This article was published on 14 April 2020 and represents the legal position on this date. Due to ongoing developments, this guidance may no longer represent the correct position as of today. If you would like assistance on the below matter please get in touch with the contacts listed or your usual Bell Gully adviser.
New Zealand has now been at Alert Level 4 for almost three weeks. Over this time, employers have grappled with legal questions that have not previously been addressed in our modern employment law framework.
Broadly, these questions concern:
Pay e.g. Do I have to pay my employees if they are unable to work from home and my business is unable to operate?
Health and safety e.g. If I operate an “essential business", what should I do with employees who fall within one of the “higher risk" groups identified by the Ministry of Health? What about employees who have household members that are “higher risk" – what are my responsibilities to them?
Terms and conditions e.g. Can I require employees to accept a reduction in their pay and/or their hours of work?
Restructuring e.g. Can I implement temporary redundancies? Do I need to wait until after Alert Level 4 or the 12-week wage subsidy ends to restructure my business?
These questions have been further complicated by the government's Wage Subsidy and Leave Support schemes. These schemes offer employers the opportunity of a cash injection (if the employer fulfils the relevant eligibility criteria); but they come with many “strings" that constrain an employer's ability to respond flexibly to the ever-evolving pandemic.1
Where we are heading?
Four weeks of Alert Level 4 is scheduled to be completed at 11.58pm on Wednesday 22 April 2020. Cabinet will meet on Monday 20 April 2020 to decide whether there will be any change to the Alert Level after 22 April 2020.
While Alert Level 4 may remain in place beyond 22 April, if COVID-19 case numbers continue to improve, the Alert Level may change for at least some parts of New Zealand. New Zealand employers should therefore start to prepare for a move to an Alert Level that enables returning to work at our workplaces (in one shape or form) over the next few weeks.
The Prime Minister has indicated that more detailed guidance will be provided this week regarding the likely implications of any change in Alert Level; in particular, on Thursday 16 April 2020.
When the Alert Levels were first introduced, the guidance regarding each level was provided at only a high level, and in the context of an escalating crisis. We expect that the government will want to ensure a carefully managed approach in reducing Alert Levels. Government guidelines will be a crucial resource for all businesses as they assess what measures to follow.
Questions for employers
No doubt many New Zealand businesses, and their employees, are keen to get their businesses back on a more productive footing. However, from an employment law perspective at least, this presents a challenge of competing demands and requirements in the decision-making about how and when to return to the workplace.
While we await more detailed guidance from the government, we have set out below some questions that employers should consider in preparing for possible changes in Alert Levels over coming weeks.
If my employees are currently working from home, can I ask them to return to their usual workplace?
The short answer is – probably not straight away. At Alert Level 3, current government guidance states that “alternative ways of working" are
required. So, employees who have been working from home during Alert Level 4 are still required to work from home at Alert Level 3. There may be some expansion to what aspects of “work" are considered 'essential' to provide some (still limited) access to workplaces.
Regardless of the Alert Level, we can expect that physical separation measures will still need to be in place. Even at Alert Level 2 (as it is currently described), it may therefore not automatically be the “right" answer for all employees to return to the workplace and each employer will need to make its own assessment in line with government guidelines.
Employers will need to carefully assess the health and safety implications of allowing employees to return to their normal work location, and ensure that measures are in place to minimise the risk of transmission of COVID-19 within the workplace. This will be a fact-specific question for each employer and their workforce to consider (see further below regarding possible measures that could be implemented).
Employers should also consider whether they are doing enough to minimise risks to their employees who continue to work from home. If an employee is customarily working from their home, their home amounts to a workplace and, in addition to the employee's own duty to ensure their personal health and safety, the employer owes health and safety duties in relation to the work that they are performing. The longer that employees are to work from home, the more important it is that employers ensure that they have appropriately assessed the relevant home work stations and ensured that they are fit for purpose.
Practical steps that employers should consider for their “work from home" employees may include:
requiring employees to undertake their own “audit" of at home work stations, so that the employer can assess whether the employee has all of the necessary equipment to perform their work safely and appropriately,
regular communications which remind employees of the need to take regular breaks, and to ensure that their workspace is kept clear and free from hazards and is well lit and ergonomic (to the greatest extent possible),
arranging for equipment to be sent to employees (to the greatest extent possible) to enable them to work safely, and
engaging appropriately trained personnel to undertake remote work station assessments (for example, through Zoom).
What do I do with my employees who are “high risk" or particularly vulnerable to COVID-19?
Essential business employers have already had to grapple with this question during Alert Level 4. A move to Alert Level 3 or 2 will result in all employers having to determine their approach for their “high risk" employees.
A medium to long-term approach should be developed given that current government guidance advises that “high risk" individuals should remain at home at Alert Levels 2, 3 and 4. We recommend that employers start developing this process now.
A possible process may include the following stages. Step one involves identifying “high risk" employees; step two involves assessing employees claims to being “high risk" (for example, seeking evidence of relevant medical conditions); and step three involves consulting those employees about the implications of the information they have provided.
Step three may involve many different outcomes, depending on the circumstances. At one end of the spectrum, it is possible that the employer and the employee will be satisfied that appropriate risk minimisation measures are in place so the employee
can safely remain at or return to work alongside other employees; at the other, the employer may deem that the risk of harm to the high risk employee is sufficiently significant that the employee
cannot safely return to work until updated guidance is issued to suggest that the safety controls can be relaxed (unless they can provide specific medical advice that justifies an earlier return).
The outcome reached at step three has implications for the employee's remuneration. Our view is that an employer is probably not required to continue to pay ordinary remuneration to an employee who is unable to attend work safely because of their “high risk" classification. However, all options should be explored, including paid leave and temporary redeployment (for example, to a role that can be performed from home).
As part of the process described above, many employers are also considering the position of employees who are not themselves “at risk", but who live with someone who is “at risk". This is consistent with Ministry of Business, Innovation and Employment guidance and the duty of good faith, although involves a broad interpretation of an employer's health and safety obligations. If this group of employees is to be considered, an approach should be developed that is appropriate for the particular circumstances (and this will likely involve gathering information about the nature of the household member's condition and risk level, as well as other measures available for the employee to minimise risk to those in their “bubble").
What health and safety measures should I put in place when my employees return to the workplace?
There is no “one size fits all" approach to this question. However, we are aware of employers that are preparing to implement some or all of the following measures to minimise the risk of exposure to and/or transmission of COVID-19 within the workplace:
“no meeting" policy – no meetings to be conducted at all, or no meetings of more than a specified number of people (and with appropriate social distancing measures in place),
sophisticated “sign in" technology, for all persons attending the workplace, to enable easier tracking of contacts,
seeking declarations from visitors as to recent travel and current health status, and appropriate policies regarding preventing visitors and employees from attending the workplace in line with Ministry of Health guidance,
increased hygiene and cleaning,
staggered lunch and meal breaks,
staggered working from home (e.g. half of the floor works from home one week, the other half the following week),
signs and clear reminders to staff of important hygiene measures (for example, washing hands),
temperature checking for
all persons attending the workplace (not just employees, but also contractors and other visitors), where the employer is able to engage competent personnel to undertake such checks, and
wearing masks – this remains a more controversial measure (which still has not been endorsed by the Ministry of Health for the general public), but one that some employers are allowing in response to requests from employees.
Some of these measures raise practical and privacy law considerations. If you intend to use any of these measures, it is prudent to consider current evidence and advice from reputable sources regarding the efficacy of these measures from a health and safety perspective, as well as making sure any Privacy Act implications are taken into account.
Can I restructure my organisation given the loss in revenue that I will sustain even with a change in Alert Level?
The answer is yes; but if an employer has already applied for and received the government's wage subsidy, it could be more complicated.
If a business cannot sustain the employment of some or all of its employees, or the business simply no longer has a need for those positions, then an employer has a prerogative to reorganise its business accordingly. Of course, that prerogative must be exercised in good faith. Despite the pandemic, these normal employment law principles apply and an employer can consult in good faith about a restructuring proposal with affected employees.
However, if an employer applied for the wage subsidy after 4pm on 27 March 2020, then it was required to give a declaration that included a commitment to retain employees for the period of the wage subsidy, and to use best endeavours to pay them at least 80 per cent of their usual wages or salary over that time. So, if an employer applied for the wage subsidy for an employee, and then makes them redundant during the 12-week subsidy period, this will breach that declaration.
It seems likely that there will be employers that in good faith gave the wage subsidy declaration requiring the retention of employees for 12 weeks, but whose financial position changes so significantly that it is not possible to comply with that commitment. In those circumstances, we consider it likely that the employer can still consult with employees about redundancies, but they will need to repay the unused balance of the wage subsidy for employees whose employment ends within the 12 weeks.
Provided that the employer can show that it did not act in bad faith when it gave its declaration, it seems to us that the risk of enforcement action by the Ministry of Social Development (MSD) against such an employer is low. However, there is very limited guidance available about when MSD will or will not exercise its rights to take such enforcement action, so employers in this situation should be cautious about their intended approach. Any employer in this situation will also need to consider whether an alternative to redundancy is continuing to retain the employee, but only pay them the wage subsidy.
General tips and updates
New support for “essential businesses": on 6 April 2020, the government released its new Essential Workers Leave Support package.2 This scheme provides support for leave payments for essential businesses whose employees cannot work from home, and cannot come to work because Ministry of Health guidelines recommend that they (or someone in their household) stay at home.
There are several inconsistencies in the information that is currently available on the scheme. In particular, one of the possible eligibility criteria refers to the employer having been “negatively impacted by the COVID-19 public health restrictions" – but there is very little explanation given as to how that will be assessed (for example, in the event that MSD audits compliance). We therefore recommend caution for any essential business that applies for this support, but is unable to show that it has sustained a 30 per cent reduction in revenue (due to COVID-19) in any month between January to June 2020 compared with the same month in 2019.
Further announcements: The government will issue more detailed guidance this week regarding the likely implications of any change in Alert Level. We expect that whatever form that guidance takes, employers will need to start considering the questions outlined above in preparation for a phased reduction in Alert Levels. It remains important for employers to keep close track of any updates from the government, and to ensure that their policies are able to adapt to new information and guidance that is issued.
If you have any questions about the matters raised in this article please get in touch with the contacts listed, or your usual
Bell Gully adviser.
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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.