13 July 2020
Answers to our partner organisations most common employment related questions.
We’ve had a number of questions from our partner organisations about navigating the current Level 4 situation with regards to employees and contractors. Below we address the most common questions we have received.
Please note, this is not legal advice and Sport NZ is not responsible for any outcomes that eventuate by following it. If you have a specific concern or legal issue, you should consult your usual legal advisers. For any other questions, contact Grant Fraser in the Sport NZ Business Capability team at email@example.com or 021 229 4114.
GOOD FAITH AND COVID-19
Underpinning all employment matters in New Zealand is the concept of ‘Good Faith’, which applies to both employers and employees. This implies that you and your staff must be responsive and communicative with each other and not do anything misleading, or intended to mislead.
In the current environment this means talking to your staff and giving them the opportunity to comment on what you are planning, proposing or considering doing. They then have an obligation to respond constructively. This is not the same as negotiation or agreement – it’s more about giving them a chance to be involved, not about making the decisions.
COVID-19/Level 4 hasn’t removed these obligations – and the answers below should be read in that context. You can change almost anything with your staff – as long as they agree.
Government wage subsidy – can we apply?
The Employment NZ website states:
The modified Wage Subsidy Scheme is available to all businesses (including the self-employed, contractors and sole traders), registered charities, incorporated societies and post settlement governance entities, that are adversely affected by COVID-19. It is also available to employers who recently let employees go because of COVID-19, provided they re-hire those employees. The scheme excludes state sector organisations.
So the answer is yes, you can apply. We have been in contact with NSOs and RSOs who have applied and have received the subsidy.
There are rules, so make sure you can/will comply with them before applying.
Note that if you apply for, or are receiving the Government wage subsidy, you will need to factor that in when you consider other matters addressed in this guidance, including in relation to staff taking leave, reductions in pay, and redundancies.
For further assistance with your entitlement please call Doug Haines (BDO) or Luke Norman (KPMG) as included in a previous partner update.
Can I ask and/or demand staff use annual leave?
As stated above – you can ask staff to use annual leave and if they agree, this is fine. We recommend that you record what is agreed in writing/via email, with the employee signing/replying that they agree.
The Holidays Act allows you to require staff to take annual holidays if you are unable to agree and you give staff 14 days’ notice – but you need to use caution.
The leave you can make them take is ‘entitlement’ - leave from a previous leave year. The way the Holidays Act is written, you don’t have a legal entitlement to paid leave until you’ve completed 12 months service. So leave from previous service years is ‘entitlement’ and leave from the current service year is ‘accrual’. Also note that under the Holidays Act, the purpose of annual holidays must be for rest and recreation. If staff are unable to work at all during this time and you direct them to take annual holidays, there’s a question about whether this meets the purpose.
Can I ask and/or demand staff take a reduction in pay? Can I reduce staff to part time roles?
As stated above, you can ask staff to take a reduction in pay (presumably with a reduction in work/hours expected) and if they agree this is fine. We recommend that you record what is agreed in writing/via email, with the employee signing/replying that they agree.
Can you make staff take a pay cut or reduce their hours?
The quick answer is ‘No’. This Stuff article provides a bit more detail. As previously noted, you can propose a change and consult with staff about it. If they agree, then record in writing exactly what is agreed and both sign it. But if you don’t agree, you can’t make this type of change unilaterally.
How do I deal with contractors?
Contractors don’t have the same rights as employees – but you are obliged to honour your commercial agreement with them. While ‘good faith’ doesn’t apply to your engagement with contractors, applying the same principles in the current environment may result in mutually agreeable outcomes.
What about recruitment activity I had underway?
If you have made an offer of employment (verbal or written), to a candidate and they have accepted it, they have become a ‘person intending to work’ and are covered by the Employment Relations Act. If you are in this position and need advice please contact Grant Fraser.
If you have recruitment processes in play that have not progressed to offer and acceptance, you can freeze or continue the process, as best suits your circumstances. It would be good practice to inform candidates of what you are doing, but you have no legal obligation to either continue or halt the process – it’s your call.
How do I go through a potential redundancy situation?
Good faith is key. And the law requires you to consult with potentially affected staff, to keep an open mind and to genuinely consider any feedback staff give you. The link below to the Employment NZ website also gives a good overview. We have included an overview from Buddle Findlay here.
In general the key steps are:
- Follow the ‘rules’ set out in your employment agreements and policies;
- Come up with a proposal – this needs to be detailed enough to enable staff to consider it and to give you considered feedback;
- Give staff an opportunity to provide feedback – in the current circumstances this might be one week;
- Genuinely consider the feedback you receive; and
- Make and communicate the final decision.
This is about consultation – not negotiation. You need to give staff the genuine opportunity to provide feedback on your proposal, consider the feedback with an open mind and treat staff with good Faith. However, you are the decision maker.
Be sure to consider the Government’s wage subsidy and factor that into your proposal and decision making. The Government has made it clear that the purpose of the subsidy, is to support employers to keep people in employment during this period. Do you need to make staff redundant now, or can you hold the line and wait to see what happens?
If you need help with putting together a proposal or with any other aspects of potential redundancy situations, please contact Grant Fraser in our Business Capability team at firstname.lastname@example.org or 021 229 4114.
Can I do these things at once?
You can certainly signal you are thinking about all options and that if, the wage subsidy, reducing hours or pay, using up leave entitlements etc, aren’t enough to solve the problem, there will need to be redundancies. One approach that might work in the current situation is to write to/communicate with all staff and say something like:
- Here is the current situation and how it is impacting us;
- We are committed to both you as our staff and to the long term health of the sport/region;
- Here is what we’ve done to date to respond to the situation and meet those commitments;
- To enable us to support you and our sport/region we are considering/proposing the following;
- Reduce Hours/Reduced Pay
- Voluntary Taking of Annual Leave
- Forced Taking of Annual Leave
- Leave Without Pay
- Voluntary Redundancy
- We want to get your thoughts and feedback on these options – ideally we want to move forward in agreement with all our staff.
- (if appropriate) We are not, at this stage, proposing redundancies but please be aware we may have to consider this in future.
- Please send your thoughts and feedback by …
If this doesn’t progress things you can then move to a more formal change proposal. A template for this type of communication is included here.
Please reach out to Grant Fraser or your usual legal/employment advisers, if you have further questions.