Moving Forward – What happens now for Employers and Employees

The Alert Level 4 lockdown has put financial pressure on many businesses in this uncertain time. Business owners undoubtedly want to preserve their businesses as best they can, and they need to ensure they uphold their obligations as employers. The financial climate in each area of New Zealand and across all industries will be differently effected, accordingly specific approaches are required for every situation. Every business is in a different position and accordingly every approach to moving forward will necessarily differ.

Whether the wage subsidy was applied for before or after 4pm on 27 March 2020 will also effect what options are available to a business. The two schemes for the wage subsidy offer two different pathways for redundancies. If an application had been made for the wage subsidy prior to 4pm on 27 March 2020 (“the old scheme”), an employer can make employees redundant provided the employer has used their best endeavours to avoid making redundancies. The interpretation and application of “best endeavours” is made on a case-by-case basis.

As an employee, you will want to know your employer has meet their obligations to you and taken the correct action. The laws imposing obligations on employers regarding restructuring and redundancy have not changed with the lockdown. The wage subsidies have been specifically introduced by the government to keep employers connected to their employees and minimise the need for redundancies. Accordingly, the obligation on employers for the usual consultation process are greatly heightened.

For employers, redundancy remains that last resort and should only be considered if all other options, such as redeployment and reduced hours, are considered and their best endeavours have been used to avoid the restructuring. If it is determined that restructuring and redundancy is the only option, a fair process must be followed.

Each businesses specific circumstances will effect what action is appropriate to take. As an employer you should consult your lawyer, accountant and banker to ensure you have a clear idea of your business’ financial position now and what it will likely become. Employees may want to ensure they are treated fairly and correctly. For any questions you have regarding your obligations, rights or options moving forward please contact us.