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COVID-19: Helping Employers prepare for shutdown

Ani Bennett, March 2020

If you are required to cease operating or if there is no work, then you could, following consultation, terminate roles in reliance on a force majeure clause if you have one in the employment agreement. However, with the business support package announced by the Government, you may be able to agree with staff that they take annual leave, and then unpaid leave over the coming weeks. You should also work with your staff to apply for financial support under the Government's economic package.

We are currently advising employers providing non-essential services who are having to send staff home that they can offer staff either leave without pay or annual leave (it’s the employers choice to offer annual leave here, they don't have to), and seek to apply for and get the wage subsidy if they meet the criteria for this (details on the WINZ website here

Employers who receive the wage subsidy then pay that to staff and must make "best efforts" to top that up to a minimum of 80% of their usual pay. If an employer cannot top up to 80% despite best efforts, they should still apply for the wage subsidy, though the employer will need to be prepared to justify why they can't do that (i.e. to explain that they did make best efforts). There will be an audit/review process of these applications.

Employers will need to discuss with staff their intention to apply for the wage subsidy and get permission to use their IRD and dates of birth on the application.

I recommend employers write to their staff setting out at least the following:

  • What the move to Alert Level 4 means for their business and staff
  • What employees will be paid (addressing the various options applicable to that business, i.e. annual leave, paid special leave, unpaid leave, the wage subsidy etc and how that works in practice)
  • When matters will be reviewed.

We can draft the above letters for employers and assist with advice for essential businesses and those who can accommodate work from home too – please feel free to get in touch.

Tauranga Chambers:

Jackson Reeves Lawyers Building
31 Hamilton Street

Waihi Chambers:

Clark & Gay Lawyers Building
61 Seddon Street