COVID-19: The shift back to Alert Level 4

Thursday 19 August 2021

Authors: Liz Coats, Jane Holland, Morgan Powell and Sarah Brougham

​​​As businesses grapple with a swift and sudden lockdown, there are some new elements to consider alongside those now familiar from prior experience with​ changing alert levels.

In this update we look at some of the key i​ssues businesses will need to think about at Alert Level 4, including trading restrictions, the implications for leases and what the lockdown means for employers and employees.

Trading r​​​estrictions

During Alert Level 4, only those businesses offering essential Alert Level 4 s​​ervices or products are permitted to open. The Government has repeated its warning that any business in doubt about whether it provides Alert Level 4 services or products should be closed at this time.

What is an Al​​​ert Level 4 business or service?

Alert Level 4 businesses and services are defined and listed in schedule 2 of the COVID-19 Public Health Response (Alert Level Requirements) Order (No 9) 2021 (which can be found here) (Public Health Response Order). Workplaces can only open if they are listed in the Public Health Response Order, and are operating safely (this includes fulfilling all other health and safety obligations) and in accordance with the specific requirements set out in the Order. The Public Health Response Order also confirms which workplaces can be accessible by the public during Alert Level 4.

This means businesses like supermarkets and dairies, pharmacies, self-service laundries, and food banks can open to the public if they have systems and processes in place to prevent food and drink being served for consumption on the premises. Hardware stores can open, but only for the purpose of selling to trade customers who work to maintain other Alert Level 4 businesses and/or services.

Full details of the 30 businesses and services identified as Alert Level 4 business and services can be found at the end of this article. One of the categories is the sale of “essential non-food consumer products via online delivery”.​ The Order does not define what is essential in this context, and it remains to be seen whether the government will provide any further guidance.

Mandatory mask ​​wearing

The Government has also announced that face coverings will be mandatory for all staff and customers when accessing Alert Level 4 businesses or services which are open to the public. This order came into force at 11:59pm on Wednesday 18 August 2021.

Current exemptions for face coverings will continue to apply. For example, you do not need to wear a face covering if you:

  • Are under the age of 12,

  • Have a physical or mental illness, or

  • Have conditions or disability that makes wearing a face covering unsuitable

Employment obligati​ons

The case law following the Alert Level 4 period in 2020 confirms that employment law still applies. This includes the duty of good faith, normal contract law principles and the Holidays Act 2003.

There is no “one size fits all" approach to managing Alert Level 4 with employees (in terms of their pay and their duties), because the right approach will very much depend on factors such as:

  • whether employees can perform their work from home (and if so, whether those employees are able to do so at a practical level, taking into account their home environment and any childcare responsibilities),

  • whether the employer can continue to operate its business at Alert Level 4, and

  • the particular contractual arrangements applicable, including any collective or individual agreements.

While these factors will apply differently to different employment situations, it is clear that the statutory duty of good faith applies in all circumstances. As such, any approach taken should incorporate consultation with employees and unions to the greatest extent practicable in the circumstances.

Health and S​​​afety

If an Alert Level 4 business or service remains open, it must put in place alternative ways of working to keep employees safe to ensure compliance with the Public Health Response Order and the Health and Safety at Work Act 2015. Depending on the industry, this may include shift-based working, staggered meal breaks, flexible leave arrangements and physical distancing.

One difference between this lockdown and the 2020 Alert Level 4 period is that there is now a vaccination available as a means of minimising the risk of COVID-19 in the workplace. However, given that the vaccination is not yet widely available across the whole population, and in light of relevant privacy and employment law considerations, employers need to tread carefully in seeking information from employees about their vaccination status. In particular, employers should consider whether they have a lawful purpose in collecting such information (such as a compelling health and safety concern), and whether it is necessary for them to know an employee's vaccination status for that purpose.

Tenants' entitlement to rent abatem​ent

Many leases, including the ADLS lease commonly used by many landlords and tenants, contain provisions entitling a tenant to an abatement of a “fair proportion" of rent and outgoings while the tenant is unable to access their premises during an “emergency" to fully conduct their business. In the ADLS lease, this is clause 27.5.

In most leases, an Alert Level 4 lockdown will trigger such a clause. However, there is no set formula for what constitutes a “fair proportion" of rent and outgoings. Despite a number of disputes arising last year between landlords and tenants, the courts have not yet considered this issue, and there is therefore no judicial guidance as to how the “fair proportion" by which the rent is to be reduced should be calculated. Most clauses contain arbitration provisions, and we are aware of arbitration decisions in which this issue has been considered. However, arbitration decisions are confidential, and therefore are not available as precedent in the same way as Court decisions are available. In our view, most tenants who have the benefit of clause 27.5 and who been required to close their premises will likely be able to claim that they are entitled to an abatement of rent and outgoings. For more detail from our earlier publications on this issue, click here and here

Landlords should also be aware that they cannot simply issue Property Law Act (PLA) notices or statutory demands in respect of unpaid rent if tenants claim to be entitled to an abatement of rent and outgoings and stop making payments in respect of that abatement. In a recent case, SHK Trustee Co Ltd v NZDMG Ltd, the High Court highlighted the risk a landlord faces if it issues a PLA notice that claims the full value of rent and outgoings while there is a dispute as to the level of abatement to be provided. In such a situation, the PLA notices are likely to be found to be invalid and, to the extent that a landlord has acted in reliance on those notices to cancel the lease, the landlord may be held to have repudiated the lease. For more detail, see our earlier client upd​ate here.

If you are in any doubt as to whether your particular business, or aspects of it, are permitted to operate (either stand-alone or as part of the critical chain of supply for another Alert Level 4 business or service), please contact the authors or your usual Bell Gully advisor.

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Alert Level 4 businesses and services​


Business or service

Additional conditions

1

Supermarkets and dairies

Must have systems and processes in place to prevent food and drink from being served for consumption on premises

2

Petrol stations, including stores operating as part of any petrol station

3

Licensing trusts

4

Pharmacies

5

Food banks

6

Self-service laundries

7

Hardware and DIY stores

Must only be for the purpose of selling to trade customers

 

8

Uncooked food delivery services and cooked delivery services where referred by the Ministry of Social Development, a DHB, or the Accident Compensation Corporation (e.g. Meals on Wheels)

Must have systems and processes in place to ensure (as far as reasonably practicable) that each person who enters the workplace

  • scans the QR code for the workplace, or

  • provides details in a contact tracing record

9

Sale of essential non-food consumer products (via online delivery)

10

Accommodation services

Must have systems and processes in place to prevent food and drink from being served for consumption on premises

11

Building, construction and maintenance services if required:

  • to address immediate risks to health and safety, and/or

  • for nationally important infrastructure

Must have systems and processes in place to ensure (as far as reasonably practicable) that each person who enters the workplace

  • scans the QR code for the workplace, or

  • provides details in a contact tracing record

12

Entities with statutory responsibilities for building and resource consent that are necessary to enable the above building, construction and maintenance services.

13

Justice sector, including Courts and Tribunals

14

Freight services, and any other transport and logistics services

15

Passenger services (e.g. public transport) by road, rail, air or sea

16

Primary industries (food and beverage processing, packaging and production) for both domestic consumption and export and the relevant support services, and veterinary and animal welfare services

17

Scientific services of a specified kind

18

Entities required to provide distance or online learning for primary or secondary education

19

School hostel

Must keep students and staff, so far as is reasonably practicable, in groups that are appropriate sized and stable

20

Social and community based services to support persons to maintain critical wellbeing or as crisis support

 

21

Key utilities (e.g. the production and supply of electricity, gas, water, wastewater, waste, fuel or telecommunications services)

Must have systems and processes in place to ensure (as far as reasonably practicable) that each person who enters the workplace

  • scans the QR code for the workplace, or

  • provides details in a contact tracing record

22

Key communications, including news and newspaper delivery

23

Government services, but only of a specified kind e.g. regulatory services which cannot reasonably be delayed

24

Foreign Government

25

Security services (including locksmiths)

26

Pest management services

27

Essential elements of pulp and paper plants

28

Tiwai Point aluminium smelter, Methanex and NZ Steel

29

Businesses or services necessary to maintain other Alert Level 4 businesses or services

30

Services for deceased persons or tūpāpaku including for example funeral homes, crematoria or cemeteries

​​



Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Tania Goatley

    Partner Auckland
  • Liz Coats

    Partner Auckland
  • Jane Holland

    Partner Auckland
  • David Friar

    Partner Auckland
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