Knowledge On Monday 30 August 2021, Black Door Law’s Director and Principal Lawyer, Caro Rieger, talked with Radio New Zealand’s the Panel. The subject – Why is there still so much confusion about whether or not employees who cannot work because of the Government’s directives are entitled to be paid during lockdown?
Why are we still having this conversation 17 months after the first nationwide lockdown? Because the law is not clear. You only have to read the varying articles put out by different employment law experts to know that the answer to the “if you cannot work because the Government has told your employer they cannot operate, are you entitled to be paid?” question is not black and white. There are proponents for both “yes” and “no” camps.
It is important to remember there are different categories of workers. People latch on to the requirement for one category of worker and think it applies to everyone. There is a big difference between an essential worker, an employee working from home fulltime and an employee who cannot work because their employer’s business cannot operate during alert level 3 or 4.
What we have always known is that the law was not suspended when the Government put New Zealand into lockdown, so:
- If you are working, you are entitled to be paid at your contracted rate unless you have reached an agreement with your employer that says otherwise;
- Employers have to follow the legislation if requiring staff to take leave;
- The mutual obligations of good faith continue to exist, including the obligation to be responsive and communicative;
- An employer cannot unilaterally change the terms of your employment;
- If an employer is proposing to reduce pay, then the employer should consult with their employees about that; and
- If an employer has obtained the wage subsidy, the obligations imposed by the wage subsidy need to be taken into consideration. However, the Wage Subsidy does not give you the ability to unilaterally change obligations.
None of that should be news to any employment law advisor. However, the question “if you cannot work because the Government has told your employer they cannot operate, are you entitled to be paid?” does not at this stage have a definitive answer.
Has this issue been taken to court?
The two cases that went through the Employment Relations Authority and on to the Employment Court following the 2020 nationwide lockdown were looking at really limited issues. Though those cases provide some guidance, the reason employees, employers – and let’s be frank employment law professionals – remain uncertain is because they do not provide a definitive answer.
On one hand, there is a view that an employee who does not do the work they are employed to do (irrespective of the reason for that), should not continue to be paid.
Others argue that an employer is obligated to provide work under the employment agreement and accordingly the employee should be paid, even if that employer cannot provide the work.
The impact of the wage subsidy
We have seen stories emerging of employers (unilaterally) deciding to pay staff at 80 per cent or less of their contractual pay. However, receiving the wage subsidy does not automatically entitle employers to pay employees 80 per cent (or less) of their contractual pay.
If employers are applying for the wage subsidy in August 2021, they should note it is paid on the basis of (among other things):
- an acknowledgement that receiving the wage subsidy does not override employment law obligations including, but not limited to, those under the Employment Relations Act 2000, Minimum Wage Act 1983, Holidays Act 2003 and Health and Safety at Work Act 2015;
- agreeing not to make any changes to employers’ obligations under any employment agreement, including rates of pay, hours of work and leave entitlements, without the written agreement of the relevant employee;
- agreeing not to unlawfully compel or require employees to use leave entitlements for the period of the subsidy; and
- agreeing to retain the named employees for the duration of the subsidy.
My business cannot survive if I have to pay staff who are not working, what should I do?
We urge employers needing to make changes to pay rates and hours of work to err on the side of caution. If you need to make changes get guidance from a legal advisor and consult, consult, consult… in other words… talk to your people!!!
Disclaimer: This information is intended as general legal information and does not constitute legal advice. If you have a specific issue and wish to discuss it get in contact with the Black Door Law team.