• Leafcutter NZ Team

COVID-19 Wage Subsidy - What you NEED to know

Updated: Feb 23, 2021

Are you acting in good faith under the compliance of the Employment Relations Act?  

In receiving the government subsidy, you, as an employer, are required to acknowledge that the granting of the application, and receipt of the subsidy, does not override your existing obligations under the Employment Relations Act.

This means that the employer should not make any changes to their employee obligations under existing employment agreements (including rates of pay, hours of work, leave entitlement, etc.) without the written agreement of the relevant employee.

Given the current situation, there are many employers in a desperate situation, but that does not mean that compliance with employment laws cannot be adhered to. For example, if an employer genuinely believes that they cannot afford to pay their employees in full, they should consult with them in good faith, and seek to reach an agreement on a reduced salary for a temporary period.   

Employers who unilaterally impose pay cuts, or stop paying employees altogether, run the risk that once all this is over; they will face significant arrears of wages claims.

The key points here are to: 

  1. Act in good faith.

  2. Provide as much information to employees as reasonably possible regarding the business and why you are proposing the following. 

  3. Communicate and present a plan to employees for 4 weeks to 3 months. Whichever is more appropriate.

  4. Give employees the opportunity to respond within a given time frame. It will be acknowledged later, that given the current environment, certain processes, procedures, and decision making will have needed to be fast-tracked. If this is not done, it may be deemed as an unfair or unjustified disadvantage for the employee.

  5. Ideally, you should have all changes to employment terms and conditions signed as agreed by employees.

The reality is that depending on what happens, this process may need to be revised more than once.

Do you need advice or help? Contact us on | 0276320821

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