As businesses do their best to keep themselves afloat whilst trying to do right by their employees, there have been a number of talking points amongst business owners during the lockdown period:
1)Most businesses care for their employees and will try and do everything possible to keep them;
2)But by not acting early or taking steps to mitigate losses, you could lose everything.
What we have noted is that businesses, although acting in the best interest of all, have put in place processes that are illegal and contravene the Employment Relations Act. This could potentially end up costing the Employers thousands of dollars in defending and eventually paying out for their genuinely innocent mistake.
During the first lockdown in March, the government released their “Wage Subsidy” scheme. One of the conditions to take up this scheme was to use best endeavours to pay staff a minimum of 80% of their wages. Businesses took this as; “I only need to pay my staff 80%” and proceeded to advise staff that their pay was to be reduced to 80%. Now on the face of it, this seemed fair. Staff were at home not working or at least not working a full 8 hours 5 days a week right? Wrong. The criteria the Government released didn’t absolve the employer’s obligations under the Employment Relations Act which requires good faith consultation and an agreement from staff to the reduction before it is implemented. This left a lot of businesses vulnerable to a claim against them.
Recently there was such a claim where the Employment Relations Authority ruled that the reduction was unjustified and so was the redundancy and ordered the employer to pay the deducted amount back to the employees.
The Employer in that case could have implemented the reductions if only they followed the correct process.
As New Zealand braces for another lockdown, or at least the effects of Auckland’s lockdown hitting hard, businesses need to get this area right and reduce any stresses they may have in this area.
If you are thinking about making redundancies or reducing staff pay, call in the experts to get it right the first time.
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JOHN DUSTOW – E: firstname.lastname@example.org | P: 027 855 9989