Issue #2: More COVID-19 FAQs Answered Here
Question: Do I need to consult or get agreement to reduce pay?
The COVID-19 lockdown is an unprecedented event, and there are differing views about whether you need written agreement to a pay reduction, or if you only need to consult. It is generally agreed that a unilateral pay reduction with no consultation is a high risk strategy. We recommend running a short consultation and seeking written (email or text) feedback or agreement prior to confirming the temporary change to terms and conditions. You can also use this opportunity to have employees indicate in writing if they would like to ‘top up’ their pay by taking some annual leave (e.g. one day per week).
Question: Can we use annual leave balances to top up the wage subsidy?
If you are passing on the wage subsidy, employees may agree to take Annual Leave to top up the subsidy. Likewise, if you have reduced pay to 80%, they may request or agree to take one day Annual Leave per week to maintain 100% pay. You may also direct an employee to take Annual Leave, but you must first try to reach agreement. If agreement can’t be reached, you must give 14 days’ notice and it must be from the Annual Leave ‘entitlement’ – you cannot direct an employee to use their ‘accrued’ balance.
Question: If I accept the wage subsidy can I make people redundant during this period if things change?
You need to try your best to retain your employees you are currently receiving the wage subsidy for. If you applied for the wage subsidy for any employees after the scheme was modified at 4pm on 27 March 2020, you must retain those employees or you will be in breach of your obligations. The WINZ website states that if you breach your obligations by making someone redundant you need to repay the subsidy within five days.
Question: What are the options if someone has signed an employment agreement but haven’t started work yet?
If you have offered someone work and they have accepted, they have the same rights as other employees – even if they haven’t started working for you yet. You can apply for the wage subsidy and pass this on from after their start date. Just like with current employees, you need to consult if you wish to change their terms and conditions (reduce hours and/or pay) or make them redundant. If you have a Business Interruption clause in your agreement, you may choose to invoke this. But remember, even with this clause you must ask for feedback before confirming suspension without pay.
Question: What happens if an employee was due to return from parental leave during the lockdown period?
Similar to the above, if this was the agreed date for the employee to return to work you must proceed with that plan. Therefore, you can apply for the wage subsidy for this employee and pass it on to them from their planned return date. You should still consult with the employee prior to confirming any changes to pay or hours during the lockdown period – even if they haven’t returned to work yet.
Question: An employee had an overseas holiday booked to take place during the lockdown and had Annual Leave approved. Now they want to retract that request (we are not an essential business) but I want them to take the Annual Leave. Can I enforce that?
Technically you can, but for fairness and simplicity, many employers have wiped all Annual Leave requests from the start of the lockdown and will review this at the end of the initial 4-week lockdown period.
Question: Can/should casuals qualify for the wage subsidy and be paid something during the lockdown?
Yes, they can – you use average weekly hours to calculate the amount. However, as casuals should have no expectation of ongoing work and you have no obligation to offer it, technically you don’t need to apply for and pass on the subsidy. If you review a casuals average hours and decide to apply for the wage subsidy scheme on their behalf, you should also consider whether they are a true casual. If they regularly work a pattern of hours and could reasonably expect this to be ongoing, they may be considered ‘permanent’. An important definition if you need to restructure down the track.
Question: What are the potential scenarios where we might be at risk of having to pay back the wage subsidy to the government?
You need to repay some or all the COVID-19 Wage Subsidy if:
- You no longer meet the criteria for the subsidy
- You’re not meeting your obligation to use the subsidy to retain and pay your employees,
- You’ve received insurance (eg, business continuity insurance) for any costs covered by the subsidy
- You have provided false or misleading information in your application.
You can check the obligations here.
Obligations if you applied before 4pm on 27 March
Obligations if you applied on or after 4pm on 27 March
You can also make a repayment if you were overpaid or made a mistake on your application.
Question: Did the minimum wage increase go ahead? I’m worried that I won’t be able to access the system to make the changes.
The adult minimum wage rate increased $1.20 from $17.70 to $18.90 per hour on 1 April 2020. However, MBIE recognises that some employers may not be able to action the increase immediately, while also complying with lockdown requirements. If you cannot process the raise in time, you should communicate with your employees about this. You should then process the increase as soon as you are able to do so in compliance with any COVID-19 restrictions in place. You will need to pay employees back for any hours that were worked, but for which the required pay rate could not be processed at the time.
Question: Does the wage subsidy always need to be passed on in full?
Not always. If your employee’s usual wages are less than the subsidy, you must pay them their usual wages. Any difference should be used for the wages of other affected staff.
Question: Can I reduce an employees pay if they’re on minimum wage but can’t work? What happens when they come back to work – partially or fully?
During the lockdown and beyond, you must still pay workers for the work they do. This means employees—regardless of whether they are working from home, or from premises to do essential work—must be paid at least the new minimum wage for each hour they work. If the employee cannot work during the lockdown and does not wish to use any Annual Leave entitlements, you can access the wage subsidy and pass this on in full without topping it up to minimum wage for the employees normal hours, or requiring the employee to do any work. You should still follow a consultation to implement this reduction in pay.
Question: What should employees be paid for the public holidays over Easter?
For employees who would have otherwise worked on the public holiday (had the lockdown not been in place and had not been a public holiday), then they should be paid for that public holiday at their relevant daily pay as set out in the Holidays Act. If the employees pay has recently been reduced, then the relevant daily pay rate is this reduced pay rate – unless otherwise agreed with them. We know some employers who have reduced pay are choosing to pay public holidays at the employees ‘normal’ full pay.
Question: How do we manage pay for staff returning to work on reduced hours – specifically the point at which we have to ‘top up’ the wage subsidy (if the wage subsidy is what we are currently paying)?
Employees must be paid for any hours worked at a minimum – however, the wage subsidy can go towards this pay. However, many employees who cannot work and have taken a pay reduction during the lockdown, will expect to be paid more when they return to work. How you manage this is really going to depend on what pay reduction you have applied, and the hours worked on return. We think it all comes down to communication. If you think that pay reductions will need to remain in place even when employees return to work (either at normal or reduced hours) it is important that you communicate this possibility early and then consult with employees fully when the time comes.
Question: What are our H&S obligations when people do start returning to work?
Employee safety is paramount. It is likely that when employees return from the lockdown changes will need to be made to the way you work to keep everyone safe. We will be looking to government advice when the time comes and implementing all recommended measures (e.g. social distancing) as a minimum. We also recommend the following:
- If you don’t have a Health and Safety Manager, appoint one person to be the COVID-19 co-ordinator. Communicate this person (ideally a senior manager) as the first point of contact for any related matters
- Identify your risks and work to eliminate, isolate or mitigate these risks
- Involve employees in a brain storming session to get their ideas on how best to manage the risks to themselves and their colleagues
- Make an emergency plan
- Review your sick leave, absence and travel policies. You may need to issue amended versions of these policies for the duration of the COVID-19 threat
- Communicate regularly, in over-drive, with employees via email, text and social media
- Publicise the supported need for employees to go home if unwell or not to come in if unwell
- Publicise the hygiene recommendations like hand washing, management of coughing/sneezing etc.
- Publicise the Ministry of Health guidelines and information
- If practicable, promote remote working/video conferencing and flexible work options where required
- Keep up-to-date with the current situation in the country and follow official advice as it is presented
- Develop a relationship with a medical provider/doctor. Alongside Healthline’s dedicated COVID-19 number (0800 358 5453), this will ensure you have trusted guidance available to answer questions and deal with concerns such as when an employee needs to self-isolate
- Discuss and agree (as much as possible) anything that comes up with employees
We know that every business is different. If you need help with working through the HR implications of Covid-19 in your workplace, call us on 09-445 1077 or email us at firstname.lastname@example.org