As at 11.59pm on 17 August 2021, New Zealand moved to Alert Level 4. This article recaps the key tips and takeaways for employers who are likely to be impacted by the COVID-19 lockdown.

What financial support is available?

Wage Subsidy: The Government has announced that applications for the Wage Subsidy will be open from Friday 20 August 2021 for a period of two weeks, if the country remains in lockdown. Eligible businesses will receive up to $600 per week for each full-time employee and $359 per week for each part-time employee.

The Wage Subsidy will be available to all employers, sole traders, self-employed people or contractors who meet the following criteria:

  • Are registered and operating in New Zealand;
  • Have employees legally working in New Zealand; and
  • Anticipate they will experience a 40% decline in loss of revenue due to alert level 4.

Resurgence Support Payment: Applications for the Resurgence Support Payment (RSP) will be available from Monday 24 August 2021. The RSP is designed to support businesses facing a reduction in revenue due to an alert level change. Eligible businesses can receive the lesser of $1,500 plus $400 per full-time equivalent (FTE) employee, up to a maximum of 50 FTEs, or four times (4x) the actual revenue decline experienced by the business. To be eligible, the business must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, which is due to the increased COVID-19 alert level. Businesses can receive both the RSP and the Wage Subsidy if the respective criteria is met.

Can I reduce an employee’s pay or hours during the lockdown period?

Not without agreement. An employer has good faith obligations to be communicative and responsive, and this requires consultation with an employee before any proposed reduction in pay or hours are made. It is important to provide the employee with a genuine reason for the proposed changes (for example, financial reasons or as an alternative to redundancy) and if possible a clear timeframe of how long the changes are expected to remain in place. Any agreed change should be recorded in writing between the parties. If agreement is not able to be reached, then a restructure may be necessary impacting one or more roles depending on the circumstances.

Can I expect an employee to take annual leave during the lockdown period?

Employees can be encouraged by their employer to take unused annual leave during the lockdown period. If agreement is reached that the employee will use their annual leave during this time, this should be recorded in writing.

If the employee and employer cannot agree on a time for taking leave, the employer can require the employee to take annual leave at a specified time during the closedown by giving the employee 14 days’ notice of the requirement to take annual leave. However, the good faith obligations still apply and the employer should use reasonable effort to reach agreement with the employee before utilising their right to require the employee to take annual leave.

What about sick leave?

An absence from work due to business closure is not ‘sick leave’. However, employees and employers can agree that the employee will take unused sick leave during a lockdown if themselves, or one of their dependents, are sick. Employees cannot be required by their employers to take sick leave during the closedown if they are not sick. It is important to remember that minimum sick leave entitlements increased from 5 to 10 days per year from 24 July 2021. Employees get the extra five days per year when they reach their next entitlement date (being either after reaching 6 months’ employment or on their sick leave entitlement anniversary).

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


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

Abigail Pearce
E: abigail.pearce@hobec.co.nz
DDI: 07 571 3830