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An Employer’s Guide to the Covid-19 Coronavirus
22 March, 2020 | Carolyn Ranson
Over the last few weeks the coronavirus known as COVID-19 has plunged the whole world, including New Zealand, into unknown territory. The measures that have been put in place in New Zealand are unprecedented. For employers and business owners, this uncertainty has extra implications on revenues and business viability.
All business owners will be considering the effects of the measures in response to COVID-19 on their own business, and this will include whether their business can continue to employ staff.
The particular issues the employer faces will be a function of whether or not they are an essential service, and if they are – whether they expect their business will increase or contract. In addition, if they are not an essential service, are staff able to work from home? This will largely depend on the industry they are in. There will be a number of different scenarios.
While the prospect of redundancies might loom overhead, there may be other alternatives that could be considered in the short term at least.
These alternatives may include canvassing with staff whether they would be prepared (as an alternative to a redundancy process) to:
- work reduced hours,
- take one or more days a week as annual leave; or
- take leave without pay.
In addition, the government has also stepped in to offer assistance in the form of a COVID-19 Wage Subsidy to help you keep staff employed while you consider options.
It has also offered a leave payment to assist employees financially if they cannot work from home but need to self-isolate or care for someone who is sick or self-isolating, or they themselves become sick. You can find more information here.
All of these options require a considered proposal to be put to the employee. The key is careful consideration of your business situation and your options before putting together the proposal. Then it will be important to follow the proper process in getting feedback on and then implementing the proposal, if that is what you ultimately decide to do.
As well as disestablishing a role, any substantial change to an employee’s role, salary or working conditions can be a restructure. A restructure can seem daunting, especially in these uncertain times, but an employer can successfully implement decisions that affect employees, as long as its obligations under employment law are met.
The COVID-19 crisis does not mean that an employer can avoid its obligations of good faith and fair and proper process. Timely and practical legal advice can assist to reduce the risk of receiving a personal grievance claim.
So what does an employer need to think about before embarking on a restructuring process?
- There must be a full review of business needs in the proposed area of change. Some questions to consider are:
- whether the business is an essential one?,
- If it is, can staff work from home?,
- If it is not, can staff work from home?,
- Will my business cease entirely, increase or decrease slightly/moderately etc?
- Will staffing needs change or stay the same or increase?
- Does the business qualify for the Government wage subsidy?
- If certain positions are identified as being subject to potential change (including being the recipient of the government wage subsidy) then the employees holding the positions affected must be consulted, in good faith and without any prior determination. These employees must be given a chance to submit feedback to the proposed changes.
- If you intend to apply for a government wage subsidy or leave payment then the employee involved must give written permission.
- The feedback given must be properly considered, again in good faith, before any decision is made.
The obligations of good faith and pre-determination have been the subject of many personal grievance claims brought before the Employment Relations Authority and the Employment Court. The difficulty is that the threshold for meeting these requirements will depend on the facts in each case. COVID-19 presents a very unusual set of facts not seen before in New Zealand or around the world.
The key to successful and stress free managing of your staffing during the COVID-19 crisis is getting timely advice, tailored to your business, from an employment lawyer experienced in redundancy and restructuring, as early as possible in the process. This way, you can ensure that your good faith obligations, as an employer, are met and that the financial benefit of a restructure, including utilising the government subsidy, is not outweighed by a costly personal grievance claim.