Minimum Wage to increase to $22.70 per hour on 1 April 2023

Please note: we have only included the payroll related sections of this article, use the link (below) to the full article.

Recent weather has devastated many communities New Zealand. Having only recently addressed issues arising from COVID-19 lockdowns, dealing with flood and storm damage is yet another hurdle for businesses to overcome.

We learnt many things during the various lockdowns, many of which are applicable during present circumstances.

We have compiled a list of Frequently Asked Questions which we hope can provide some insight into how to ensure employment risk is minimised during these difficult times.

2.    How do we manage remote working arrangements?

By now, many businesses will be used to remote working in some form. Ideally, each business will have established policies and IT infrastructure in place to manage remote working.

One of the key difference between COVID-19 lockdown and the recent weather events is that employees’ homes may have been damaged. In many cases, an employee may not be able to work remotely as they have their own damage to deal with and/or may be without power or internet. Where an
employee cannot work in the office or remotely, there is no ability to require them to complete work.

In cases where an employee has advised they can work remotely, it is still important for businesses to conduct risk assessments. A ‘workplace’ under the HSWA includes a remote working environment, meaning an employer’s obligations extend to an employee’s home. An employer may approach such

assessment by engaging the employee (through an appropriate questionnaire) to assess risks in their home, including physical risks (trips, slips), health risks (mould, flood damage), and risks relating to security and confidentiality.

3.    Do we have to pay employees if there is no, or reduced, available work?

This is a situation we encountered during COVID-19 lockdowns, and indeed one that the Courts have provided clear views on.

The key question is whether an employee is ‘ready, willing and able’ to work. That question is answered from the employee’s perspective. So, if work is unavailable for any reason, but the employee is otherwise ready, willing and able to work, then the employer will need to pay the employee. In contrast, if

the employee is not able to come to work (such as transportation issues, or caring for family), then the employer is unlikely to be obliged to pay the employee.

This applies to current and ‘intending’ employees equally. Employment law extends to employees who have signed an employment agreement but are yet to start work. They must be treated with equal care and attention to employees that are presently working. Most importantly, employers cannot revoke
an offer for employment where it is already accepted – that will be deemed a dismissal and will attract risk of legal proceedings.

There may be many cases where, due to storm damage, employers cannot open or facilitate remote working, but otherwise still need to pay employees. The next section addresses ways to work with that scenario.

4.    What do we do if we cannot afford to pay employees?

This will be a pressing issue for many businesses affected by the storm, in particular SME businesses. The law is protective of an employee’s right to be paid, but there are ways to mitigate financial harm. Below are some suggested methods that can be used individually or, where practicable, collectively.

Business interruption
Check your employment agreements to see whether there is a ‘business interruption’ or ‘force majeure’ clause, and take advice from a lawyer as to whether such a clause can be triggered. While the intent of such clauses is to address a situation like flood damage, each case will turn on its facts and will need to be assessed from a legal perspective.

Utilising leave
Employers may reach out to employees to seek agreement on them taking leave, whether paid or unpaid.
If agreement is not given, employers may give notice (14 days) that an employee is required  to take paid annual leave.

Reduction of hours
Employers may seek agreement from employees to reduce their working hours on a temporary, or permanent, basis. It is vital that any agreement is clear in its terms, in writing and each employee has the opportunity to seek legal advice before signing.

For waged employees, a reduction in hours will correlate directly to remuneration. For salaried staff, businesses ought to seek agreement with employees on a pro-rated reduction in remuneration to account for the reduced hours of work.

Reduction of pay
As above, any agreement to reduce pay must be in writing and clear as to its terms. An important consideration is whether any reduction will result in an employee being paid less than minimum wage (currently $21.20 per hour). For waged employees, that is a simple exercise. For salaried staff, care needs to be taken to ensure the effective hourly rate does not fall below minimum wage.

Restructuring
It may be necessary to considering downsizing the business to remain viable. For many businesses, the damage caused by the weather may mean reduced income for months to come.

If this is being considered, businesses need to take care to conduct a proper restructuring process. Just because the reason for the restructure may be clear to all, employment law obligations still apply even in the most dire of circumstances. Seeking legal advice before commencing a restructure is important.

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