The double whammy of blackouts on business

By GRAEME PERFECT*

High electricity prices are a major cost to business, but so are labour costs — particularly if a shortage of electricity stops workplaces from operating.

It is important that businesses get an understanding of the risks they face if future shortages mean supply to domestic and business consumers are cut either periodically or completely.

The precise position at each workplace will depend on that workplace’s individual circumstances and existing employment agreements. Even if cuts occur — less likely now as the spring snowmelt gets closer — it is still important to look at contingency planning.

The two primary issues emerge: Does the absence of an electricity supply affect the performance of the employment agreement and what health and safety issues arise out of this?

If a person’s normal work cannot be performed in this circumstance, as a general rule the legal position is that the employer must continue to pay them.

Generally, employers may suspend employees without pay only when they are on strike or when their normal work is not available to them as a result of a strike by other employees, either within the same workplace or elsewhere.

The only exception is where the employment agreement enables the relationship to be suspended, but such provisions are rare.

Variations may be made to employment agreements only by mutual agreement and collective agreements must be recorded in writing.

Employers who are considering dismissing employees if work runs out because of the electricity crisis should do nothing without first seeking advice from the association.

Any dismissal leaves the employer open to a claim of unjustified dismissal and it would be difficult to justify dismissal of employees whose work is not longer available due to the crisis.

There may, however, be circumstances where the crisis forces a business, or part of it, to close and redundancy issues may then arise. Employment agreements will probably not be frustrated by the absence of an electricity supply.

Whether operational costs — incurred as a result of the crisis — are covered by insurance will depend on the terms and conditions of the policy.

There is no legal reason why annual leave entitlements may not be used during the crisis if that is operationally convenient. However, care should be taken not to breach the provisions of the Holiday Act.

Employers have a general obligation under the Health and Safety in Employment Act 1992 to provide and maintain their employees’ health and safety in the workplace. Circumstances will vary from workplace to workplace.

We urge employers to take a proactive approach towards informing employees and in encouraging involvement in saving power.

* Graeme Perfect is assistant manager advisory services for the EMA.

Power to the People Supplement