Being an Employer during COVID-19 Alert Level 4 - Frequently Asked Questions

During this period of major disruption, many firms and organisations are grappling with providing their clients with current advice in relation to the rapidly changing legal position on COVID-19 measures.  On top of client demands, the industry is also having to deal with their entire workforce working remotely (if possible).

With courts operating significantly reduced services and clients re-focusing their attention on urgent areas in their businesses, the legal profession is also facing tough decisions as to how their business functions over the coming weeks and months.  We have summarised below some of the key workforce implications that legal professionals will need to consider during this period.

1. What are the key things to think about when employees are working from home?

1.1. Both employers and employees have continuing duties to ensure that employees have a safe and healthy workplace.  When employees are working from home, that becomes their “workplace” and employees need to work with their employer to identify and eliminate (as far as possible) any potential hazards.

1.2. With all employees (except any involved with essential services) now working from home, it likely won’t be practical for firms to carry out a home audit of everyone’s workspace.   However, employers and employees will need to find a way to comply with their obligations – for example, employees can carry out their own workstation assessments and confirm to their employers that they have do so.  It may also be necessary for employees to undertake checklists and/or review material on safe working practices.

1.3. Employees should also have the necessary tools to complete their work.  Computer and telephone equipment are obvious elements of this, but it may also be necessary to make sure that you have adequate internet facilities and, importantly, the right knowhow when it comes to the applications that the organisation uses. 

1.4. Adequate supervision of junior staff is likely to also be an issue.  Firms and individual supervisors should make sure that robust systems are in place to make sure that junior staff members are getting the right balance of work where possible.  Critically, there should also be protocols in place to ensure work is supervised, albeit remotely, where necessary.

1.5. Finally, both firms and their employees will need to make sure they take measures to protect the security of all business and client information and data.  This is particularly important for lawyers and their colleagues who may handle financially or personally sensitive information.  For example, employees who are working in a shared space with other flatmates may need to take precautions to ensure that sensitive client information is not shared inadvertently.  Similarly, work should not be undertaken via personal email addresses that may not be secure.

2. Can employees be asked to take annual leave and/or sick leave during the shutdown period (provided the employees of the non-essential business are unable to work from home)?

2.1. Employees may be encouraged to take their annual leave at any time.  During the government lockdown, employers and employees can agree that an employee will take annual leave during this period if they are unable to work.

2.2. If an employer and employee cannot agree on the employee taking annual leave, then the employer can require the employee to take annual leave at a specified time during the closedown by giving the employee 14 days’ notice of the requirement to take annual leave.

2.3. However, pursuant to the duty of good faith, the employer must try to reach an agreement with the employees as to when the entitlement is to be used before utilising their right to require the employee to take leave.

2.4. Employers and employees can also agree to take any unused sick leave during the shutdown period if the employee is sick and/or the employee is caring for a dependent that is sick.  However, employees cannot be required by their employers to take sick leave during the closedown if they are not sick.

3. How are leave entitlements affected by the government assistance schemes for employers?

3.1. Employees can also receive payments pursuant to the wage subsidy or leave payments from the government during the closedown period if they meet the eligibility criteria.  These payments don’t affect employers’ sick leave obligations and are in addition to any accrued entitlements.  Employees are not required to exhaust their sick leave or annual leave to be eligible for these payments.

3.2. Employers and employees can also agree to use annual and/or sick leave to top up any remaining amount of their income that is not covered by the leave payment or wage subsidies

3.3. In addition, an employee can agree that they will only take annual leave and/or sick leave for the period of time where their wages are not covered by the wage subsidy and/or leave payment.

4. What if a firm needs to implement cost cutting measures that will have an impact on employees’ terms and conditions?

4.1. In short, what a firm needs to do depends on the measures that the business is taking.  If any measures are minor or don’t impact on the employee’s terms and conditions of employment, the employer should consult with its employees about the change but can likely undertake the change unilaterally.  For example, the business has decided to reduce office space and will reconfigure where everyone sits in the office.  

4.2. If the change is more significant or may negatively alter an employee’s terms and conditions of employment, the employer’s ability to implement the changes will depend on its contractual rights to do so.  For example, if the employer provides certain allowances or entitlements that are discretionary benefits and has reserved it’s right to amend or remove those specific benefits, then it should still consult with its employees before amending the terms of the handbook but likely doesn’t need employee consent to do so.

4.3. Finally, if the change will have negative consequences for an employee’s contractual entitlements, it’s likely that the employer will need to reach agreement with the employee about the changes before they are implemented.  A generic clause in the employees’ employment agreement which allows the employer to make amendments to terms and conditions will not change that position.  For example, if the employer wants employees to reduce their working hours and/or salary.


5. What happens if a firm needs to make redundancies?

5.1. Where the employee’s position is surplus to the commercial needs of the business, an employee’s employment may be terminated on the grounds of redundancy.  

5.2. The process for making employees redundant is relatively prescriptive.   We have summarised the process below, however, each process may be different depending on the number of staff that are affected, whether employees will be selected for redundancy from a pool of colleagues and on the overall terms of the redundancy. 

5.3. As a starting point, all employers have a duty of good faith.  In a redundancy context, this means that:

a. The employer must provide the potentially redundant employees with:

i. access to all the relevant information (on which it will make its decision as to whether to make any redundancies); and

ii. an opportunity to comment on the information before the decision is made.

b. In practice this means that employers are required to consult with affected employees on the rationale for proposed redundancies before they make a final decision to undertake such redundancies.  The rationale must be a genuine business reason based on the needs of the business.  In this case, that reason is likely to be lack of work for the employees to perform.

5.4. Where applicable, the employer must also consider whether there are any alternative positions available (though this is unlikely to be the case in the current circumstances).

5.5. Generally, the redundancy process will involve the employer putting a detailed written proposal to the employees explaining the genuine business reason for the proposed restructure.  Relevant supporting information should also be provided.  The employee will then be given a reasonable period of time to consider the proposal and give written and/or oral feedback.  Only after that feedback is considered does the employer decide whether or not to go ahead with the proposal.  The employer then announces that outcome to the employees with its reasons for proceeding. 

5.6. Save in limited circumstances, there is no general requirement under New Zealand law to make severance payments, however, some individual employment agreements may give employees an entitlement to a redundancy payment. 

Prepared by Peter Kiely, long time ADLS member and contributor, 8:23am 27 March 2020

Please note that ADLS is unable to provide legal advice and the above is not offered as such, but instead, as some form of guidance. We recommend seeking your own legal advice where necessary.