COVID-19 and Redundancies: Advice from an HR Lawyer

DecisionFor this newsletter, we have a special contribution from specialist HR lawyer Kirsten Maclean with five key bullet points that employers need to be aware of when considering redundancies and restructuring in the current environment.

Kirsten advises that these are five key things you need to know when considering a restructure, including redundancies and how to deal with the wage subsidy, in light of the government’s COVID-19 wage subsidy scheme:

  • If you qualify and receive the wage subsidy, then there is currently a prohibition on terminating any employee’s employment for the 12 week period.
  • Sidekick HR is aware that wage payments are not a business’ only cost, however the subsidy scheme obliges you to only use the subsidy for the purposes of meeting employees’ wages/salary, and not for general operating expenses. You must therefore pass the wage subsidy onto the employee. If the employee usually earns less than the wage subsidy amount then you are only obliged to pay up to the amount of ordinary weekly earnings – this is not an opportunity for a windfall for the employee.
  • For businesses who have not accessed the subsidy scheme, then currently you fall outside of this scheme and therefore the rules and regulations and there is no obligation to retain all employees and therefore you are continue business and possible redundancies and restructurings however the ordinary obligations regarding consultation and justification remain. We advise getting more specialised advice around this area if this applies to you.
  • For businesses who do qualify for the scheme but don’t access it, we consider there is a risk that an employee made redundant during this period may have grounds to raise a personal grievance for unjustified dismissal. This would be on the basis that the employer could have applied for the subsidy and passed that onto the employee and not terminated them. Failure to do this when a business qualifies for the subsidy would, in our view, be considered as falling below their obligations to use best endeavours to pay/keep staff.
  • You are also required to use best endeavours to top up to a minimum of 80% of an employee’s ordinary weekly wages, but in the event you can’t then either consider a lesser amount or using accrued leave as the top up.
  • Openness, communication and clarity is really important for employees, so make sure you are keeping you team updated

If you would like to contact Kirsten directly, her phone number is (021) 221 0721 and her email is Kirsten@sidekick.co.nz.