Fulton Hogan is asking its estimated 5,000 New Zealand employees to take two weeks annual leave in April, despite receiving the government's wage subsidy to help it manage through the coronavirus crisis and national lockdown.
Chief executive Graeme Johnson made it clear in a video for staff obtained by BusinessDesk that the company had previously been wanting employees take even more annual leave through the crisis, although Fulton Hogan has still left open its ability to seek more in future.
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"Based on our current outlook, I'm pleased to confirm that, for those not working, the requirement to take annual leave from April 15 will now be capped at two weeks during this initial alert level four period," Johnson said in the video.
"After this, people will continue on 80 per cent of their ordinary income as originally planned," Johnson said, telling staff they're welcome to take more annual or long-service leave.
After urging them to sign "this temporary variation to your employment agreement," Johnson said: "If you don't agree to the plan, we will make contact with you to outline your options."
He didn't spell out what those options are and the company didn't respond to BusinessDesk's requests for comment.
Johnson said he and other executives will receive 80 per cent of their salaries through the crisis but that the company had applied for the government's wage subsidy and was advised it had been successful on the evening of April 6.
"This was key to be able to progress and finalise our staff support plan that we have been developing with you since the alert level four restrictions were signalled," he said.
The government's wage subsidy is $585.80 a week for 12 weeks for those working 20 hours or more a week and $350 per week for those working less than that, paid as a lump sum.
"We have been able to review our financial position in detail, alongside the confirmed level of support received from the government and, although the confirmed subsidy is still less than half what we will be paying out to support our people through this period, we have also been able to mitigate some risk and further improved our immediate outlook," Johnson said.
One of the conditions of the government's subsidy is that employees have to agree in writing to any variation of their employment contract and that "you will not unlawfully compel or require any of the employees named in your application to use their leave entitlements for the period you receive the subsidy in respect of those employees."
However, the key words in that condition are "unlawfully compel" – Johnson specifically cited section 19 of the Holidays Act which allows an employer to require an employee to take annual leave after giving at least 14 days' notice, which is why the leave begins from April 15.
Fulton Hogan has 3.064 shareholders, although it isn't listed on NZX, and files annual accounts with the Companies Office.
It reported a $173.6 million net profit in the year ended June 2019, down from $180.1 million a year earlier, with revenue largely flat at $4.68 billion.
Its balance sheet showed total assets of $2.98 billion at June 30, 2019 and net equity of $1.07 billion. Total borrowings at that date were $933.2 million while employee entitlements, mostly due in the following 12 months, totalled $118 million.
Last year, the Christchurch-based construction and infrastructure group tried and failed to sell its Australian civil construction unit. It had cited troubled Australian projects as the main reason for its first-half profit dropping by a third.
In the annual results the company said the Australian operations had returned to profit.