Question :
A business owner has given me this question – I work in retail and I applied for and received the Wage Subsidy. I have topped up my staff’s salaries to 80% for the first two weeks, but I have no revenue and I can’t afford to top them up anymore. My accountant has advised me that I can only pay my staff the subsidy from here on in. I have emailed all of my staff and explained our situation and given them notice of this change in pay. I have suggested they could use some of their leave at this point if they wish. Everyone has been receptive and understanding, but I have one staff member who is demanding I pay them the full 80%. I am unsure what I should do. I simply don’t have any revenue. 

Question submitted 09/04/20 @ 01:06pm
Industry: People & Culture
  • Up

    I can hear the worry in your note. It’s such a challenging time for you – and I’m glad you’re seeking out professional advice. I encourage you to call MSD asap to advise that your situation has changed and you are no longer able to support your employees at 80% of their income as you thought when you applied for the subsidy. You will then need to decide if you are able to retain your employees, and conduct a consultation to advise them of what you propose, and liaise with them in good faith on those changes. Sadly, you may need to consider proposing redundancies if you are unable to come to an agreement with your people. I encourage you to consider some professional support on the HR side, either an employment lawyer or experienced independent HR consultant, to help you tailor your options and run a fair and transparent process. Also have a think about the support you need for you. Do you have a mentor or someone who will understand your business predicament – who can listen and be empathetic as you work your way through your options. Your health and wellbeing is very important too. Take care and best wishes for your next steps. Fiona


    I thought it might be relevant to post something I put up last week as I think it is relevant for this question also.

    Before any changes are made, each employer is responsible to review the individual terms and conditions of each relevant employee’s Employment Agreement. The Employment Agreement may set out a prescribed process or requirement.

    Whatever you set out to propose, ensure that you do your best to express empathy, tell a thorough story, and bring people along on a journey in which they perceive you to be fair and reasonable. Even the most robust process and outcomes can lead to an employee raising a personal grievance, if they feel that their employer has not been fair and reasonable.

    Please remember that each communication, whether to the employee or affecting the employee, is a discoverable document. This could include emails, texts etc. between Directors. Be careful not to predetermine an outcome.

    Prepare a business case that outlines:
    – Your current position – Good faith requires that employee receives all the financial information required to support the position.
    – Your predicted position (short-term and long-term) – this should include revenue and cashflow predictions
    – Any disclosure relevant to the position – e.g. disclosing the position on Government Wage Scheme Subsidy, and any declarations made during applying for this scheme
    – Any action that has been taken to mitigate the need to impact employees incl. banking assistance

    New Zealand Employment Law has not changed, therefore where an employer is looking to change an employee’s terms and conditions of employment, they require the consent of the employee – therefore employers are recommended to enter a robust communication process (that mirrors the formal process of Change consultation) when considering these changes.

    It is our position that where an Employer, in good faith, believes that they cannot sustain their normal operations or future operations, which may include not being able to sustain all employees at 100% of their usual pay, then an employer can enter into a formal Consultation Process with employees. This may include a proposed change to role requirements and should those proposed changes include a change to working hours, then this in turn would include a proposed impact on pay. So the requirements need to be reviewed team by team, and role by role. We recommend staying away from a simple application of 80% pay to all employees.

    Every employee must be given a genuine opportunity to provide feedback, input and make alternate suggestions. Every piece of employee feedback must be given consideration with an open-mind, and the thinking and decision must be documented.

    Remember that Employment Relations Authority will review any Personal Grievance in the position of hindsight, and advice is changing daily at present. What won’t change is the assessment, “What would a reasonable employer do in the circumstances?” Every decision must be fair and must be genuine.

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