agreements but updating these would reflect best practice.  This change is also separate to further changes expected to be made following the Holidays Act working group’s report, so watch this space.

A further potential change to the Holidays Act is also on the (distant) horizon.  The proposed change would introduce a new form of leave named “parent-teacher interview leave”.  This would provide employees with up to four hours’ of parent-teacher interview leave every 12 months.  It remains to be seen whether a note from the teacher will be required to obtain this leave!

For any advice from our employment law specialists, either call us on 04 801 5427, or contact us via email:

Paul McBride (Partner) – paul@mdjlaw.co.nz

Guido Ballara (Partner) – guido@mdjlaw.co.nz

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz

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 – No Jab – No Job?

Client Update: February 2021

COVID-19 updates

No Jab – No Job?

One of Aotearoa’s largest retirement village providers recently stated that anyone hired to work at its facilities would need to consent to receiving the COVID-19 vaccination.  It also stated that if an existing employee objects to receiving the jab, then it will look to manage the risk through personal protective equipment (PPE), particularly when borders open and the risk of a COVID-19 outbreak may increase.

So, can employers actually require job applicants, or existing employees, to show they have received the COVID-19 vaccination to be offered, or keep, their employment? 

The starting point here is that there can be no blanket, or even a ‘one size fits most’, rule.  Instead, a case-by-case approach will be required, and risk assessments will need to remain dynamic as the circumstances change. 

Requiring confirmation of vaccination pre-employment, or requiring existing employees to be vaccinated, could be considered a breach of the Human Rights Act 1993.  Relevant prohibited grounds of discrimination under that Act include religious belief, ethical belief or disability.  There are some exceptions based on avoidance of risk.  The New Zealand Bill of Rights Act 1990 also states that a person is entitled to refuse medical treatment, which will include being vaccinated.

Balanced against the rights and protections in those Acts, employers are also required under the Health and Safety at Work Act 2015 to take all reasonably practicable steps to ensure employees’ (and others’) health and safety.  That Act requires an assessment of the type of work being performed, the worker’s own circumstances, and, as part of both, considering the available steps to avoid or mitigate risks (such as risk of contracting or spreading COVID-19).

The availability (or otherwise) of a vaccine would also clearly affect all of this.

The extent of any community transmission, and so of risk of infection, would also be relevant.  

We suggest that if you are looking at how to approach the ongoing risks of COVID-19 for your business, you contact us for tailored advice about what measures you can put in place.

Financial assistance

There are several kinds of financial support available for businesses and workers.  Some of the new subsidies available include:

  • Resurgence Support Payment: this helps businesses affected when there is a change from Alert Level 1 to higher Alert Levels for a week or more. The payment will help cover wages and fixed costs.  There is a standard payment available for each eligible business, with an additional payment for each employee, up to a total of 50 full time equivalent employees.  Eligibility criteria includes a 30% drop in revenue or capital raising ability over a 7-day period following the increased Alert Level. Other criteria also apply;
  • Short-Term Absence Payment (STAP): this is a one-off payment of $350 for each eligible worker who needs to miss work while they (or a dependent or close contact) waits for a COVID-19 test result, in accordance with public health guidelines.  An employer can apply once for each eligible employee in any 30-day period, or more frequently if the employee has been told by a health official or doctor to get another test;
  • Leave Support scheme: this is a lump sum payment to cover 2 weeks’ wages for employees who are required to self-isolate and cannot work from home;
  • : the Government has announced wage subsidies will be available again if we move to Alert Levels 3 and 4 anywhere in New Zealand for 7 days or more.  The support would be provided in two weekly payments for the duration of the Alert Level period.

More information on these, including criteria, can be found at www.covid19.govt.nz.  We are also happy to assist.

In other COVID-19 related news:

  • COVID-19 vaccinations for border workers started last week.
  • The first Employment Court judgment on COVID-19 lockdown wages was released just before Christmas 2020: Gate Gourmet New Zealand Ltd v Sandhu.    

Employees were paid at 80% of their wages during lockdown, with the option of using annual holiday entitlements to top up to 100%.  The minimum wage rate increased during lockdown, and an issue arose about whether that increase had to be applied to the payments made.  The majority of the full Employment Court held the Minimum Wage Act 1983 applies only to hours actually worked.  That means there is no statutory minimum wage entitlement for times when employees are not working.  There may be other basis for payment (e.g. contractual) but this was not addressed in the case. 

More Employment Court judgments addressing obligations and entitlements during lockdown are expected soon.  Watch this space.

Other employment law changes

  • A Bill has been introduced to increase minimum sick leave entitlements from 5 days per year to 10 days per year.
  • The Government has announced a new public holiday – the first in almost 50 years.  The new Matariki public holiday will be first observed next year, on 24 June 2022.  The date will change each year, and will usually occur at the end of June and the beginning of July.
  • Minimum wages rates will increase from 1 April 2021.
  • The Government has also accepted all the recommendations made by the Holidays Act Taskforce, and new Holidays legislation is expected to be introduced in early 2022.

For any advice from our employment law specialists, either call us on 04 801 5427, or contact us via email:

Paul McBride (Partner) – paul@mdjlaw.co.nz

Guido Ballara (Partner) – guido@mdjlaw.co.nz

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz

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

What does a majority Labour government mean for employment law? – November 2020

Before the election, Labour made a raft of promises to reform employment law.

Many of these promises were the results of working groups (and their recommendations) that predated the election. Now, as a majority government, it is likely that at least the lion’s share of Labour’s proposed changes will be made a reality, and potentially soon.

We set out below what Labour’s pre-election promises were and recommend that if you think you are going to be impacted, you speak to us about how you can prepare.

More money

Increasing minimum wage

The current minimum wage rate is $18.90 per hour. Labour promised to lift the minimum wage to $20 per hour by 2021. No specific date for that increase has yet been proposed, although this could  be from 1 April.

Beyond 2021, Labour has said that it will take a “balanced” approach to further minimum wage increases, and that it will signal any increases well in advance.

Living wage for public sector contractors

The “living wage” is currently $22.10 per hour. This is calculated independently each year by the New Zealand Family Centre Social Policy Unit.  The living wage has no legal foundation, and various definitions exist about what a living wage is intended to be (eg sole earner supporting a family of four, or a single individual having a modest quality of life.  Interplay with benefits and subsidies are another factor).

Labour promised that as current government contracts, for example for cleaning, security or catering, end, public service agencies will be required to include the payment of a living wage as part of the negotiations for new contracts.

Labour further committed to expanding this to cover those workers who fall under government service contracts in the wider state service, including DHBs, though it has not indicated a timeframe on this.

More leave

Reviewing the Holidays Act 2003

Long derided as unworkable, Labour promised to simplify the Holidays Act 2003.

A taskforce was created to make recommendations for changes to the Act in May 2018, and an interim report from this taskforce was submitted to then Workplace Relations Minister Ian Lees-Galloway later that year. No further progress has been announced on this issue.

Labour has said that broadly there is a lack of guidance about how the Act works, poor implementation by payroll systems, and a lack of transparency around holiday pay calculations, all of which increase compliance costs. How a simplification will look is yet to be determined, as there has been no further report from the taskforce, or government action announced following the earlier report. Watch this space.

Doubling sick leave and increasing bereavement and family violence leave

Sick leave, currently 5 days per year (after 6 months’ continuous employment), will be doubled to 10 days per year. It is unclear at what point in the employment that entitlement will arise, that is, after 6 months in employment or on commencement of employment. In this regard, Labour has said for example that it will amend the Holidays Act to allow employees to take bereavement leave and family violence leave as needed, and before they have been in employment for 6 months. It could therefore take the same approach with the promised additional sick leave.

As to when these changes are to be made, at least in respect of sick leave, Labour promised that in light of COVID and a greater awareness about taking time off when unwell, legislation to extend sick leave entitlement will be introduced within the first 100 days of its second term. 

Matariki on June 6 as a public holiday

The last public holiday to be introduced was Waitangi Day – around 50 years ago.

Labour promised to introduce what would become New Zealand’s 12th public holiday – Matariki, to fall sometime in the winter period. Matariki is the start of the Māori New Year.

The exact date of the public holiday has yet to be proposed, but it is likely to be June.

More Changes

‘Dependent contractors’

Labour proposes to fill the ‘gap’ between the categories of independent contractor and employee by creating a “dependent contractor” category. Workers in this category are said to be effectively under the control of an employer, but do not currently receive the legal protections and minimum entitlements that employees receive.

To determine whether someone is a “dependent contractor,” Labour proposes looking at such relevant factors as who assigns work to them, whether they need permission to take time off, or how they are paid.

The implications for all parties are not yet clear, but at a minimum Labour proposes to extend to dependent contractors the right to collectively bargain and statutory minimum entitlements, such as sick leave.

Fair pay agreements (FPAs)

FPAs would be agreements as to minimum terms and conditions of employment across an entire industry or occupation.

An FPA working group was set up in June 2018 to make recommendations on the design of such a sector-level bargaining system. It provided a report with recommendations to then Minister Lees-Galloway, found here: https://www.mbie.govt.nz/assets/695e21c9c3/working-group-report.pdf

Broadly, the working group proposed that an FPA would provide a collective bargaining mechanism which would complement the current employment relations and employment standards regulatory system.

It appears this mechanism would also allow the Employment Relations Authority to make a binding determination if parties were unable to conclude an FPA.

Now a majority government, it is reasonable to assume that Labour intends to implement the recommendations (or a form of those) provided by the working group.  

In addition, Labour plans to amend the Employment Relations Act 2000 in terms of what could comprise conduct that undermines a collective agreement.

Pay equity

Labour promised, though with a lack of specificity, to address pay equity for women, aged workers and all ethnic groups.

Broadly, Labour stated it would improve transparency for women by ensuring that there are better records of pay equity across New Zealand, including by age and ethnicity, as well as gender. These measures are in addition to the Equal Pay Amendment Act which just came into force and which provides for negotiated pay equity outcomes.

Security guards

There are around 5,500 security guards in New Zealand. Labour promised to add security guards to Schedule 1A of the Employment Relations Act 2000 so that they would be classified as “vulnerable” workers covered by sub-part 1 of Part 6A of the Act. This would mean security guards would have the same automatic ability to transfer to a new employer in a contracting in or out situation as cleaners and other existing listed workers enjoy now.

Seafarer welfare centres

Under the Maritime Labour Convention, New Zealand has an obligation to provide for crews who come ashore here, but this is currently funded largely through charitable sources. In many cases, the facilities are not considered adequate.

Labour promised to amend the Maritime Transport Act 1994, enabling the maritime levy to fund the services required for seafarers’ wellbeing.

Raising the age for workers allowed to perform hazardous work, and reintroducing the right to elect health and safety representatives

Health and safety representatives are part of the Health and Safety at Work 2015 framework. The previous National government removed the right of workers in businesses with fewer than 20 staff to elect their own health and safety representative. Labour promised to reinstate this ability.

Also in this area, Labour promised to raise the entry into hazardous work age from 15 to 16, which will align with the school leaving age, and is consistent with the International Labour Organisation’s recommendation 190 on the Worst Forms of Child Labour.

New Privacy Act 2020

As a final note, we remind you that in less than a month (1 December), the new Privacy Act 2020 comes into force. This Act has sharper teeth; penalty provisions are applicable, as are positive duties to report breaches to the Office of the Privacy Commissioner and affected individuals in certain circumstances. We recommend that you seek advice if you are unsure of the implications of this new Act.

For advice from our employment law specialists, either call us on 04 801 5427, or contact us via email:

Paul McBride (Partner) – paul@mdjlaw.co.nz

Guido Ballara (Partner) – guido@mdjlaw.co.nz

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz

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

Recent privacy and employment law (and COVID-19) updates – August 2020

Over the past few weeks there have been a number of significant developments affecting employers, including introduction of new privacy and employment legislation, and the first (of likely many) cases dealing with employers reducing wages to 80% without consent during lockdown.  Information about these are set out below.

New privacy legislation

New privacy legislation was passed by Parliament in late June.  There are a number of new obligations on businesses, including:

  • A legal obligation to notify both the Office of the Privacy Commissioner, and affected individuals, of any breach of privacy if that breach poses a risk of serious harm.  Penalties can be awarded for a failure to notify;
  • The Privacy Commissioner will now have the power to demand release of personal information (before it could only make recommendations);
  • The Privacy Commissioner will be able to issue compliance notices: failure to comply may result in fines of up to $10,000.  New criminal offences are also introduced;
  • The new legislation governs cross-border disclosures, with controls on disclosing New Zealanders’ personal information overseas; and
  • Application of the new law to businesses dealing with New Zealanders’ personal information, whether they have a legal or physical presence in New Zealand or not.

This new law comes into force on 1 December 2020.  Please let us know if you require any advice on this.

Triangular Employment Relationships

A new law came into force on 27 June 2020 allowing employees to raise a personal grievance against not only their employer, but also any “controlling third party” who has control or direction over the employee’s work.  Employers can also apply to add a “controlling third party” to personal grievance claims brought by their employees.

A triangular employment relationship is where a worker is employed by one employer, but works under the control or direction of another.  Secondment arrangements may be impacted, as well as organisations who engage temporary workers/contractors from labour hire or personnel/recruitment companies (as well as the labour hire or personnel/recruitment company itself).

The criteria for adding a controlling third party to a grievance claim include that there is an arguable case the third party’s actions caused or contributed to the grievance, and notification timeframes were complied with.   Different 90-day timeframes apply for notification to the controlling third party by either the employer or employee:

  • By the employee: 90-days beginning with the date on which the action alleged to amount to a personal grievance occurred or came to the notice of the employee (the standard timeframe);
  • By the employer: within 90-days of the personal grievance being raised with the employer (this is new).

This means that a “controlling third party”, previously shielded by contractual arrangements being between the worker and labour hire agency (or other employer), now has legal exposure to any grievances that an employee may raise.  Assuming the employee is successful on their claims, and that the actions of the controlling third party caused or contributed to the grievance, the controlling third party may be ordered to pay reimbursement of wages and/or compensation.  The extent to which the actions of both the employer and the third party contributed to the situation must be taken into account in determining what remedies are payable by each.

That means that where the controlling third party no longer has work for the person to do, it might not be as simple as notifying the original employer/labour hire company.   As usual, the best defence for any personal grievance is by acting justifiably, including by being as fair and reasonable as possible in the circumstances. This could involve the third-party consulting with employees hired on contract if a situation that will affect them arises.

If you are a labour hire or recruitment company, your legal position is not necessarily altered, but we suggest that it is best practice for you to keep communication lines open with your employees and clients, addressing any problems before they arise. If a personal grievance is raised, you and your client might both need to respond to the employee.

Covid-19 updates

Recent cases

Recent Employment Relations Authority determinations consider whether an employer’s decision to pay staff 80% of their wages during lockdown, without the consent of those employees, constituted an unlawful deduction under the Wages Protection Act 1983 and/or their employment agreements.  The result in both cases was the same: reduction of wages to 80% of usual salary or wages, without the consent of employees, was unlawful.

In one case, Sandhu and others v Gate Gourmet New Zealand Limited [2020] NZERA 259, reduction of wages to 80% resulted in employees being paid less than their minimum wage entitlements, which was unlawful under the Minimum Wage Act 1983.  The employer argued that no money was owing as the employees were not working.  The Authority disagreed. 

Gate Gourmet provides inflight catering services at Auckland airport.  Although it is considered an essential service, there was very little work to do and it had to partially shut down operations.  Employees were entitled under their employment agreement to be paid minimum wage for full time employment (minimum 40 hours a week).   Employees were offered three options: (a) take all of their entitled annual leave, (b) be paid 80% of their normal pay, or (c) be paid 80% of their normal pay and use their annual leave entitlements to supplement their income to receive 100% of their normal pay.  Although there was initially some agreement, the union later objected on the basis Gate was not entitled to reduce the pay of any employee below the minimum wage of $756 per week for a full-time employee. 

The Authority found that the parties cannot contract out of the Minimum Wage Act 1983, so the agreement or otherwise of the parties to the proposal was irrelevant. If the employees were ready, willing and able to carry out their function in an essential industry, then Gate was required to pay at least the minimum wage regardless of any agreement they may have made to the contrary.  The employees were entitled to be reimbursed the shortfall in wages.  No penalty was awarded however because of the difficult and complex situation the parties found themselves in as a result of the pandemic.

In the second case (Raggett and others v Eastern Bay Hospice Trust t/a Dove Hospice [2020] NZERA 266), after Dove Hospice’s retail stores were closed, employees were paid 80% of their wages and then made redundant.  The employer extended the notice period to provide employees with additional financial support during lockdown, with the first half of the notice period to be paid at 80%, and the second half at the wage subsidy rate.  This was also considered to be unlawful:

  • None of the grounds for deducting money from wages set out in the employment agreement covered the circumstances caused by Covid-19 restrictions;
  • The workers were ready and willing to work.  They would have been able to fulfil their obligations under their employment agreements had it not been for the Covid-19 restrictions and Dove Hospice’s decision to not require them to work;
  • There was a contractual obligation to pay, and no consent to deduct from, full wages;
  • Where Dove Hospice extended the contractual notice period, it could not then set a different remuneration rate for that.  The extended notice period at a new rate would have been allowed had employees agreed to that – here it was imposed on them.  

The Authority ordered Dove Hospice to pay the shortfall in wages.  The question of whether a penalty should be ordered has been left open, until the second part of the claim dealing with the dismissal on grounds of redundancy has been heard. 

These are early cases and the approach taken by the Authority cannot be taken as the last word on the subject.

The Employment Court also dealt with an application from a former employee to freeze the assets of the employer on an interim basis, which was granted. The employee’s claim includes that she was only paid the wage subsidy during lockdown, instead of her usual wages, and was eventually dismissed.   The Court has not yet considered this claim, or issued a decision on reduction of wages during lockdown – watch this space.

In the meantime, several recent cases have dealt with the more general issue of remote participation in the Covid-19 environment. The Employment Court has shown a willingness to progress matters by allowing the hearing of evidence by audio-visual link. The Court has also granted applications to serve documents on defendants living outside of New Zealand. It is assumed there will be no opportunity to attend a hearing from overseas (at least in the near future) and so those cases are likely to proceed by AVL also.

Wage Subsidy Extension

In other Covid-19 related news, the Wage Subsidy scheme has ended.   The Wage Subsidy Extension scheme is currently available.  Applications are open from 10 June to 1 September 2020.  Employers can apply to cover the wages of their employees for an 8-week period.

There have been some changes to the criteria for accessing this support.  To qualify, employers must have experienced at least 40% decline in revenue for a continuous 30-day period, as compared to the closest period in 2019.  The relevant 30-day period must be in the 40 days before an employer applies for the Wage Subsidy Extension.  The decline must be Covid-19 related.   The business must also have taken active steps to mitigate their loss. 

The employees named in the application for the Wage Subsidy Extension must be retained for the duration of the subsidy extension.  If an employee has been made redundant, a Wage Subsidy Extension application cannot be made for that employee, unless the redundancy notice is cancelled and the employee is re-hired.

Employers must try their hardest to pay employees at least 80% of their usual wages.  There is no criterion about what ‘trying their hardest’ looks like.    If that is not possible, then at least the wage subsidy extension rate must be paid.   Consent issues will arise.

The Government has confirmed there will be no further wage subsidy support available after 1 September, though other support remains available, including income relief for people who have lost their jobs as a result of Covid-19 and small business loans.

For advice from our employment law specialists, either call us on 04 801 5427, or contact us via email:

Paul McBride (Partner) – paul@mdjlaw.co.nz

Guido Ballara (Partner) – guido@mdjlaw.co.nz

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz

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 – Moving to Level 2

COVID-19 Newsletter #5 – Moving to Level 2 – What you need to know about “Playing it Safe” (12 May 2020)

The Government has announced that New Zealand will move to Level 2 in stages, starting this week.  Retail, malls, gyms, and cinemas can open from 14 May, schools from 18 May, and bars from 21 May, as long as that can be done safely.  Domestic travel will also be allowed.

We have set out below the general principles that will determine how businesses can reopen at Level 2. Please keep in mind that the situation (and government and industry guidance) is constantly evolving.

Can I reopen under Level 2, and how?

If you can operate safely at Level 2, you may reopen. 

‘Safely’ means that the risk of contracting COVID-19 is reduced. To achieve that reduction, you must observe the following requirements:

  • Social gatherings can be no more than 10 people.
  • Contact tracing of all visitors is to be implemented. Worksafe’s expectations of how this should operate can be found here: https://worksafe.govt.nz/managing-health-and-safety/novel-coronavirus-covid/our-expectations-about-contact-tracing/
  • There must be a physical distance of 1 metre between groups of customers, in combination with other effective controls. If other effective controls cannot be put in place then the distance between groups of customers should be 2 metres.
  • General hygiene practises are maintained, like those required under Level 3 (hand washing, regularly disinfecting commonly touched surfaces, coughing or sneezing into elbows).

Wherever possible, businesses are encouraged to continue working from home or consider other alternative arrangements, such as working in shifts and practicing physical distancing. If your staff are coming back onsite, you should discuss with them ways that you can work together to minimise the risks. You should also expect a reduced level of service on public transport, due to social distancing, which may cause staffing delays.

Additional rules for some industries

For some industries, these requirements plus additional specific rules apply.  We have outlined those below, and recommend that you keep an eye on the MBIE website for further industry specific updates in the coming days. You can also find some Worksafe endorsed industry guidance here: https://worksafe.govt.nz/managing-health-and-safety/novel-coronavirus-covid/endorsed-industry-guidance/

Hairdressers, beauticians, home help:

If you cannot operate without close client contact, you must have the following:

  • A robust contact tracing system in place.
  • Good hygiene practices, including disinfecting commonly touched surfaces and equipment.
  • Appropriate PPE to be worn by staff (the Ministry of Health will provide guidance on how to obtain this).
  • Minimal contact with each client as far as that is possible.

Hospitality:

Bars, restaurant and cafes will be able to let customers visit their premises.  Additional measures apply, referred to as the ‘three S’s’ principle:  groups of customers must be physically separated 1 metre apart, customers must be seated and cannot stand, for instance, at the bar, and each table can only be served by the same server.

PPE is not required.

Can I undertake some preparation to reopen, and how?

If you need to prepare for reopening, you may undertake this only if you observe the current rules for Level 3.  Level 3 is broadly characterised as ‘contactless,’ meaning customers cannot visit you (for example) instore, and you must be observing stringent hygiene measures.

If you’re unsure about what Level 3 should like for you, please refer to our previous newsletter on the matter or contact us for advice.

If I am already open, does the change from Level 3 to Level 2 mean anything for me?

Yes, it means that customers may now visit you onsite. You will also need to implement a contact tracing register.

The stringent hygiene measures you should have been observing under Level 3 remain unchanged.

Is there anything else I need to know?

We recommend that if you’re unsure about what operating safely under Level 2 will look like for you, you keep an eye out for Government guidance specific for your industry in the following days, contact any industry organisations for further guidance, or reach out to us with your questions.

Other updates:

The Covid-19 Essential Workers Leave Support scheme has been extended since our newsletter of 9 April.  This support, for workers required to self-isolate, is no longer only available for essential workers.  It is now available for any workers who meet the eligibility criteria (apart from those employed in the state sector).  The name of the scheme has also changed – it is now called ‘Covid-19 Leave Support Scheme’.   Please see our newsletter of 9 April for information on eligibility requirements, or contact us directly for advice.

The advice provided here is general. 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 – Level 3 Update

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

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

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