Breaking news: employment law not cancelled during lockdown

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If there was ever a time to prioritise selflessness over selfishness and people over profits, that time is now. Exceptional times often lead to exceptional conduct, both the exemplary and the atrocious.

Since moving to Covid-19 response Level 3 on  April 23, followed shortly thereafter to Level 4, I have seen the very best of employers treating their employees with kindness and compassion, and the very worst, summarily dismissing their staff via a phone call or text. The latter is unacceptable, and employers need to be aware that New Zealand’s employment laws were not cancelled or amended as part of the Covid-19 response.

I anticipate we will be seeing a flood of personal grievance claims that will dwarf the number of Covid-19 cases (all going well) in New Zealand. I also imagine that the Employment Relations Authority and Employment Court will be taking a very dim view towards employers who exploited the Covid-19 crisis to unjustifiably dismiss an unwanted employee, and the remedies for successful employees will likely be at the upper end of the scale and, likewise, penalties for employer breaches of good faith.

The Government has just raised its commitment to the wage subsidy from $5.1 billion to $9.3 billion, in addition to other financial support to assist businesses during this difficult time. The wage subsidy was expressly created to enable businesses to continue employing staff during business disruption, and to ensure people can keep a roof over their head and food on the table.   

The subsidy requires employers to pay 80 percent of an employee’s usual wage, of which $585.80 (full-timers) and $350 (part-timers) comes from the wage subsidy, with the remainder being topped up by the employer. However, the Winz website states that, if the employer cannot pay the top up, they must at least pass on the full amount of the subsidy to the employee, so at the very least, the employee will be receiving the subsidy.

Employers need to go online at workandincome.govt.nz and apply for each employee. The money is paid as a lump sum for a 12-week period, and the eligibility criteria is that the business must have suffered, or anticipates suffering, a 30 percent or more decline in revenue. Employers must also have tried to mitigate this decline, via talking with their banks or making insurance claims. Anecdotally, it appears to be taking between two to seven business days for payments to be made.

Now back to these dismissals, which I am being overwhelmed with. Firstly, just because we are under lockdown, a dismissal still has to be substantively justified (the why) and done in a procedurally fair manner (the how).

With the wage subsidy available, it would be fairly difficult for an employer to say they simply could not afford to keep paying the employee, when it may end up not costing them a cent. If they really cannot pay the top-up, then they can still keep the employee employed and pay them the subsidy. It may well be that at the end of the 12 weeks, the continuation of the business or of some employees’ employment cannot continue, but at least the lockdown is likely to have finished by then, and employees can actually go out and seek alternative employment.

If, for any valid reason, an employer did need to consider terminating the employment relationship, then the usual fair process is required. The employee must be provided with all relevant information which supports the employer’s proposal to terminate employment, and must be provided with an opportunity to seek legal advice and then respond to the proposal. Only after the employer has listened to what the employee has to say (which under the circumstance can be by phone, email or Skype) and considered this information, can they then go on to make a final decision on whether to dismiss or not. Even then, as the dismissal is a no-fault dismissal (as in the employee did not do anything wrong), it should be on notice.

Clearly, the cases I am seeing, where an employer simply calls or texts an employee and tells them they no longer have a job, is never going to pass as a justified dismissal, even if you could show that the reason for the dismissal is valid.

The current situation is tough for everyone — employers and employees. The Government has done everything within its power to try and mitigate everyone’s financial losses. To simply dismiss an employee, in the middle of a lockdown so they are unlikely to be able to find alternative employment, is unconscionable, unacceptable and downright mean.

Our grandparents and great grandparents were sent off to fight world wars. We are being asked to stay home, wash our hands and be kind to each other. I do not think that is too much to ask.

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About Author

Erin Burke

Employment Lawyer and Director at Practica Legal Email: erin@practicalegal.co.nz phone: 027 459 3375