Balancing Competing Interests During Lockdown02 April 2020
What many businesses are facing is catastrophic and the simple reality is the usual rules and practices will be compromised to some extent or, put simply, many more people will lose their jobs.
You can see by the news out of Air NZ and more recently Fletcher Building and NZME and other high profile businesses, just how devastating the impact of this situation is; and it’s far from over.
The same challenges are being faced by the vast majority of SME businesses in NZ, but they don’t hit the headlines. It’s not a question of what businesses should be paying – it’s a matter of what cash is there to pay anything. Businesses have scrambled to get the wage subsidy, but it will take much more than that to save them. $585 per week is equivalent to only 30 hours at the minimum wage. If you’re a small business with zero revenue for 4 weeks with say 10 employees being paid say $25 per hour, you will still have to find $16k which means you won’t be able to pay yourself either!
The Government needs to do more in terms of financial support. The Australian wage subsidy is $1,500 per fortnight for 6 months compared with our $585 for only 12 weeks, which is a total of $19,500 versus our $7029. If nothing changes, there will be more job losses.
More importantly, businesses need clarity about what they can and can’t do; and the Government can help with that too. Right now if you apply for the wage subsidy you have to get the written consent of every employee to pass on their information, commit to full compliance with employment laws, use best endeavours to pay 80% of normal earnings and not change pay and hours of work without the written consent of employees. That is simply not practical. Most employees have scattered to the four winds during the lockdown and in many cases can’t be contacted and/or don’t have the means to sign anything. The Government needs to revisit that matter.
Most employers want to do the most they can for their people, and are committed to acting fairly and reasonably in these very trying times. They also know that if they are to recover quickly, they need to retain people, particularly those in key positions. The fact is however, if we’re going to unite and do this together then everyone needs to share the pain.
As to the rights under employment law to change pay and hours, my view is that employees in non-essential services are not ready, willing and able to perform their contract. They may be ready and willing but they are not able to perform the contract because the Government has decreed they must remain at home. Therefore, it is arguable there is no obligation to pay and employers need to act fairly and reasonably to do whatever they can to support their people.
The next question is, how can changes to hours and pay be implemented? A normal restructure process is one such method, but arguably that is a unilateral change to terms and conditions that would contravene the Government’s criteria for the wage subsidy. On the other hand, if you ask people to agree in writing to proposed changes, there are a number of difficulties, including not having the luxury of time to seek written agreement. Its odds on that a percentage of people will not agree to the changes, particularly if other commentators are telling them changes can’t be made without their agreement. Meanwhile the people who have done the right thing feel aggrieved about the inequity. On top of all that, if people are not contactable or have the means to sign anything, you may have no option but to proceed without written agreement.
The only practical approach is to develop a sound proposal, fully considering and explaining the impacts on your business and then consult with people as far as possible, consider any feedback provided, then make your final decision and implement it across the board. In the current environment where speed is a factor, a compressed consultation process should still achieve workable outcomes in the interests of all parties. If you can get people to agree in writing to any changes that will minimise the risk later on.