COVID-19 Update Resurgence Wage Subsidy

Employment Law
Aug 19 2020

At noon 12 August 2020, Auckland moved to COVID-19 Alert level 3 and the rest of New Zealand moved to Alert level 2.

Resurgence Wage Subsidy

On 18 August 2020, Finance Minister Grant Robertson announced additional funding of up to $510 million for a targeted extension of the Wage Subsidy Scheme, being the ‘Resurgence Wage Subsidy’ (RWS).

The RWS is able to be applied for between 21 August 2020 and 3 September 2020. It is anticipated that approximately 470,000 affected employees will receive this.

The criteria for the RWS is similar to the previous Extension to Wage Subsidy Scheme, where applications remain open until 1 September 2020.

The RWS criteria is:

• The Business must have had, or expect to have, a minimum revenue drop of at least 40% because of COVID-19; and

• The revenue drop must relate to any consecutive period of at least 14 days between 12 August 2020 and 14 September 2020, compared with a ‘similar period’ in the previous year.

Eligibility for the RWS is not limited to Auckland businesses. Any business in New Zealand can apply and will qualify provided they meet the criteria.

Businesses that have been operating for less than a year or have ‘high growth’ may also be eligible for the RWS. To determine whether these businesses meet the 40% ‘decline in revenue’ assessment, they must compare their revenue against a 14 day period that gives the best estimation of the revenue decline related to COVID-19.

We anticipate that the undertakings required for the RWS will be the same as provided for the previous wage subsidies, that is that the employer must endeavour to pay at least 80% of an employee’s pay, but may reduce to the minimum wage subsidy payment. The employer also cannot terminate qualifying employees’ employment while in receipt of the RWS.

COVID-19 Tracer App QR Code

All businesses are required to display the COVID-19 tracer app QR code prominently at all entry points, allowing any attendees to sign in via the tracing app. This is expected to last through Alert levels 2 and 3.

COVID-19 Employment Cases

There had been conflicting views by employers around whether anything more than the wage subsidy needed to be paid to affected employees (beyond making ‘reasonable efforts’ to pay 80% of their usual pay), and whether an employee could be paid less than their ‘usual remuneration’ while working, or while unable to work due to the lockdown.

The Employment Relations Authority has determined:

• Employers cannot make deductions from pay unless expressly authorised (such as by a deductions clause in their employment agreement contemplating circumstances including COVID-19). This means that an employer must pay the wage subsidy plus a top up, without deduction, unless agreed with the employee. The Government’s requirement was that the employer must make ‘reasonable efforts’ to top up an employee’s pay to 80%;

• An employer cannot unilaterally reduce an employee’s remuneration. Failure to pay full remuneration is unlawful. For example, in that case, the employer attempted to reduce the employee’s pay without agreement;

• Employers cannot contract out of minimum wage requirements as a result of COVID-19, even if an employee agrees. So all hours worked must be paid at least at the minimum wage (currently $18.90 gross per hour); and

• Where an employee is ‘ready and willing to perform their work’, they must be paid, irrespective of whether there is work to provide them (unless expressly allowed by their employment terms. For example a waged employee where hours of work vary subject to guaranteed minimum). The employer may, however, withhold payment where an employee refuses or fails to perform work. In that case, the Authority accepted an argument of ‘no work no pay’.

Looking Forward

We have many clients who, before, during and after lockdown have reorganised their businesses with a view to decreasing costs/trading through COVID-19 interruptions. Key takeaways are:

• Employment law obligations still apply during COVID-19 alerts and lockdowns. While restructure processes may be truncated, where justified, any restructures must be substantively and procedurally justified;

• Good communication is essential. A paper trail evidencing consultation is important. Technology can be utilised – for example using zoom/facetime for meetings;

• Consultation requires provision of an explanation of what is proposed, a rationale for the proposal, and details of how this will affect the employee concerned;

• Redeployment should be considered, and any applicable criteria should be set out (for example where multiple of the same roles are being reduced);

• Lawyers/advocates continued to work during level 2, 3 and 4 lockdown and can provide advice/representation to affected employees. This should not unreasonably hold up an employment process;

• Changes to employment terms, such as hours and days of work need the agreement of affected employees;

• Restructures shouldn’t be utilised as a means to address poor performers or ‘dead wood’, there need to be genuine reasons on reasonable grounds to disestablish a role; and

• Ultimately, an employer has the ability to organise their business in a way that meets their needs, provided this is substantively justified, and carried out in a procedurally fair way.

The above is general information. If you have specific questions or require advice, please contact one of our Employment Law team.

Authors:

Christie McGregor
Partner
E: Christie.McGregor@hobec.co.nz
DDI: 07 928 7099
M: 021 0841 4220

Alby McClelland
Solicitor
E: Alby.McClelland@hobec.co.nz
DDI: 078 570 0692
M: 027 367 8666

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