Workers in several sectors are having their wages cut to just the Government wage subsidy of $585 a week because of the coronavirus pandemic.
Workers at a Wellington hotel have been asked to sign new contracts stating that the hotel will pay them $585 a week before tax and the workers "agree to receiving this payment as your full compensation for any reduction in hours or loss of work" during the 12-week wage subsidy period.
They will still be paid more if they work enough hours. But a worker who spoke to the Herald said he was earning the new legal minimum wage of $18.90 an hour so he will not get more than $585 unless he works at least 31 hours a week.
"Before the lockdown 10 days ago, the manager changed the rosters and cut down my hours to 30 and said the business will need to save money," the worker said.
"Then they sent me this contract on Friday and said if you want to get your subsidy you have to sign this. I feel like my arm is being twisted."
The contract does not provide any guaranteed minimum hours and says "the employee may request that accrued annual leave may be used to top up payments to an amount no more than [the] employee's normal weekly salary."
Unite Union national secretary Gerard Hehir said workers in other sectors, including a retail chain, have been asked to sign contracts that were "almost identical" to the hotel contract.
"It seems some template has been drawn up and shared around some employers," he said.
He said the contract was "probably not illegal", but employers were obliged to use their "best endeavours" to pay workers at least 80 per cent of their ordinary wages while receiving the subsidy.
Hesketh Henry lawyer Alison Maelzer said in a commentary: "If a person is taking annual holidays, they cannot be working at the same time. Sounds obvious, but annual leave cannot be used to top up the pay of an employee who is actually working."
Chloe Ann-King, who runs the Raise the Bar campaign to improve hospitality workers' conditions, said she had received nearly 100 emails from workers who have been made redundant.
"There is no reason to do this as the wage subsidy is meant to avoid this happening," she said.
"Countless employers are also pocketing all or part of the subsidy. Some employers also try and coerce their workers into 'freely' giving up the subsidy by pleading poverty to their workers and attempting to emotionally manipulate them into allowing them to keep the subsidy.
"Such employers are opening themselves wide open to committing fraud. Ultimately the type of fraud would be welfare fraud and they could be criminally prosecuted."
Employers receiving the wage subsidy must declare that they have taken "active steps to mitigate the impact of Covid-19 on your business activities (including but not limited to engaging with your bank, drawing on your cash reserves as appropriate, making an insurance claim)".
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Ann-King said Auckland's Good Bar Company, which owns nine bars, had taken out a $5.6 million bank loan so that it could keep paying its staff their normal wages while bars and restaurants are closed during the lockdown.
Unlike bars and restaurants, hotels and motels are classed as essential services for "essential workers, isolation/quarantine and emergency housing".
Guest numbers have fallen dramatically but there is still a demand from people returning from overseas, who must self-isolate for 14 days, and from thousands of overseas visitors who were stuck in New Zealand when the lockdown started.
Phillipa Gimmillaro, human resources director of Hind Management which owns Sudima hotels, said Sudima's Rotorua hotel had been closed and all its employees were at home and receiving the wage subsidy, but the group's other hotels were still operating.
"Our Auckland hotel [Sudima Auckland Airport] is an essential service and really busy. All staff are on full wages," she said.
"Sudima Christchurch Airport is similar to Auckland - still working, an essential service, continuing to operate but at a much lower occupancy."
But Olivier Lacoua, manager of Novotel Christchurch Airport which is part of the same group, said his hotel was now closed to the public and open only for guests referred by the Ministry of Health.
"We are working with a very skeleton team," he said. "What we have is maybe 20 people [staff] on the roster compared with 80 or 90 normally."
He said staff who were still working would stay on full pay, but the hotel was consulting with its other workers about reducing their pay to $585 a week while there was no work for them.
The Ministry of Health said it was using nine hotels in Auckland, and two each in Wellington, Christchurch and Queenstown for returning travellers who need to self-isolate.
The Ministry of Business, Innovation and Employment said it had contracted two accommodation providers in Auckland and was working with others in other cities to accommodate overseas visitors and others required to self-isolate.
The wage subsidy of $585.80 a week is the same as the maximum rate of paid parental leave, or 55 per cent of the average wage.
Australia is paying a subsidy of A$1500 a fortnight (NZ$773 a week). Canada is paying 75 per cent of workers' normal wages and Britain is paying 80 per cent.
• Official advice: covid19.govt.nz.