COVID-19 Updated practical tips for employers in an evolving situation

This response now includes the government's relief package announced on Tuesday 17 March, as well as its announcement of a 14-day compulsory self-isolation period for arrivals from nearly all international ports of origin.

We therefore set out below an updated list of practical tips for employers.

Keep a close eye on changes

The Ministry of Business, Innovation and Employment (MBIE) is continually updating its guidance to employers about the workplace response to COVID-19. As the situation evolves, we recommend checking this guidance.

Employers and employees will need to be flexible. Ultimately, there is no substitute for good communication with your employees and planning for a range of different scenarios in advance.

We anticipate the government will be exploring a range of measures to support employers so that they can maintain employment for as many employees as possible. We recommended keeping a close eye on announcements over the next week and factoring them into your decision-making.

Health and safety considerations

Employers must manage the health risks to workers and other people affected in the workplace, taking them seriously and treating employees in good faith. Employers should plan ahead and work with workers and unions to address likely scenarios arising from COVID-19.

Employers are required to take all reasonably practicable steps to eliminate or minimise risk, and protect workers at all times from workplace hazards. Relevant risks/hazards to consider here are both the actual virus itself, and the mental health issues that may arise for employees given the stress of such an uncertain situation.

To minimise the risk of spreading infectious diseases in the workplace, encourage employees to follow the Ministry of Health guidelines regarding basic personal actions that we can all take to stop the spread of infectious diseases. Employers should also consider providing immunisations to staff this flu season. They won't protect against COVID-19, but will at least protect against a number of strains of influenza.

To minimise mental health impacts on your employees, our advice is communicate early, and communicate well. If you offer EAP support, make sure that the contact details are well publicised. Managers should be encouraged to be patient with employees and not to “joke" about the situation – there are likely to be a range of responses to this type of situation within a workplace (from people who are less concerned to people for whom this could cause more severe mental health responses).

All employers should have a plan for what might happen in a wider outbreak situation, and ensure that employees are aware of that plan in advance.

Leave and pay: various scenarios

The rules on annual leave, sick leave and alternative leave in the Holidays Act are quite clear – but none of these neatly apply to a compulsory self-isolation situation in which the employee is not actually unwell. There is now a new form of leave, “COVID-19 leave", which the government has announced to address some of this “grey area".

A range of possible scenarios could arise within your workforce. Every employee's particular circumstances need to be considered, but there are some general principles to guide your planning for these situations.

If an employee is sick with COVID-19 (or has a dependent who is sick with COVID-19):

The employee should not be required to work until they have been symptom-free for 48 hours.
The employee should be directed not to return to work until they have been advised by public health staff that they no longer need to be in self-isolation.
The employee is entitled to sick leave if they satisfy the relevant criteria in the Holidays Act or their employment agreement.
If the employee has run out of sick leave or is not entitled to it, they may seek to use other forms of paid leave (such as annual holidays or alternative holidays).
The employee is entitled to receive COVID-19 leave which is provided by the government. The employer must apply to the Ministry for Social Development for COVID-19 leave, which is paid to the employer at the following rates:
- $585.50 per week per full-time employee, and
- $350 per week per part-time employee.
The employee is entitled to receive COVID-19 leave at the same time as other forms of paid leave, and therefore may use their sick leave or annual leave concurrently. However, the employer is not required to pay the employee more for that time on leave than what they would otherwise have received.
Receiving COVID-19 leave does not reduce an employee's sick leave balance.
COVID-19 leave is available from 17 March 2020, and may not be backdated beyond that point.

If an employee is sick with any other illness (or has a dependent who is sick):

The employee should not be required to work.
The employee is entitled to sick leave if they satisfy the relevant eligibility criteria in the Holidays Act or their employment agreement.
If the employee has run out of sick leave or has no entitlement yet, they can request annual leave or alternative holidays that are available to them (an employer should most likely agree to this, but isn't required to). They might also seek paid leave in advance of entitlement. An employer cannot direct an employee to take annual leave against the employee's will in this situation.
Ultimately, in this situation, the period off work may need to be treated as unpaid sick leave.

If an employee has been directed to self-isolate in accordance with Ministry of Health guidelines and they have registered their self-isolation with Healthline, but they are not sick:

They should not be required to attend their workplace or mix with their colleagues/customers.
Employers and employees should consider whether working from home is practicable during the self-isolation period. In that case, the employee would be paid normally.
If an employee cannot work from home, then this is not a sick leave situation.
- However, the employee is entitled to receive COVID-19 leave, for which the employer must apply through the Ministry for Social Development, and is paid at the following rates:
  - $585.50 per week per full-time employee, and
  - $350 per week per part-time employee.
- The employee is not entitled to receive COVID-19 leave if they have travelled overseas after 16 March 2020 and returned to New Zealand.
- MBIE guidance recommends that the employer and employee consider paid special leave (i.e. allowing the employee to continue to receive their ordinary pay, without any deduction of leave) or the use of other forms of leave by agreement. This arrangement would be separate from the government-provided COVID-19 leave.

If an employee is required to stay at home because their child is required to self-isolate, but neither the employee nor their child is unwell:

The employer and employee should consider if working from home is possible (in which case normal pay would apply).
If working from home is not possible, the employee is entitled to receive COVID-19 leave from the government, for which the employer must apply through the Ministry for Social Development, and is paid at the following rates:
- $585.50 per week per full-time employee, and
- $350 per week per part-time employee.
MBIE guidance recommends that the employer and employee consider paid special leave (i.e. allowing the employee to continue to receive their ordinary pay, without any deduction of leave) or the use of other forms of leave by agreement. This arrangement would be separate from the government-provided COVID-19 leave.

If an employee wishes to self-isolate, but there is no requirement for them to do so under Ministry of Health guidelines:

The employee must notify their employer if they:
- believe they are at risk of spreading or catching COVID-19 and why, and
- are concerned that attending their workplace places them at risk of exposure to COVID-19 and why.
If the employer agrees there is a reasonable belief or concern about COVID-19, they must do what is reasonably practicable to address the risk.
Ways to address risk could include:
- Mitigations in the workplace, for example providing health or hygiene support.
- Agreeing when paid leave (including paid special leave) or unpaid leave will be used.
- An employer may need to institute a policy where they instruct some employees to not come to work (and pay those employees normally), in order to manage the risk.
- Allowing employees to work from home, if that is feasible for the type of work that the employee undertakes.
Where the employer does not agree there is a reasonable belief or concern, the employer must tell the employee this and provide their reasons for this view.
The employer may agree the employee will come to the workplace (or work from home) and the employee will be paid normally. The employer and employee may also agree to other arrangements, for example paid special leave. If an employee does not agree to one of these options, they will likely need to take unpaid leave.

Restructuring: redundancies are likely

It is likely that the economic impact arising from COVID-19 and the international response to it will result in employers in some industries needing to significantly restructure their spending – including staffing costs.

We are already seeing an impact particularly in the travel and hospitality industries where some employers are already having to undertake restructuring processes. It is likely that other industries will be impacted also.

As an alternative to restructuring proposals that involve staff lay-offs, employers could consult with employees to see if they would agree to a reduction in salaries voluntarily, so as to avoid a restructuring scenario. However, an employer would need employees' consent in order to vary their employment agreements.

Wage subsidies

That said, as at 17 March 2020, the government has announced wage subsidies that will be available to employers who have suffered (or are projected to suffer) a 30% decline in revenue between January 2020 and the end of June 2020, compared to the same month in 2019.

An eligible employer (which includes self-employed or sole-traders) will receive:

$585.50 per week per full-time employee, and
$350 per week per part-time employee.

The wage subsidy is paid to the employer in one lump sum for a 12-week period, on the condition that:

The employer undertakes that they will continue to employ affected employees at a minimum of 80% of their income for the duration of the 12-week subsidy period. This is the equivalent of keeping people working four days per week out of the ordinary five.
The employer has taken active steps to mitigate the impact of COVID-19. A declaration must be signed by the employer to this effect.

If, notwithstanding the government's wage subsidies, an employer is still forced to consider a restructure of its business, it should bear in mind its duties of good faith under s4(1A) of the Employment Relations Act 2000. In particular:
Consult with employees while any restructuring plans are a proposal only and before a decision is made.
Provide employees with relevant information to support why such a proposal is considered necessary in all the circumstances. This might include financial information about the impact of COVID-19 already, or about the projected impact.
Keep an open mind on other options that might avoid having to terminate employment, such as periods of leave (whether paid or unpaid), or temporary pay reductions to respond to reduced demand (and as a way to avoid redundancies across the business).
Ensure employees have an opportunity to provide input on the proposed approach before any decisions are made about next steps.
All alternatives to redundancy should be considered before notice of redundancy is given.
Make sure any contractual entitlements are provided (that is, notice, redundancy compensation, and any special consultation obligations that apply under the employment agreement).

Privacy considerations

Employers may wish to consider temperature screening or other medical screening in the workplace. If so, there are a range of legal considerations that will apply. Employers should:

Consult their employment agreements to assess if any there is any broad consent provided for in agreements with their employees that allows for such screening measures.
Demonstrate that such measures are “reasonably necessary" and not unreasonably intrusive if the employer wants to introduce this measure for the purposes of health and safety compliance. This will be a fact-specific question – and at this stage it is unlikely to be considered something that would be reasonably necessary given the relatively low incidence of COVID-19 in New Zealand.
Consider and comply with all of the privacy principles 1-4 under the Privacy Act, ideally before any information is collected.
Balance health and safety concerns with employee rights in relation to privacy and lawful and reasonable instructions.

The Privacy Commissioner has released guidance on the Commission's blog addressing privacy issues relating to employers telling other employees about employees with COVID-19, or who are in self-isolation, but otherwise well.

The guidance suggests that a “common sense" approach should be taken as to whether it is necessary to tell other employees that one of their colleagues is unwell or in self-isolation. However, it should be noted that obligations under the Privacy Act are subject to the provisions of the Health Act 1956 which provides that a medical officer of health may direct individuals and agencies to disclose information about individuals who pose a public health risk.

If you have any questions about the matters raised in this article please get in touch with the contacts listed, or your usual Bell Gully adviser. 

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Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.