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[Covid-19] Obligations upon employers under Alert Level 3

Apr 28, 2020 / 2 minutes read
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The below article has gratefully been advised by Mary-Jane Thomas, litigation director of Preston Russell Law as part of our Covid-19 video series, Business Unusual.

Meet Mary-Jane


Obligations upon employers under Alert Level 3

  1. You must stay closed if your business relies upon close physical contact e.g. hairdresser.
  2. You must continue to work from home if you can (inconvenience is not an excuse).
  3. You are not allowed to have customers/clients in your premises unless you are an essential business e.g. supermarket, petrol station.
  4. You must maximise methods that are contactless e.g. pay online, pick up/deliver.
  5. If you have an employee that cannot work from home and you have them at work it is vital that you ensure there is social distancing. Make sure people stay 1 - 2 metres apart. 20 seconds hand wash.  Disinfect surfaces regularly.  Do not have vulnerable staff at work.
  6. Use your common sense. The whole idea of Level 3 is to allow businesses as much as possible to operate but it must be in a way that meets the Government’s directions.

Dealing with Your Employees

  1. Employment Obligations: Regular employment law applies to all employment relationships – regardless of Covid-19. If in doubt seek advice.
  2. Reductions in Pay: Employers have good faith obligations under statutes when bargaining for variations to terms of employment.  An employer must not mislead or deceive; must be active and constructive, responsive, and communicative. Employers must follow a fair process before reducing employees’ wages or salary.  You must communicate a proposal for reduction, reasons, and background information.  Employees need to be told they can seek advice.  You should allow a reasonable time to consult and set a time frame for that consultation.
  3. Leave: Refer to - https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/leave-and-pay-entitlements-during-covid-19/

Annual Holidays

  • An employer needs to first try to agree with the worker when to take annual holidays (s 18 Holidays Act (“HA”).
  • If the parties cannot agree, an employer can direct an employee to take annual leave after 14 days’ notice (s 19 HA).
  • An employer cannot compel an employee to take annual holidays in advance.
  • An employer may allow an employee to take annual holidays in advance (s 20 HA).
  • Cashing up annual holidays is restricted to one week per entitlement year.  This means there will only be so many weeks that an employee can “top-up” reduced hours. Employers who have reduced employees to 80% and allowed them to “top-up” need to be aware that this will ordinarily only be able to be done for five weeks.

Wage Subsidy Obligations

  1. Employers in receipt of the Government’s wage subsidy must comply with their obligations in the Declaration for the Wage Subsidy (paid for 12 week period) or Essential Workers Leave Support (the latter paid under L4). There were differences in the Declaration depending on the timing of when an Employer applied for the Wage Subsidy. In general, these Declarations required employers:
  • Retain employees for 12 weeks of subsidy;
  • No changes to terms without agreement;
  • Don’t unlawfully require employees to use leave entitlements to top up subsidy (cannot compel – but can direct with 14 days’ notice);
  • An employee can only cash up 5 days per leave year to top up;


Pay $585/week full‐time, $350/week part‐time (up to actual); Use “best endeavours” to pay 80% or more for 12 weeks (and if unable to do so, pay at least the full amount of the subsidy to employees unless ordinary wages are less than subsidy).

  • If an employee leaves the employer during the period of subsidy or support should contact MSD to ascertain whether to return the payment or use it for other affected employees.