More COVID-19 FAQs Answered Here (issued 3 April 2020)

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 info@positivepeople.co.nz

Employment Relations Changes

Employment Relations Changes:

What to Expect and When

Are you trying to keep up with what is happening with the upcoming changes to employment law? We’ve made it easy with a brief outline of the proposed changes and some information on what stage they are at in the process.

The key changes coming into force are:

  • Changes to the Employment Relations Act, including the 90-day trial period
  • Minimum Wage increase
  • Changes to the Holidays Act
  • Fair Pay Agreements

Employment Relations Act 2000 Amendment

The Employment Relations Amendment Act 2018 was passed into law on 6 December 2018. It introduced a number of employment law changes.

The main changes included:

  • The right to set rest and meal breaks will be restored, the number and duration of which depends on the hours worked. For example, an eight-hour work day must include two 10-minute rest breaks and one 30-minute meal break, while a four-hour work day must include one 10-minute rest break. Employers must pay for minimum rest breaks but don’t have to pay for minimum meal breaks. Employers and employees will agree when to take their breaks. If they cannot agree, the law will require the breaks to be in the middle of the work period, so long as it’s reasonable and practicable to do so.
  • 90-day trial periods will be restricted to businesses with less than 20 employees.Businesses with 20 or more employees will not have access to 90-day trial periods. They will be able to use probationary periods to assess an employee’s skills against the role’s responsibilities. A probationary period lays out a fair process for managing performance issues and ending employment if the issues aren’t resolved. However, it is a much more complex and protracted process to use to terminate employment than a trial period.
  • Strengthening collective bargaining and union rights
  • Restoring protections for vulnerable workers, such as those in the cleaning and catering industries, regardless of the size of their employer

More information on these changes can be found here

Timing

Most of the changes relating to strengthening union and collective bargaining rights were implemented on 12 December 2018. Changes to rest and meal breaks and 90-day trials will come into effect on 6 May 2019

Minimum Rate Increases

The Government has announced it will increase the minimum wage to $17.70 an hour on April 1 2019, with further increases to take it to $20 by 2021.

Changes to the Holidays Act

A review was commenced following several high-profile cases where employers have failed to pay their employees the correct rate for annual leave.

The current Act states that holiday pay can be calculated two ways; either on the basis of ordinary weekly pay at the beginning of the holiday period or on the average weekly earnings over the previous 12 months, and that employers must pay whichever rate is the highest. Where employees are part time, have overtime rates or have bonus or incentive payments these rates can be significantly different. The practicality of calculating this every time an employee goes on leave is very difficult and many payroll systems are not set up to do this correctly. The review will cover this, as well as the full Holidays Act with the aim of simplifying the regulations, ensuring the act is fit for purpose for the current work environment and making it easy for both employers and employees to ensure that correct entitlements are paid.

Timing

The review commenced in August 2018 and is expected to be completed by August 2019. The terms of reference also stated that an interim report would be issued within 6 months to inform the public about the progress of the review, so we should see this released soon.

Fair Pay Agreements

A working group was established in June 2018 to consider what a Fair Pay Agreement would cover and look like, with the aim of providing recommendations on how these may work in the future.

Fair Pay Agreements, as outlined as one of the Governments election promises, would be collective agreements which cover whole industries and set out the minimum requirements for that industry. The Government  indicated that it expected Fair Pay Agreements to be used in occupations where there is already a high level of Union membership (like nursing, teaching or manufacturing), and that once a Fair Pay Agreement is in place, it would be compulsory for all employees in that industry to be covered.

There was some discussion around small employers being exempt from Fair Pay Agreements and this was part of what the working group considered. They were also tasked with looking into whether regional variations should be allowed in Fair Pay Agreements, how often they should be renegotiated and if they should apply beyond workers (for example to contractors.)

The working group delivered 46 recommendations in their report. One of the recommendations is that workers should be able to initiate a Fair Pay Agreement bargaining process if they can meet a minimum threshold of 1000 people, or 10 per cent of workers in the nominated sector or occupation.

The full report from the working group was released on the 31st January 2019 and can be found here

Timing

The Government is now taking time to consider the recommendations and comments from the report before undertaking policy consideration and consultation.

Many of these changes will require updates to your employment agreements and could also mean changes to your current practices. Positive People can help to keep you ahead of the game and make sure you remain compliant. Contact us to talk through how you can prepare for the upcoming changes.

Upcoming Legislative Changes

ER Changes – What is planned and when is it happening?

With several recent announcements from the Government around employment standards and reviews it can be confusing to keep up with what is planned, when it’s planned and what this means for you.

Below is a brief outline of the proposed changes and some information on what stage they are at in the process, so you can keep ahead of the game and make sure you remain compliant.

Areas to keep an eye on are:

  • Changes to the Holidays Act
  • Fair Pay Agreements
  • Changes to the Employment Relations Act, including the 90 day trial period
  • The Minimum Wage

Changes to the Holidays Act

Workplace Relations Minister Iain Lees-Galloway has commenced a review of the Holidays Act, following several high-profile cases where employers have failed to pay their employees the correct rate for annual leave.

The current Act states that holiday pay can be calculated two ways; either on the basis of ordinary weekly pay at the beginning of the holiday period or on the average weekly earnings over the previous 12 months, and that employers must pay whichever rate is the highest. Where employees are part time, have overtime rates or have bonus or incentive payments these rates can be significantly different. The practicality of calculating this every time an employee goes on leave is very difficult and many payroll systems are not set up to do this correctly. The review will cover this, as well as the full Holidays Act with the aim of simplifying the regulations, ensuring the Act is fit for purpose for the current work environment and making it easy for both employers and employees to ensure that correct entitlements are paid. This review is expected to take one year.

Fair Pay Agreements

A working group has been established to consider what a Fair Pay Agreement would cover and look like, with the aim of providing recommendations on how these may work in the future.

Fair Pay Agreements, as outlined as one of the Governments election promises, would be collective agreements which cover whole industries and set out the minimum requirements for that industry. While little further detail has been provided on these, the Government has indicated that it expects Fair Pay Agreements to be used in occupations where there is already a high level of Union membership (like nursing, teaching or manufacturing), and that once a Fair Pay Agreement is in place, it would be compulsory for all employees in that industry to be covered. There is some discussion around small employers being exempt from Fair Pay Agreements. However this will be up to the working group to establish.

The terms of reference for the working group indicate it will also be able to look at whether regional variations should be allowed in Fair Pay Agreements, how often they should be renegotiated and if they should apply beyond workers (for example to contractors.)

Recommendations are expected to be made by this group by the end of 2018.

Changes to the Employment Relations Act 2000

Earlier this year a bill was introduced to parliament which proposed changes to the Employment Relations Act. The key proposed changes are:

  • Limiting 90-day trial periods to employers with fewer than 20 employees
  • Reinstating set rest and meal breaks, with limited exemptions
  • Restoring reinstatement as the primary remedy in unjustified dismissal disputes
  • Removing the small to medium enterprise exemption to the requirements in Subpart 1 of Part 6A of the Act when a business is sold and restructured.

This bill is still at the select committee stage, so no date has been set for the changes to come into effect. This means that for these areas the provisions still stand as in the current legislation. A report is due on 1 August 2018, so we should know more about the changes, and when and if they will come into effect, then.

Minimum Rate Increases

While a commitment has been made to raise the minimum rate to $20.00 per hour by April 2021 no further specifics have been provided on how these will be achieved, what the annual increases will be and when. Traditionally 1 April is the date when annual minimum rate increases would occur, so currently it seems we will have to wait until closer to this date to understand how the annual increases will work to achieve this target by 2021.

Keeping up to date on changes to employment legislation is critical for any employer to make sure you minimise risk and remain compliant. Positive People can help you keep up to date so if you have any questions on current or proposed legislation, please contact us.

2018 Employment Legislation Changes

What the changes mean for you

Although the details of the changes haven’t been confirmed yet, here are our thoughts on what some of the changes might mean for your business.

Restriction of 90-day trials

For those that employ less than 20 people, there won’t be any change. However, if your numbers are creeping up towards 20, you will need to keep across that to ensure that you’re not including a trial period if you’ve become ineligible.

If you employ 20 people or more, you will lose the ability to use the 90-day trial. You will still be able to apply a probationary period. These were in play prior to the trial period being introduced and some employers have continued to use them instead of the trial.

For more information here on the potential changes to the 90 day trial period and probationary periods

Restoration of meal breaks

In 2015 there were changes to rest and meal break entitlements. Where previously there had been minimum entitlements, the 2015 changes made it up to employers and employees to negotiate when and how long rest and meal breaks should be. An employer is currently required to compensate employees where they cannot give an employee rest and meal breaks, but the legislation does not state what that compensation should be.

The upcoming change will see a re-introduction of required meal and rest breaks to be provided over a work day or shift. However, we don’t expect this to be a huge change for most employers. Many have chosen to continue to apply the same breaks as before the 2015 changes – either written into the employment agreement, or in practice. In addition, the current legislation does state that employees are entitled to breaks. If anything, this change will just provide clarity again on what this means.

Reinstatement restored as primary remedy for unjustified dismissal

Reinstatement as the primary remedy means that if an employee is dismissed and successfully challenges the dismissal (the Employment Authority finds that unjustified dismissal has occurred), reinstating the employee to their former role is the first remedy to be considered. In 2011 the Employment Relations Act was amended to remove reinstatement as the primary remedy for unjustified dismissal. However, since then it has still been available as an option and some commentators have pointed to a growing trend in reinstatement as a remedy in recent years.

It’s restoration as primary remedy is unlikely to have a widespread impact. Most employers rarely, if ever, end up in front of the Authority. Also, where reinstatement is genuinely not practical for either party, other remedies for unjustified dismissal can and will still be considered.

 

Month: January 2018

Employment Law Changes

This year we are expecting to see a significant shift in the employment legislation landscape, and last week’s announcement signals the start of these changes.

The following changes were confirmed last week:

  • Trial periods will be restricted to small business (up to 19 employees) only. All employers will be able to use probationary periods, but unlike the 90-day trial, these do not allow unjustified dismissal
  • Guaranteed rest and meal breaks
  • A number of changes relating to collective bargaining, including removing the ability of employers to opt out of multi-employer collective agreements.

The bill is expected to have its first reading before February 3rd. In addition, we have the following changes to paid parental leave and minimum wage coming up:

  • The minimum wage will rise to $16.50 per hour ($0.75 increase) from 1st April, with increases set to continue to a targeted $20 per hour by April 2021.
  • Paid parental leave will extend from 18 to 22 weeks from 1st July and to 26 weeks from 1st July 2020

Other changes being indicated include:

  • An increase in minimum redundancy protection for employees affected by restructuring. This could go as far as a statutory entitlement for redundancy pay of at least four weeks for the first year of service and two weeks for each subsequent year of service, up to a maximum of 20 years
  • Contractors who work under the ‘control’ of an employer, but are not employees are likely to see their rights extended for more statutory protection
  • Legislation may be introduced to make it easier for women to bring claims if they consider they are not being paid equally. In particular, changes are likely to give women in female-dominated industries better access to collective bargaining
  • Reinstatement is likely to be re-introduced (it was removed in 2011) as the primary remedy for unjustifiable dismissal claims.
  • Minimum employment standards being extended to apply to all employees working in New Zealand, including foreign employees working for foreign companies. This will impact employers with a globally mobile workforce.

It’s a case of ‘watch this space’ for the possible changes outlined above, followed by looking to see how changes will impact employers and industries when implemented. We’ll keep you informed via this blog, or follow us on LinkedIn or Facebook for regular updates. If unsure of anything, contact us.