COVID-19 – Making Necessary Changes - Practical Advice
Mon April 20th 2020
Below are the most common questions we are currently receiving. Our observations are provided as general information not intended to cover specific circumstances.
1. What should you be doing now with Level 3 imminent?
In simple terms from an HR perspective – planning and communicating.
Planning
a) Who can continue to work efficiently and effectively from home? Do they have appropriate resources?
b) Who do you need to physically be at your workplace or at another location away from their “bubble”?
c) What do you need to do to ensure your workplace meets the Government guidelines which involves implementing the required Covid-19 Workplace Plan.
d) Is there anyone whose job will no longer be available for the next 3-6 months, if at all?
e) Consider whether the business requires staff to work different hours, at a different rate of pay, remembering nothing can change without their agreement, and it must always be recorded in writing. If they don’t agree you may have to look at restructuring.
f) Do you require them to use annual leave? Legally you have to give 14 days’ notice, but by agreement it can be a shorter period.
g) Have a register at the workplace to record everyone who visits and their contact details. Employees will be required to keep a list of who they come in contact with on a daily basis (see point (c) above).
Communicating
a) Prepare a communication plan.
Note: Aside from staff, if you’re not already doing so, communicate with suppliers and clients to reassure them of your intentions.
b) Which staff do you need to speak to individually?
c) Prepare a company wide communication, informing staff what you are proposing and asking for their feedback where practical. Set a deadline for this of 24-48 hours. Consider any feedback and communicate again as to what will be happening, why and when.
We are very experienced at talking through different options and guiding our clients through what they need to do with confidence and calmness.
2. What happens if you cannot afford to top up the Government subsidy to 80% of your employees’ normal wages?
No terms and conditions of employment can be changed without the employee’s approval, so in the current climate especially, communication is critical. We recommend that you prepare a written communication to each employee outlining your proposal and the reasons for it, and provide documentation to substantiate those reasons. When you speak to them use this documentation and then email it to them afterwards to avoid any misunderstandings.
If, after going through a consultation process including considering their feedback to your proposal you get agreement from your staff member, this should be confirmed in writing, preferably in a proper Variation Document signed by both parties. If this is not practical, as a minimum an email confirming their agreement should be obtained from the employee.
In our experience employers are topping up the Government subsidy to 80% where they can, but this is not always possible and, as time goes by, many are having to review this position. Some are only able to pay the subsidy.
Please note that if an employee is working from their home or their normal place of work, they must receive at least the minimum wage of $18.90 per hour for all hours worked. In some cases the subsidy may have to be topped up.
The rules around the subsidy are quite complex and specific and you may be audited in the future.
We strongly advise you to call us before commencing this process with employees.
3. What happens if you believe you need to make redundancies now to ensure sustainability?
There are two different scenarios and they depend on when you applied for the Government subsidy, i.e. before 4pm on 27 March 2020 or after that time.
a) Where the application was made before 4pm on 27 March 2020, redundancies within the subsidy period are permissible because the declaration made when applying for the wage subsidy was that the employer would use their “best endeavours” to retain the employee named in the application, in employment. You would then be required to notify the Ministry of Social Development (MSD) within five working days and will probably be asked to repay the money to MSD. Alternatively, MSD may suggest that any excess subsidy payments are put towards topping-up other employee subsidies.
The normal restructuring processes apply if a redundancy is undertaken.
b) The declaration that applied to applications after 4pm on 27 March 2020 confirmed that employers undertake that they “will retain the employees named in their application as employees for the period they receive the subsidy in respect of those employees”. In some circumstances where the business needs to make some positions redundant to ensure their sustainability, an extended notice period can be agreed between the parties so the employee receives the full subsidy. Note that the subsidy cannot be paid as a lump sum but is to be paid as part of the normal pay cycle during the notice period.
The normal restructuring processes apply if a redundancy is undertaken.
We strongly advise you to call us before commencing this process with employees.
4. What if an employee wants to stop contributing to their Kiwisaver?
Yes, they can go online and do this, but they need to be aware that the Employer is not then required to continue the employer contribution.
5. If an employee is on unpaid leave, do they accrue holiday entitlement?
No, it doesn’t accumulate while on leave without pay after the first week (section 16(2)(a)(vi) Holidays Act 2003.