By Claire Mansell - 17 Aug 2021
As we start our first day of lockdown, many employers will
be wondering whether or not they need to pay employees who cannot
work during lockdown. Last lockdown there was no clear authority on
this point, however the Employment Court decision, Gate
Gourmet New Zealand Limited v Sandhu clarifies the
situation somewhat.
In that case, it was argued that the employer breached its
obligations under the Minimum Wage Act by failing to pay workers
who were ready, willing and able to work but could not do so
because of level 4 restrictions. In a split decision by the full
Employment Court, it was found that the employer was not obliged to
pay minimum wage as no real "work" was performed. It is
important to note that; this was a split decision, it reversed the
original decision in the ERA, and the employees have been granted
leave to appeal to the Court of Appeal. There is a good chance that
this position may change in the future.
So what does this mean for employers?
- The starting point is that employees are entitled to be paid if
they are ready, willing and able to work and are able to carry out
some form of work for their employer (i.e. working from home)
- If employees are not able to carry out meaningful "work" then
no statutory obligation to pay minimum wage arises;
- Employers need to check the employment agreement. Some
agreements contain force majeure clauses (which need to be
exercised with care) or clauses which guarantee minimum hours
during lockdown;
- Each case should be assessed on a case by case basis, a blanket
approach to all employees is risky;
- To mitigate risk, an employer may choose to reach an agreement
with employees regarding how they will be paid during lockdown
(i.e. reduced wages, annual leave etc);
- The wage subsidy is available to employers who meet the
criteria;
- Proper consultation and good faith obligations remain. At the
very least, employees should be spoken to before the decision not
to pay them is made.
We recommend that employers or employees speak to one of the Employment
Team members at Martelli McKegg if they have any queries
regarding this issue or any other employment matter arising from
the lockdown. Employment issues are rarely clear cut and there may
be other factors which would change this advice.
Contacts
Claire
Mansell
Mathew
Martin
Aimee
Elia