Tag Archives: Craig Sidoruk

Is your business ready for changes to alert levels?

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The last Alert Level 3 Lockdown in Auckland has once again shown that businesses need to be prepared, at short notice, to make to significant changes to the way they work if required to move to Alert Level 3, or 4.  As a result, it’s important to have a plan that you can put into action should this next occur.

An important part of this plan should focus on how you will, if necessary, seek agreement with staff on temporary changes to their employment terms and conditions.

During the lockdown in March, it became obvious that numerous employers were making decisions without first getting agreement with staff. The common situations included:

  • Automatically reducing salaries to 80% or lower, or to the $585 subsidy level – without employee agreement, and
  • Directing employees to take annual leave, leave in advance or leave without pay – without their agreement and without the 14 days’ notice required under the Holidays Act.

It was noted at the time, that irrespective of the disruption and confusion caused by COVID-19, many of these practices were illegal and it was widely expected that we would see these claims filter through to the Employment Relations Authority. We are starting to see the first of these cases appear [note: both of the below cases are being appealed].

Raggett & Ors v Eastern Bays Hospice Trust t/a Dove Hospice [2020] NZERA 266

In addition to providing hospice services, Dove Hospice also operates a number of retail shops that were closed due to the COVID-19 Lockdown.  Dove proposed restructuring the retail shop employees’ positions and invited feedback, which the employees gave.  Dove subsequently sent letters advising the employees’ positions would be disestablished with an eight week notice period.  The first four weeks would be paid at 80% of their wages and the second four weeks would be paid at the wage subsidy rate of $585.80.

The employees’ maintained they did not agree to be paid anything short of their normal wages and therefore Dove had breached the Wages Protection Act (WPA). Dove stated that due to COVID-19, the employees were not ready, willing and able to work, and therefore the WPA did not apply.

In this case the Authority found that:

  • If employees could not work due to a Lockdown, the employer must pay 100% of wages unless otherwise ‘agreed’.
  • There was no ability to only pay 80% of wages unilaterally.
  • The employer must fulfill its Employment Agreement obligations.

Sandhu vs Gate Gourmet NZ Ltd [2020] NZERA 259

Gate Gourmet provides inflight catering services and was therefore deemed an ‘essential service’.  Business had fallen sharply and the company proposed a partial shutdown of its operations.  The employees in question were all paid the minimum wage which was due to increase on 1 April.  The company decided that only those employees at work would be paid the new minimum wage, and believed that those who were not rostered should be paid 80% of the old minimum wage.  After some objection, the company agreed to apply the new minimum wage, but only at 80%.

The employees challenged this on the basis that 1) reducing wages required consent, and 2) the company failed to pay the minimum wage.

The Authority found that:

  • The minimum wage increase on 1 April 2020 must be paid even if the employee was not required to work, and
  • The company could not agree to pay 80% of wage rate if the employee was on the minimum wage.

While this might seem obvious now, during the confusion of the first few days of the March lockdown this was far from clear to many employers. While there is no doubt that employers were facing a unique situation, compliance with employment law should not be ignored.

To avoid this these issues arising it is important to note that all of your pre-COVID-19 employment obligations still exist – nothing has changed in this regard.  Importantly:

  • You cannot unilaterally make decisions regarding employees terms and conditions, including wages and hours of work.
  • Any agreed changes should be recorded in writing confirming that agreement.
  • If you cannot get agreement and need to reduce costs, you have the ability to restructure the positions in your business.

Thinking change? – get the process right

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COVID-19 has caused many employers to consider making changes within their business. If you are a business owner who needs to downsize, or re-align to new market conditions, there’s an important process you need to follow if those changes have the potential to impact an employee’s employment, and while there’s a lot at stake for you, it’s just as important to consider the employee.

Plan and prepare:

Before embarking on any proposed changes, you should describe the genuine business reasons for the change in a clear and transparent manner. Even as a result of COVID-19, an employer needs to be able to describe the specific reason for the change, the problem you are trying to fix, and the outcomes you are hoping to achieve.

Develop a proposal:

The next step is to develop the proposal for change. Depending on the extent of the change, this could be in the form of an individual letter or a more comprehensive change proposal document. This should clearly describe the change being proposed, provide the potentially affected employees with access to information relevant to the proposed changes, and clearly set out how the employee(s) will be affected by
the change. The proposal should also set out the timeframes, how the employee can provide feedback and any support you will offer. If new positions are being proposed, or there is a reduction in the number of employees who hold the same position, you will need to clearly outline the proposed selection criteria for those positions.

Consultation:

Under the Employment Relations Act an employer is required
to consult with employees potentially affected by the proposed change, and allow them the opportunity to provide feedback on the proposal. Feedback could include any alternatives to the changes proposed.

Ideally, you should meet with each affected employee. This is an important discussion, so if you feel a bit nervous, prepare a script and follow that. Employees also find these discussions difficult and potentially upsetting, so should always be given the opportunity to have a support person or representative present.

Employees should then be given sufficient time to consider the proposal, seek independent advice if necessary, and provide

feedback on the proposal. There’s no fixed timeframe, but I generally recommend a minimum of five business days.

Once you have received the feedback, it’s important that you consider that feedback carefully, or any alternatives suggested. Often employees provide viable alternatives that you may not have considered or thought acceptable to the employee such as job sharing or reduced hours. You don’t have to accept everyone’s feedback or suggestions, but it’s important to show you have considered it.

Making the decision:

Once the consultation period is over and all feedback considered, the employer must decide what the final decision will look like. The final decision needs to be conveyed in person to each employee.

If an outcome is that an employee’s position is to be disestablished, you must comply with the terms and conditions of their employment agreement in regards to any redundancy entitlements or notice provisions. It’s also important to consider any opportunities for redeployment within the business.

Don’t undermine your brand:

While it’s important to get the process right from a legal perspective, it is also important to get the process right from
a humane perspective. Demonstrating genuine empathy during meetings, treating employee’s with respect and dignity, taking the time to meet individually with affected employees, being aware of the employee’s emotional state and being
able to respond appropriately to that, offering support or outplacement, allowing time off to attend job interviews or
to talk to professional advisors, considering requests for shortened or extended notice periods – all make this a better process for both the employee and the employer.

Businesses often spend years building their employer brand and recruiting the right people, don’t undo all that good work and good will by cutting corners through the change process.

This article deals with complex legal issues. If you are considering change management or restructuring, please seek specialist advice first.