If your business had to close or has been operating at reduced capacity due to COVID-19 restrictions, wages are still payable to employees who are ready and willing to work and would have been able to work, but for the COVID-19 restrictions. 

Take the case of an Auckland employer, Eastern Bays Hospice Trust t/a Dove Trust (Dove), which provides hospice services in East Auckland. 

Dove applied for the government wage subsidy on March 23 for six employees. On March 24, Dove closed its retail stores due to lockdown restrictions. The next day, Dove sent a memorandum to all staff stating that normal salary and wages would continue until the end of the week, but after that all staff would be paid 80% of their salary or wages until the end of lockdown.

After lockdown ended, employees were told their positions were disestablished immediately and they would be paid eight weeks’ notice (double what they were contractually entitled to) at a reduced rate. 

The employees took a case to the Employment Relations Authority to challenge the fairness of their dismissals and decreased pay rate. The Authority held that the employees had not agreed to the reduction in their wages. It also held that just because Dove extended the contractual notice period, it could not set a different remuneration rate different to that agreed in their employment agreement. 

Dove should have consulted with employees about extending the notice period and paying a different rate to what they were contractually entitled to. 

If your business is struggling, it might be time to start considering what long-term effects COVID-19 may have on your business. If you are considering a restructure and potential redundancy process, Aspiring Law is more than happy to help.

Feedback, comments and questions are always welcomed – please feel free to e-mail me on [email protected]

T: 03 443 0900

W: www.aspiringlaw.co.nz

Lucy Conway specialises in family law at Aspiring Law.

Please remember, this information is designed as a general guide, and should not replace specific legal advice on a particular issue.