LET'S TALK LAW

Brought to you by Treadwell Gordon

It seems inevitable that Covid-19 will reach community outbreak status in New Zealand, and spread throughout households and workplaces.

It also seems likely that in one way or another, every workplace will eventually have some employees affected by the virus.

Most workplaces are alert to the health and hygiene needs of their workplace (and we expect now have enough soap and toilet paper to last a year).

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However, there seems to be a great deal of uncertainty and trepidation in relation to employment obligations and whether and in what circumstances employees will get paid.

To some extent, this confusion arises out of the varying opinions being offered, and that this is an unprecedented situation which hasn't been addressed by legislation or the courts before.

It is important to keep in mind throughout that the fundamental principle of all employment relationships is good faith and this should guide all decisions made by employers and employees.

Continuous communication and reasonableness will go a long way in assisting employees and business get through.

Brittany Gibson, law column writer, from Treadwell Gordon.
Brittany Gibson, law column writer, from Treadwell Gordon.

Many of the potential employment issues are resolved if the employee has the ability to work from home. Not only do employees remain productive, they can also continue to get paid while avoiding the risks of spreading or contracting the virus at work.

Employers have an obligation to take all reasonable steps to protect the health and safety of their workers and this includes the requirement to give genuine and honest consideration as to whether employees can work from home, even if this may mean doing tasks they would not traditionally do, working different hours or creating different systems to monitor productivity and meet client needs.

In respect of employee pay, it should be no surprise that an employee who contracts coronavirus is sick and should be paid sick leave.

If an employee is looking after a dependent who is unwell, they should still receive sick leave.

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Where an employee uses up their sick leave, annual leave could then be used, but only if the employee consents.

It is also worthwhile considering whether the employer is able to offer any sick leave or annual leave in advance (which would then be deducted from any leave the employee accrues in the future).

It becomes more complicated once the employee has used up all their leave.

If an employee is sick, they should not be at work and both the employee and the employer would likely be in breach of their health and safety obligations if that employee does come to work.

While special leave may be considered by employers, there is no obligation to pay a sick employee who has used up all their sick leave.

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Thankfully, the government has announced a financial support package to pay any employee who is sick from contracting the virus or caring for a dependent who has the virus.

Employees will receive a flat rate of $585.80 (before tax) if they work 20 hours or more per week or $350.00 (before tax) should they work less than 20 hours per week.

Employers are still required to pay any employees who are sick until their sick leave is used up. The purpose of the scheme is to support those who are sick or self-isolating but otherwise might be deterred from staying at home because of financial reasons.

Employers need to apply on the employee's behalf and pass the leave payment on in full. This payment could be topped up by the employer to match the employee's ordinary weekly pay, but there is no obligation to do so.

Employees may also be in self-isolation if they have been exposed to the risk of infection.

Should they not be able to work from home during their 14 day self-isolation, employers are not required to pay the employee and the government's leave payment will then be applied. Strictly speaking, the employee does not have an identifiable illness and is therefore not sick and not entitled to sick leave.

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However, we expect that most employers will take a reasonable attitude and allow sick leave should the employee make such a request. Annual leave is also available should the employee elect to take it.

It is important to note that the leave payment will not cover any employee who is in self-isolation after they have elected to travel overseas after 16 March 2020 (when the travel restrictions came into effect).

Where no other pay arrangements are in place, employers should make it clear to any employee who intends to travel that, on their return, they will be on unpaid leave during their self-isolation period.

What you need to know
What you need to know

The exception to the self-isolation payment is where an employee decides not to self-isolate and wants to attend work.

This is a difficult situation as, under New Zealand employment law, any employee who is willing and able to work should be allowed to do so.

However, to allow the employee to work would be in breach of the employer's health and safety obligations.

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In this circumstance, the employer should give consideration as to whether the employee can work from home or work in such a way that complies with the self-isolation rules e.g. collecting data from an isolated environment.

If this is not possible, the employer may be forced to suspend the employee on full pay (the employee's feedback must be sought before a suspension).

Employers may also have employees who are overly cautious and electing to self-isolate (despite not being exposed to any risk of the virus or having any increased risk factors).

Employees can refuse to attend work if they have reasonable grounds to believe that they would be caused serious harm. Again, the employee and employer should discuss alternative work and payment arrangements or whether precautions can be put in place to reduce risk of contracting the virus.

However, the bottom line is, if the employer considers that there are no grounds for self-isolation and that they have taken all reasonable steps to protect the employees' health, they are not likely to be obliged to pay the employee.

Treadwell Gordon
Treadwell Gordon

A simpler way of looking at the above scenarios is, if the employee elects to stay away from work they should be allowed to use their leave entitlements but there is no further obligation on the employer to pay the employee.

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If the employee is ready, willing and able to work, but it is the employer who is deciding that the employee cannot work, then the employer should pay the employee.

Although it is difficult to predict at this time, should there ever be a 'lock down' as we see in other countries, it may be possible for employers to rely on 'force majeure' clauses in their agreements.

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These clauses are more commonly referred to as 'Act of God' clauses and ensure that employers are no longer bound to their obligations in employment agreements where there has been natural and unavoidable catastrophe that prohibits the contract being performed.

If an employer doesn't have this clause, they may be able to rely on the contractual doctrine of frustration, but this would require detailed legal advice.

In all the circumstances, we recommend that employers communicate with their employees and are very clear as to the various leave and pay policies in each situation.

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This is a stressful and uncertain time for everyone, and it is important that employees and employers understand what will happen not just if, but when, the virus affects them.