The Government has announced various relief measures in recent weeks to assist businesses affected by the impact of the Covid-19 virus. The uncertain nature of the current situation has resulted in business conditions that are constantly and rapidly changing. Employers are faced with making significant decisions about their staffing to ensure the viability of their businesses. Decisions that need to be made quickly in these circumstances often result in the additional risk of not acting appropriately or following the necessary processes.
Wage Subsidy Scheme
The aim of this scheme is to support employers to ensure the continued employment of their staff, thereby helping employees maintain an income even if they are unable to work. It is available to most businesses adversely affected by COVID-19. The most comprehensive and accurate information may be found on the Work and Income website.
Employees will need to pay tax on their wage subsidy payment as it is paid to them as part of their normal wages. This means its subject to the usual deductions, such as PAYE, Student Loan, KiwiSaver and ACC.
Leave and pay entitlements
One of the key challenges is working out employee entitlements to leave, where the worker cannot carry out their role.
Employment New Zealand have developed a useful table to provide guidance about leave and pay entitlements, to ensure all obligations continue to be met.
Changing or terminating employee agreements
It is important to remember that the normal obligations within the employment relationship are still present. Whilst the scenario we are all living through is far from normal, it is important that we all continue to act in good faith, a principle underpinning employment law in New Zealand.
Good faith includes the following three elements:
- Parties must not act in a misleading or deceptive way.
- Parties must be responsive and communicative.
- Before making any decision, which may result in an employee losing their job, the employer must give the affected employee sufficient information to provide an understanding of the proposal, followed by sufficient time and opportunity to comment.
Many employers are looking to alter the hours of work for employees during this time. This cannot be done without the employee’s agreement. It is crucial that a normal process is followed to make a change, which will include explaining the proposal and allowing employees an opportunity to consider and give a response on that proposal.
In some cases, redundancy may be the only option. There is some element of flexibility in the legislation to allow for the process to be conducted in a faster manner than may otherwise be normal. If the correct process is not followed, this presents significant risk for the employer and it is prudent to gain advice before conducting redundancies.
We are currently assisting clients with a wide variety of employment related questions including payroll, tax, subsidies and change management. If you would like assistance to help you through the issues you are facing as an employer, please contact us.