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LETS GET DOWN TO BUSINESS.

Question :
I have loaded up a few HR questions people are battling with: (1) Are there any changes to employment law during this period or leniencies for employers? (2) Do you still have to honour redundancy clauses (from their contract) in full e.g. 3-month notice period? (3) If you are looking to reduce everybody’s hours, do you have to follow a normal restructure process? What if somebody doesn’t agree/isn’t interested? (4) Can you force someone to take their annual leave during their notice period? (5) How do you offer unpaid leave?

Question submitted 26/03/20 @ 05:21pm
Industry: HR & Talent
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  • Hi Andy,

    These are some meaty questions so I’ll try and separate the responses to keep it clean.

    1) Are there any changes to employment law during this period or leniencies for employers?

    No. So in light of that I highly recommend employers front communication with their employees as early as possible in regards to the potential of employment terms changes. Now more than ever it is important for employers to be a Good Faith Employer, and that everything they put to an employee to consider is Fair and Reasonable (which is giving the employee an opportunity to consider and respond)

    2) Do you still have to honour redundancy clauses (from their contract) in full e.g 3 month notice-period?

    Currently employment legislation has not changed in recognition of the extenuating circumstances that Covid19 has put small businesses in, so yes, an employer has to honour redundancy clauses. Which can potentially be more expensive than keeping staff.
    The best thing to do is take employees through the regular change process (see below) and try to jointly come up with alternatives such as LWOP (which allows them to be employed elsewhere until you’re in a position to get them back on board) or perhaps a temporary salary reduction (which they have to agree to but it may be more palatable than losing a job).
    You can fast-track the below but remember to be reasonable. This shouldn’t for example all happen in one or two days:
    Step 1 – Document your business case
    Step 2 – Document your proposal
    Step 3 – Present your proposal to employees
    Step 4 – Gather feedback
    Step 5 – Genuinely consider the feedback
    Step 6 – Confirm the new structure – in writing and via a meeting or technology
    Step 7 – Implement the change – and keep talking with your staff

    At this time of uncertainty a lump sum of money would be reassuring to some staff, so be prepared for them wanting to take their entitlements (and it may be worth talking to the bank in advance of this process if that is an option for you)

    3) If you are looking looking to reduce everybody’s hours, do you have to follow a normal restructure process? What if somebody doesn’t agree/isn’t interested.

    Yes. A change to an employees employment conditions warrants a change process (better terminology that “restructure” process which has immediate negative connotations of job loss).

    After going through a genuine (and documented) change process where feedback has been received, considered and decision has still been made to modify hours across the board, the employer can make that business change. Though I would recommend that there is a finite time period provided for the employee to consider the reduction for. E.g if you are suggesting it be for 12 weeks, you need to confirm in writing that you will be returning them to their previous terms and conditions at a certain date.

    The employee doesn’t have to agree, and may consider the change to hours significant enough that they want to be made redundant rather than continue in employment that is worth less to them, though for a temporary period of time. This can be negotiated, and it would also be dicey. I would seek assistance in wording that final decision should you have employees that are vehemently opposed to supporting their employer remaining in business, which is effectively what that scenario would mean.

    Further to question 3) Hopefully your employment clauses state that you as an employer can make changes to hours of work, though you still need to act fairly and reasonably when you do so e.g take them through a change process.

    4) Can you force someone to take their annual leave during their notice period?

    Yes. BUT bearing in mind employees should be able to, in the first instance, choose when they holiday, it would be best practice to seek agreement first if a shutdown is in relation to Covid19.

    The employment.govt.nz cites that “If an employer and employee cannot agree, an employer may direct annual leave be taken if they have first discussed this with the employee and provided 14 days’ notice before the annual leave is to be taken” so if you have been through a change process, there has been no agreement, now would be the time to implement notice commencing.

    5) How do you offer unpaid leave (also known as Leave Without Pay or LWOP)?

    Again, a change process needs to be adhered to. The multiple options you are considering as an employer need to be put to your employees, and what the intended outcomes of each of those options e.g why unpaid leave over paid leave, why redundancy over hours reductions etc.

    You need to invite the employee to meet to discuss the change to employment terms, which would have to be digitally or over the phone. Allow them time to prepare and have someone with them if needed, then go through the options.

    Remember, we cannot assume everyone has internet access. This obviously makes the process harder, but it still needs to be documented and followed if your employee doesn’t have access to internet, wifi or data so you will need to rely on phone.

    Ensure that when you offer this as an means to retain employment, that you have a fixed period for this temporary change. It is important to provide certainty as much as you can to your employee, so you cannot leave it open-ended.

    Hey Andy, Jada – any thoughts on whether the COVID wage subsidy of $585 per week can be used towards paying their annual leave whilst on lockdown?

    Hi Sarah – good question!
    My understanding is once the employer receives the lump sum subsidy, how you choose to use it for the employee is basically untraceable. So if your employee is currently on annual leave, yes you can apply the subsidy towards that. You’re given a bucket of money to get you through and you need to pay them for annual leave regardless of the source of the money.

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