Running your business at Alert Level 4

Coronavirus Background
Coronavirus Background

Got questions about paying employees, operating your business, and other employment matters while New Zealand responds to the latest COVID-19 outbreak? MyHR’s rolling update provides some answers.

Nick Stanley
By Nick Stanley

We’ll be updating this page with questions we receive from our members about paying employees, operating your business, and other employment matters while New Zealand responds to the latest COVID-19 outbreak. To look at updated versions of this article click on this link: https://blog.myhr.works/alert-level-4-frequently-asked-questions?utm_source=boma&utm_medium=partner&utm_campaign=faqs

As of 11:59pm, Tuesday 17 August 2021, the whole of NZ is at Alert Level 4. Auckland and the Coromandel Peninsula are likely to be at Level 4 for 7 days; the rest of the country is at Level 4, for an initial period of 3 days. Get the latest government information at COVID19.govt.nz.

This information is correct as at 9am, 19 August 2021. 

Do I need to pay my staff over lockdown?

The short answer is yes, employees are entitled to be paid their usual hours of work. However, you should consider whether the employee can work from home:

Yes, they can work from home

Then it’s business as usual and the employee works from home. Remind them of their health & safety obligations and check to ensure they have a safe and healthy home work environment.

Yes, but not their full role

In this case, you will need to consult with them about working reduced hours and outline the impact on their pay. Or you can consult on a temporary change in duties, e.g. they can do admin tasks instead of the usual building work.

It is important to recognise this is a change in hours, not pay. If you are unsure of the difference, get some expert advice.

Also remember the consultation process involves 3 core steps: your proposal, the employee’s response, then a decision. MyHR can support with this process.

No, they can’t work from home

If there is no work the employee can complete, then you have 2 options:

  1. Pay them as normal.
  2. Consult on reduced hours – this is by far the riskiest option and we highly recommend you get specialist advice before undertaking this option.

I have a shift cancellation clause, can I use that?

Yes, but this isn’t our recommended tool. The purpose of a shift cancellation clause is to allow flexibility for things like wet weather, unforeseen lulls in trade etc.

Under the Employment Relations Act, shift cancellation provisions in an employment agreement must state how much notice needs to be given – the notice must be reasonable (typically more than 24 hours) – and what compensation the employee receives if the notice isn’t given.

If you do want to use the shift cancellation clause, then we recommend consulting with your employees using the terms ‘for the period of the lockdown’, as there is a possibility of it getting extended.

Shift cancellation should not be used if you can access any of the government wage subsidies.


I have a business interruption or force majeure clause. Can I rely on this?

We highly recommend against this. Both of these clauses have a high legal threshold to meet to be a safe option. Considering the nature of COVID-19 and the various government support schemes available, invoking these clauses would not be seen as fair or reasonable. You still need to consult with employees on any changes.


If there is work available (either working from home or due to the business being an essential service), however an employee does not want to work, what happens?

If an employee chooses not to work when there is work available, and it is safe for them to do so, you could agree to either annual leave or leave without pay.

For employees in essential services, you will need to ensure that all social distancing and isolation guideline recommendations are followed.

Find out more about the guidelines for doing business at Alert Level 4.


My employee got sick before lockdown and has applied for sick leave for the whole week, what do I do?

They are still sick (or caring for a dependent that is sick), so treat this as normal, i.e. the employee is not ready, willing and able to attend work. As they wouldn’t otherwise be at work, they can take sick leave.

If they have cold or flu symptoms, encourage them to contact their doctor (or Healthline: 0800 358 5453) and get a COVID-19 test.

You can use the wage subsidy to pay for the sick leave.


My employee applied for annual leave during this period, what do I do?

If an employee has annual leave booked and it falls during the lockdown, it would be good faith to cancel the leave if the employee requests it.


Can I just get everyone to take annual leave/sick leave for the lockdown?

In this current lockdown, you cannot require employees to take annual leave to cover their pay. You can compel employees to take annual leave, but this requires at least 14 days’ notice and we recommend consulting with employees before doing this. Given the current length of the lockdown, this would not be a practicable option.

Employees can request to use annual leave to top up the wage subsidy.

You cannot require employees to take sick leave if they are not sick.


What financial support is available for businesses?

The best place to find out is the government’s COVID-19 website.


During the lockdown, business only have to pay their employees 80% of their wages. Is that correct?

Not exactly. To meet the wage subsidy criteria, businesses you must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.

If you are proposing paying employees less than their normal wages, you will need to follow the correct consultation process.

Find out more about the COVID-19 Wage Subsidy at Work and Income.


I have got the wage subsidy, what do I pay employees?

You need to make the best effort to pay employees 80%. If that isn’t possible, you must pay them them at least the full subsidy.

You should consult with employees if you are paying them less than their usual wages.


I have a new employee starting over this lockdown, what do I do?

You can change their start date, but this does require consultation with the person.

If you need assistance preparing a change to start date letter, please contact us.


You keep saying consult, what does that mean?

Consultation is in essence a 3-step process:

  1. Propose your changes to the employee, outlining what it means for them.
  2. Give the employee an opportunity to understand the changes, seek advice, and prepare a response. Then meet with them to hear the response.
  3. Consider their response and confirm the outcome.

This can be a shortened process in some situations; we recommend seeking advice.


More useful information

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