Salary cuts must have employee consent at all times

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Image from Employment New Zealand

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Auckland, September 6, 2021

Employment Law continues to apply to all employment relationships, regardless of the circumstances including different alert levels during Covid-19.

Employers can only reduce wages only if employees agree, after a discussion in good faith.

Employers must keep paying employees at all alert levels, whether they are continuing to work at their usual place of work or from home, or if they are not able to work because of alert levels.

Importance of Employee Agreement

Employees should be paid their wages as set out in their employment agreement.

If an employee has an employment agreement with minimum hours but has been working for more than the minimum hours for some time, employers must calculate their pay according to the number of hours that they have been working, rather than the minimum hours in their employment agreement.

The Wage Subsidy can be used to help pay their wages. Employers can only reduce how much they pay their employees if the employee has agreed to receive lower pay. This means that if they do not agree, employers must pay their normal pay, even if this is higher than what they receive from the Wage Subsidy. 

If employers have no money left over from the Wage Subsidy, for example, if an employee no longer works for the employer, the latter can use their remaining subsidy to pay other affected employees. If there are no other employees to use the subsidy, then the remainder must be paid back to the government.

If employees cannot work normally and a business is struggling to meet its costs, the best thing to do is to talk to employees in good faith, explain to them the financial situation of the business and talk about the available options and agree to any changes.

If the business has unionised employees, employers must involve the Union in discussions relating to any changes.

There are other financial support schemes available to businesses to pay wages during this time.

For example, the Leave Support Scheme can employers pay employees who have to self-isolate, even if the business does not qualify for the wage subsidy.

Information on the Wage Subsidy Scheme can be obtained from the Work and Income website (www.workandincome.govt.nz).

Annual Leave and Sick Leave

At each alert level, employers and employees should first discuss whether the employee can work normally, how much work is available, and how to work safely at home or at their usual place of work. 

During any alert level, employers cannot make employees take (1) sick leave if the employee is not sick (2) advanced annual leave (3) annual leave, without giving at least 14 days’ notice (unless the employee agrees to take annual leave, after a discussion in good faith).

If an employee cannot come to work because they have been told to self-isolate by the National Contact Tracing process or by a Health official, and they cannot work from home, the Leave Support Scheme is available to help pay their wages. 

Payment for masks

Employers are responsible for the health and safety of workers at work. They must provide all appropriate Personal Protective Equipment (PPE), and make sure that they use, wear and maintain the required PPE. This includes face coverings when required to do so under Covid- 19 rules. Face coverings required by Covid-19 rules and PPE required by Health and Safety laws at work are different.

Employers cannot pass on the cost of providing PPE (in full or part) to workers. They cannot make the worker provide their own PPE as a condition of employment. 

Image from Employment New Zealand

Vaccination of workers

Businesses cannot make individuals vaccinated. However, they can require that certain work must only be done by vaccinated workers, where there is a high risk of contracting and transmitting Covid-19 to others. The government has also specified that certain work can only be performed by vaccinated workers.

For a business to decide that work is high risk and therefore needs vaccination for health and safety reasons, the business must first assess its Covid-19 exposure risk. This applies to work done by all workers, whether employees or independent contractors. 

The Covid-19 Public Health Response (Vaccinations) Order 2021 provides details.

The following websites contain useful information.
https://www.workandincome.govt.nz/covid-19/wage-subsidy
https://www.workandincome.govt.nz/covid-19/leave-support-scheme/index.html
https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/leave-and-pay-entitlements-during covid-19/
https://www.worksafe.govt.nz/topic-and-industry/personal-protective-equipment-ppe/personal-protective-equipment-a-guide-for-businesses/
https://legislation.govt.nz/regulation/public/2021/0094/latest/LMS487853.html#LMS487852
https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/covid-19-vaccination-and-employment/

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