Open for business: next steps for employers

You could be forgiven for thinking that New Zealand’s transition from the Covid-19 Alert Level 4 lockdown meant complex Covid-19 related employment scenarios were behind you. But as New Zealand moves down alert levels, many employers are realising that operating in a post-lockdown world is not as simple as opening the doors and running the business as usual. Here are a number of key considerations to help employers stay on track.  


Implementing a business plan  


First and foremost, employers should have a plan in place as employees return to work to ensure the workplace is not only safe for employees and customers, but also legally compliant in terms of health and safety duties which are naturally heightened in a pandemic environment.  


Appropriate measures that should be part of a business plan will depend on the specific workplace, but it is likely that all businesses will need to at least consider the following:  


  • Ensuring workers have appropriate personal protective equipment (PPE); 
  • How social distancing will be maintained in the workplace. It may be that some workplaces need to implement a staggered lunchbreak system to avoid overcrowding in the break room; 
  • Having a method for contact tracing*Most businesses should have a register at reception for all clients/customers that enter the premises 
  • Ensuring hygiene, including appropriate sanitation of high contact surfaces; 
  • How the business will respond to outbreaks and sickness, and ensuring these processes are well known to all employees. For example, outlining various scenarios and what is expected of employees, including notification requirements if they are unwell or a family member is unwell; and 
  • Encouraging communication  


“Covid- leave” entitlements and refusals to return to work 


The Covid-19 Leave Support Scheme (formerly ‘Covid-19 Essential Workers Leave Support’ and ‘Covid-19 Leave Payment’ before that) will come into play if an employer has employees that cannot attend work because the Ministry of Health guidelines recommend they stay at homeand they cannot perform their role from home.  


This scheme not only encompasses employees that have tested positive for Covid-19, but also those that are (or live with someone who is) considered ‘high risk’ if they contract Covid-19, or if they are required to self-isolate.  


The declaration required from employers is similar to the Covid-19 Wage Subsidy: employers must use their best endeavours to pay these employees at least 80% of their usual wages. An employer won’t be able to access this scheme if they are already receiving the Covid-19 Wage Subsidy in respect of the relevant employee/s. 


It is also true that a ‘leave’ scheme can occasionally prompt non-eligible employees to point to the scheme as a means of obtaining some paid time off. Employers that run into the issue of employees refusing to return to work will need to consider the employee’s personal circumstances in good faith and discuss the risk, mitigation and any alternative solutions. If the refusal by the employee is unreasonable, there may be grounds for disciplinary action.  


Reduced workloads and cost-saving measures 


Employers will be well aware that if employees are able to work, they are entitled to be paid. This obviously has implications when the business has a reduced workload and insufficient work to keep all employees occupied.   


There are a range of options available to employers to mitigate a downturn in work and the corresponding reduction in cash flow. These include:  


  • Negotiating a temporary reduction in hours and/or remuneration with employees 
  • Seeking to reach agreement that employees will use their leave entitlements and if agreement cannot be reached, directing employees to use annual leave on 14 days’ notice  
  • If the above options are insufficient, and depending on the length of the downturn, restructuring 


A key point to remember is that if an employer has received the wage subsidy, there may be restrictions on whether redundancies can occur in respect of those employees whom the employer has received the subsidy on behalf of 


If the application for the wage subsidy was made prior to 4pm on 27 March 2020, the employer will have to show that it used their best endeavours to retain employees for the 12-week period that the subsidy applies for. It is likely the employer would need to show that business circumstances have worsened since the wage subsidy was applied for and that it is no longer financially viable to keep all positions.  


If the application for the wage subsidy was made after 4pm on 27 March 2020, the employer must keep employees for the 12-week period. Any termination for redundancy during this period would be in breach of the declaration.  


If you and your business require further assistance with your employment obligations and responding to the challenges presented by Covid-19, please contact Jessie Lapthorne on 09 374 7156 or at Duncan Cotterill for specific advice.   


Jessie Lapthorne has extensive experience as an employment law specialist, both in New Zealand and the United Kingdom. She is a partner in Duncan Cotterill’s growing employment, and health and safety team and is based in Auckland.  



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