Covid-19: Employment FAQs

As the past couple of weeks have moved very fast, in every new development more questions are being asked. Here are some answers to common questions:

What are the obligations of an employer right now?
Most importantly – Normal Employment Law applies. Nothing has changed.
An employer must pay according to the contract, and all other obligations must be met, unless there has been an agreement to the contrary, between employee and employer.

Can I require staff to use their annual leave?
Yes, however the employer must issue a notice which the employee must receive 14 days’ notice before commencement, unless agreed otherwise.

Can I make an employee redundant?
The same obligations as any normal redundancy process apply. Employers must consult in good faith with employees, and a restructuring process still applies. Employers should explain the rationale and put the suggested proposal to the employee and consider feedback before coming to an agreement. Employers may be able to find some flexibility with the employees to have a win-win outcome. Reduced hours or reduced pay? A proposal may be made by either party to help retain employment. The employment rules are not being broken if there is an agreement made between employer and employee.
Things to consider: Under the novel circumstances we are facing, it may be possible that a “force majeure” clause if applicable could come into effect. This clause might excuse either party from performing their obligations. A careful look at the contract for wording that may suggest an epidemic, otherwise contract prevails.

Can an employer getting the staff subsidy, reduce employee hours to the subsidy rate?
Yes, with employee’s agreement. It might be a way to retain the staff after the subsidy period has finished and keep staff from being made redundant. As long as best efforts have been made to pay 80%, you have satisfied the criteria of the wage subsidy.

Can the wage subsidy be used to pay annual leave?
Yes, annual leave is considered wages.

Can the wage subsidy be used for notice periods?
Yes, notice periods is considered wages, however employers receiving the wage subsidy have an obligation to retain staff during the period of the wage subsidy period. If not, you may have an obligation to repay subsidy.

Can the wage subsidy be used for redundancy compensation?
No, redundancy compensation is not considered wages.

Are casual staff entitled to the wage subsidy?
Yes, if the employee was expected to have worked during the period of the wage subsidy. The employer can apply on their behalf. Work out what the hours expected to have worked would be to determine what the employee is eligible for.

Key Message:
Employment law obligations continue to apply normally. If in doubt seek advice. Wage subsidies do not change the fundamentals. You still need consent to change any contracts.
Communicate well and communicate early with staff. Try to find win-win solutions.