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COVID19 Level 4 Now What

Published 24 Mar 2020

Yesterday, 23 March, Prime Minister Jacinda Ardern announced that New Zealand will go into Alert Level 4 at midnight Wednesday, 25 March 2020. This means that all non-essential businesses must close for at least the next 4 weeks, unless workers can operate from their homes.
Click here for a definition of what qualifies as an Essential business. This will include entities in their supply chains also, for example IT and data infrastructure to an entity providing an essential service.
With very little guidance from Government and entering untested terrain, our interpretation on the process to follow is set out below.

1.  Open and constant communication with staff is key. Obtain updated contact details for all staff and ensure you communicate and keep staff up to date on all developments and steps.

2.  Act in good faith and ensure you can prove that you applied your best efforts. Please do not use this period to terminate employment without applying your best efforts to save jobs. Listen to staff and their inputs and suggestions. Consider the same and give them proper feedback.

3.    Always refer to each Individual Employment Agreement. The content might be different for each employee with different stipulations, for example, redundancy pay. If the agreement stipulates a certain amount as redundancy pay, you will have to honour that agreement.  

4.  See if staff can perform their duties remotely. If possible, allow staff to work remotely to ensure business still continues for as long as possible. Try to adapt duties or even spread duties across more employees.

5  Apply for the wage subsidy offered by Government. Keeping in mind that information and guidance on this changes almost daily, at this moment, we advise as follows;
  • All businesses that can show a 30% decline in revenue between January 2020 and 9 June 2020 can now apply for the wage subsidy.
  • A 30% decline in revenue means actual revenue or predicted revenue.
  • The decline must be related to COVID-19.
  • The subsidy is paid to the employer in a lump sum and covers 12 weeks per employee. At least this amount must be paid to the respective employee as wages.
  • The employer must “make best efforts” to pay staff at least 80% of their normal income for the subsidised period.
  • If not possible to top up staff to 80%, it is our interpretation that employers should;
  • Seek advice from your financial institute regarding support for business continuity to address anticipated financial impact on your business; 
  • Discuss with staff the possibility to take their annual leave entitlements to top up the wage subsidy;
  • Accepting a lesser percentage of income (70% or 60%), or just the minimum amount provided by Government – only if we can prove that we cannot top up to 80%.
6.  Embark on redundancy process if needed. Should staff not accept and agree to any of the above points and you can prove that you acted in good faith and tried your best efforts to pay them at least 80% or even less, you will have no other option but to start the redundancy process.
The redundancy process should still be followed as prescribed, but due to the current circumstances the time period could be shortened and the consultations can be done via e-mail or telephonically.

As mentioned before, we have no concrete guidelines from Government on how to deal with this pandemic, this is our interpretation and suggestions – which we are confident would evidence good faith as required at a later stage.
We are of the opinion that after the pandemic subsided, Government will allow employers a time period to rectify any misinterpretations and leniency will be applied, should shortcomings occur.

If you cannot pay staff their normal wages, even with the subsidy, we strongly suggest both parties agree on what is affordable and sign off on that. Please download our suggested template to this effect:

  Download Wage Variation Agreement

As we enter these uncertain times, we would like to assure you that we are doing our utmost best to keep on top of the ever changing information and to give you the best possible advice. We will update you through newsletter as often as possible. We will be available telephonically throughout this period – please bear with us as the lines are ringing nonstop, we will return your call if you leave us a message.
In the meantime, be safe, look after yourself and take care of your loved ones.