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

COVID-19 Government Support – What you may be eligible for as employer

You have probably seen that the Government has announced a COVID-19 package.

Assistance is applicable in two scenarios:

  • you are significantly impacted to pay wages because of the economic impact (30% or more revenue reduction), or
  • your employees are absent from work because of COVID-19.

Am I eligible?

You will be eligible for the subsidies detailed below if you can show that you have suffered, or are projected to suffer, at least a 30% decline in revenue (not profit) compared to last year, for any month between January 2020 and the end of the scheme in June 2020.

Applications can also be made based on forecast revenue loss within the period of the scheme.

All sole traders and the self-employed are also eligible.

What wage subsidies can I apply for?

Wage subsidies for eligible employers will be $585.50 per week for full time employees and $350 per week for part-time employers, for a period up to 12 weeks. The maximum that you can receive is $150,000.

You will need to undertake the following:

– A declaration that, on your best endeavours, you will continue to employ affected employees at a minimum of 80% of their income for the duration of the subsidy period (ending June 2020).

– You must take active steps to mitigate the impact of COVID-19 and sign a declaration form to that effect. This could look like engaging with your bank or seeking other financial advice.

You can apply now and for the next 12 weeks. Applications can be made here:  https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html#null

MSD aims to make the payments within 5 working days from the date of receiving the application (depending on demand).

What leave subsidies can I apply for?

If your Employees are absent because they have contracted COVID-19, are undertaking government ordered self-isolation or are caring for a dependent in either scenario, you will be eligible for a subsidy to cover the cost of this absence. Your employees must not be able to work from home during this absence.

This absence must have started on 17 March 2020 and can be backdated to this date. Employees who have travelled overseas since 16 March 2020 will not be eligible for their period of self-isolation (apparently on the basis that they have chosen to place themselves in that position).

The subsidy is $585.80 per week for full time staff and $350 per week for part time staff, up to a maximum of 8 weeks. If your Employee is required to self-isolate more than once, you will be able to apply for the subsidy on an ‘as needed’ basis.

These entitlements do not affect existing entitlements, meaning that the Employee’s sick and annual leave balance will not be impacted.

You will need to apply to MSD for these payments https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html#null

MSD aims to make the payments within 5 working days from the date of receiving the application (depending on demand).

The Government has also announced a relaxation on taxation requirements for this year, and we recommend you look into your eligibility for support on that basis.

For advice from our employment law specialists on any of the issues covered above, either call us on 04 801 5427, or contact us via email, and please stay safe:

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

March 2020 – References – it pays to check

Whether you are asked to provide or are seeking a reference, a recent Human Rights Review Tribunal decision confirms that care is needed. 

Director of Human Rights Proceedings v Katui Early Childhood Leaning Centre Limited [2019] NZHRRTinvolved an employee (Ms A) who thought she had secured a job at Waatea Early Childhood Centre, and so resigned from Katui Early Childhood Centre.  However, on arrival at Waatea she discovered that her references, from Katui personnel, had not been satisfactory and so her employment at Waatea was terminated.  Ms A made a complaint to the Office of the Privacy Commissioner about Katui’s interference with her privacy, and the Director of Human Rights Proceedings then took her case to the Human Rights Review Tribunal.

The issue was whether Katui had breached Privacy Principle 11 and if so had interfered with Ms A’s privacy.  For the purposes of this case, Principle 11 states that:

“An agency that holds personal information shall not disclose the information to a person or body or agency unless the agency believes, on reasonable grounds … that the disclosure is authorised by the individual concerned”.

In other words, when Katui provided references to Waatea, was this unlawful?

The answer was yes.  To start with, the Tribunal found that the references provided did contain personal information about Ms A because they were about her, despite involving the referees’ opinions.

Next, the Tribunal found that Ms A had not authorised anyone from Katui except Ms T (her former direct manager) to disclose her personal information, i.e. to be a referee for Ms A.  However, Ms T was not (twice) the person who answered the telephone when Waatea called. 

Finally, the Tribunal found that what the (unofficial referees) said about Ms A, which was not complimentary, did cause Ms A harm.  In this regard, she was not able to provide the referee she had desired for a job that was clearly important to her, and lost that job.

Fortunately for Katui, damages were a fairly modest $3,000.  As part of that, the Tribunal considered that Ms A was unlikely to have secured the new job in any event.  It also found Ms A should have told Waatea expressly that it could only to speak with Ms T.

The takeaway from this case is that whether you are the prospective employer or the employer being approached to give a reference, it is critical to ensure that any individual who provides comment (and not simply the organisation) has the requesting employee’s express consent to be their referee.  And that the organisation knows who is able to speak, and contact is directed accordingly.  Also keep in mind that ‘opinion’ can still be ‘personal information’.

For advice from our employment law specialists on any of the issues covered above, 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

Availability provisions – Postal Workers Union of Aotearoa Inc v New Zealand Post Ltd (July 2019)

An ‘availability provision’ is a provision in an employment agreement which requires an employee to make themselves available for work on top of their usual hours of work.  Reasonable compensation is required for this availability.

In the recent Postal Workers case, the Court was required to decide whether NZ Post could require delivery agents (essentially posties) to perform extra hours of work in addition to their standard hours without compensating them for their availability.  The relevant clause stated that posties may be required to work reasonable overtime in excess of their standard hours.  No reference to compensation was made.  NZ Post’s arguments included that the clause was not an availability provision, the Employment Relations Act (“the Act”) was really aimed at preventing ‘zero-hour’ contracts, and that the posties were remunerated by way of salary, which included reasonable compensation for availability.  The Employment Court found in favour of the posties, with the following themes emerging:

  • An employee’s free time is a commodity which has value.
  • The Act is not limited to addressing ‘zero-hour’ contracts, but ensures that reasonable compensation is payable to employees who make themselves available for their employer’s benefit.
  • Employment agreements with availability provisions will be unenforceable if they are not drafted appropriately.

What this all means in practice is that, in the absence of a compliant availability provision, an employee may refuse to work outside their usual hours of work.  In turn, ‘compliance’ will depend on a number of factors such as: the structure of work, the type of remuneration and how the requirement for availability is drafted in the employment agreements.  What we can also say is that simply being paid a salary will not mean an employee has a compliant availability provision – as is often the case, the devil will be in the detail.

‘Triangular employment relationships’ – new Bill to widen the personal grievance net

The classic example of a ‘triangular employment relationship’ is a labour hire model.  Recent changes to employment law via the Employment Relations (Triangular Employment) Amendment Bill, will create an expanded personal grievance regime.  This includes that the new law will enable personal grievance claims to be brought against controlling third parties – in the labour hire model, that is the business the workers are doing the work for.  This significant change has the potential to affect a large number of businesses across various sectors.  The net has been widened.

For advice from our employment law specialists on any of the issues covered above, 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

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

Significant change has arrived (May 2019)

As you may have heard, Parliament has been busy on the employment law front.  In this update, we summarise the main changes you should to be aware of:

Employment Relations Act:

  • 90 day trial periods: as of 6 May 2019, these can only be used by employers with 19 or fewer employees. Probationary periods (which are not the same thing) are still available
  • Set rest and meal breaks are again required (with very limited exceptions)
  • Reinstatement is again the primary remedy in unjustified dismissal cases
  • Collective agreements and bargaining – the changes include:
    • There is a new code of good faith for collective bargaining
    • A modified version of the 30-day rule is back
    • There are new employer obligations (and a new required form) regarding providing information to employees and unions
    • A collective agreement needs to be concluded unless there is a genuine reason based on reasonable grounds not to, and an employer cannot opt out of MECA bargaining as of right
    • Pay rates now needs to be included in a collective agreement
    • There are changes in relation to strikes and lockouts
    • Union representatives no longer need employer consent to enter a workplace
    • Union delegates are allowed reasonable time during working hours to perform union-related duties
  • Part 6A changes: all vulnerable employees (e.g. cleaning staff) can again elect to transfer on the same terms and conditions, as the previous 19 or fewer exemption has been removed

Minimum Wage Act: The adult minimum wage has increased to $17.70 (gross) per hour, and other minimum rates have also increased

Domestic Violence – Victims’ Protection Act: Affected employees are now entitled to take Domestic Violence Leave and to request temporary changes to their terms and conditions of employment

Employment Relations Infringement Regulations: Employers can now be fined $1,000 for failing to have a written employment agreement (as well as still being liable for ER Act penalties)

For advice from our employment law specialists on any of the issues covered above, 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

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