Covid and employment - wage subsidies and varying employees pay

As we get further into the current lockdown, we are hearing more questions about these topics. Time to write a blog we said!

We shed some light on the main questions when it comes to starting conversations with your employees about the wage subsidy and temporary variations or reductions in pay.

Legal dos and don’ts

We covered these in our last blog but given they are super important, we are sharing again! These came out of Lockdown 1.0 and are pretty clear when it comes to what you need to do this time around.

• An employer cannot reduce an employee’s pay or hours without the employee’s agreement (even if they are receiving a wage subsidy).

• If you agree to temporarily reduce an employee’s pay, you must ensure that you are paying at least minimum wage for hours actually worked.

• If you are in potential redundancy territory you must follow the required consultation process before decisions are made and have a justifiable reason for making someone redundant.

Wage subsidies

While the wage subsidy application process is relatively simple (we take the win), there are a few things to cover when talking to your team.

Note: if you also need to talk to you team about temporary pay reductions, we’ve incorporated this with the next section

• Give each employee a call and let them know you are intending to apply for the Wage Subsidy to support your business through the current lockdown.

• Ask them for consent to load their personal details (Name, Date of Birth, IRD number and employment status) onto the Work and Income website as part of the application process. This is for privacy reasons.

• Where ever possible, follow up with an email explaining the above and ask them to reply confirming they agree (in case you need to refer to it in the future). Save / print this email and keep it in their employee folder.

Head here for more information about the Wage Subsidy Scheme.

Temporary pay reductions

This is a tough conversation to start with your team. We’ve put together some tips:

• Be as open and honest about the situation. Your team are more likely to be understanding.

• Explain that you would like to talk to them about pay while we are in lockdown and while people aren’t working normally (and generating revenue/income). Summarise what you done to try to reduce costs.

• Explain that the businesses is in a challenging financial position where you need to ask if they would be prepared to take a temporary reduction in pay.

• Outline details of the temporary pay reduction - proposed start and end dates, rate of pay, when you intend to review the situation and what next steps could look like.

• The temporary rate of pay could be just the Wage Subsidy, 80% of normal pay (as per the terms of your Wage Subsidy), or anywhere in between.

• Listen to your team’s feedback, comments and questions.

• Ask that they confirm whether they agree (ideally via email) by a specific time and date (asking for an immediate decision is not OK). We think 24 - 48 hours is reasonable.

• Confirm your conversation with each employee via email (or letter).

Other temporary changes

The same process would apply if you are considering a temporary change an employee’s hours of work, duties or ways of working (i.e. location).

Final word

The best piece of advice we can give you here is that if you are unsure or have a situation (or two) that isn’t straight forward, get in touch.

Employees who do not agree to a temporary change

This is a really difficult situation. As an employer, your hands are tied because you can’t just make a change without the employee’s agreement. It’s unlawful.

• If someone refuses, find out what their reason’s are. You might be able to find a middle ground.

• Never threaten them or treat them differently to those employees who agree.

• Give them some time to think.

• If they still don’t agree, respect their decision and explain that you’ll take this into consideration when figuring out what to do next.

Other tips

• If an employee agrees to reduced pay and they do some work during lockdown, they must be paid at least the minimum wage for these hours.

• Read last weeks’ blog for questions about what to do with self-isolating employees or if they are waiting for test results.

• Vaccinations in the workplace is a complicated subject that’s evolving all the time. For questions about this, get in touch.

Still have questions?

If you have questions, concerns or need more support, get in touch.  We are here to help.

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