COVID 19 – MOST COMMON MISTAKES BY EMPLOYERS

4 June, 2020 | Rachael Chandra

Since the Government announced the Covid 19 Alert Level systems, the swift move to Level 3 and 4 (lockdown) and then the gradual climb back to level 2 and 1, most businesses have been (and continue to be) faced with some challenging issues about how to manage their businesses during the different alert levels, including dealing with employees and being able to retain and pay them.

Each business made decisions based on their unique circumstances.

It is clear from the nature of instructions from both employer and employee clients we are currently dealing with that not all those decisions were made in a manner that was compliant with the employers’ obligations under the Employment Relations Act 2000, the Holidays Act 2003, the Privacy Act 1993 and other related legislation.

We set out below the most common mistakes some employers have made since the Covid 19 lockdown period and risks they have exposed themselves to as a result.

1. Included information about specific employees in the application for Covid 19 Wage Subsidy Scheme (“the wage subsidy”) without the consent of those employees.

The declaration by employers to the Ministry of Social Development (“MSD”) for the purposes of applying for the wage subsidy states amongst other things, that employees included in the application consented to their information being provided to MSD, and MSD sharing that information with other agencies.

Employers could face civil proceedings by MSD if there is evidence of non-compliance and employers having made false declarations.

Employees could also make a complaint to the Privacy Commissioner for breach of privacy.  However, if the employee has not suffered any harm as a result of the breach, and information was provided by the employer to MSD in good faith, for the eventual benefit of the employee, then it is highly unlikely the complaint will be progressed to the Human Rights Review Tribunal and/or any compensation awarded.

2. Failed to comply with their obligations under the declaration by either not paying employees included in the application the wages subsidy, and/or making employees included in the application redundant during the wage subsidy period.

The declarations made after 4pm on 27 March include that the employer will for the duration of the wage subsidy period (12 weeks) pay employees included in the application at least the full amount of the wage subsidy.  It also states that the employer will retain those employees for the wage subsidy period.

Employers who have breached these obligations could face civil proceedings by MSD for recovery of any amount the employer is not entitled to, and/or to prosecution for offences under the Crimes Act 1961.

Affected employees may also bring a personal grievance claim for unjustified disadvantage and unjustified dismissal.

3. Varied terms of employment for employees by changing hours, rates of pay etc., without consultation and agreement.

Employers’ obligations under the Employment Relations Act 2000 and related legislation did not change due to Covid 19 and the restrictions imposed as a result of the different government alert levels.

This means that any changes to employees’ terms of employment, including rate of pay and hours of work should be by way of consultation in good faith with employees whose terms of employment were to be affected.

Employers who fail to do this and instead unilaterally make or have made decisions varying the terms of employment could be at risk of a personal grievance claim for unjustified disadvantage and wages recovery.

4. Unlawfully compelled/required employees to use their leave entitlements for the wage subsidy period.

The declaration to MSD states that employers will not require an employee to use annual leave during the wage subsidy period.  If they do, the risk they face is prosecution by the MSD.

The employer could also be in breach of its obligations under the Holidays Act 2003 and face a claim for recovery of wages.  There is also potential for a personal grievance claim for unjustified disadvantage if employees within the same business have been (without good reason) treated differently.

5. Made employees redundant without complying with its obligations of good faith as regards consultation and procedural fairness.

Actions taken in relation to Covid 19 are not an exception to employers’ obligations of good faith and procedural fairness in relation to restructures and redundancies.

Employers who have made employees redundant by relying on the effects of Covid 19 as the basis for such redundancies, without engaging in a genuine consultation process and without following a process that is fair and reasonable, may face personal grievance claims for unjustified disadvantage and dismissal.

A large number of employers have not as yet had to consider restructures/redundancies, but are at a stage where that is becoming inevitable.

We recommend those employers obtain legal advice at the outset to minimise the risks of a personal grievance claim.

The same applies to employers considering changes to rates of pay and/or hours of work.