The Prime Minister announced on 11 May that we will move to Alert Level 2 on Thursday 14 May 2020. Last week the government provided guidance on what Alert Level 2 will look like.

In summary, while there is more freedom of movement in Alert Level 2, the core message is to play it safe.

What are employers’ pay obligations under Alert Level 2?

At Alert Level 2, businesses are able to operate if they are able to do so safely. Many of the businesses that re-open will be in receipt of the government wage subsidy. Once these employees return to work, even where the employer is receiving the wage subsidy, the employee is entitled to be paid in accordance with their employment agreement. 

That may not be sustainable for some, and any amendment to the employment agreement (such as pay cuts or reduced work hours) would need informed consent from the employee.

Restructuring under Alert Level 2

The business impact of the lockdown has been huge; particularly for SMEs. Many are predicting a further wave of redundancies once the 12-week period of the wage subsidy ends. From 4:00 p.m. on 27 March 2020, the undertaking employers give when applying for the wage subsidy requires the employer to confirm it will retain its employees for the period it receives the wage subsidy (prior to this, the declaration only required employers to use best endeavours to retain staff for that period).

MBIE has said that the wage subsidy period starts with effect from the commencement of the Level 4 lockdown (26 March 2020). That said, it is possible to start the process during the period of the wage subsidy and even give notice, provided it does not take effect until after the subsidy period ends.

The usual rules related to consultation and fair process will apply. Employers will need good evidence of the business impacts, based on reasons which apply into the future and are not just based on current demand levels.

Can an employee refuse to come into work?

As well as businesses reopening, Level 2 will also likely see some employees who have been working from home return to the office.

The government encourages alternative ways of working where possible, in Alert Level 2. As such, if an employee is able to work effectively from home and prefers to do so, there should be no issue with this.

If an employee cannot work remotely and refuses to work without properly engaging with the employer, this may amount to a failure to make themselves available for work, which would mean they are not entitled to be paid.

However, many workers have serious concerns about the risks of returning to the workplace. The Health and Safety at Work Act 2015 requires a Person Conducting a Business or Undertaking (PCBU) to engage with workers who are directly affected by a matter related to work health and safety. Any changes or proposed changes to location of work should be discussed with workers, and the PCBU should try to resolve any concerns.

Where that is not possible, and the employer has taken appropriate steps to control risks and it is reasonable for the employees to attend work, the employer would not usually be obliged to pay an employee who refuses to work. By contrast, employees are entitled to be paid if the PCBU cannot provide a safe workplace.

To ensure both the physical and mental safety of workers, PCBUs should be vigilant about their obligations to workers and ensure the workplace is safe. Returning to work after a long period of lockdown, and amidst an on-going pandemic, will likely cause some employees stress and anxiety. PCBUs must ensure avenues are in place to deal with these stressors, and the steps the employer is taking to manage infection risk should be well publicised among the workforce, as well as highly visible.

What if an employee is unable to attend work?

During Alert Level 2, most public transport services will require travellers to distance themselves one metre apart when aboard services, which will impact on passenger capacity. As more people make their way back to work, the increased demand for public transport may create difficulties getting to and from work during peak hours.

If an employee is not able to attend work due to transport issues, the employer is probably not obliged to pay. However, while this may be the starting point, for those who are unable to come to work (or refuse to come to work), the terms of the employment agreement, the nature and width of the restrictions and the particular circumstances of the employee should all be taken into account before determining the approach to pay.

To avoid this situation, we suggest employers apply flexible start and finish times to space out commutes, or support the employee to work from home, if they are able to do so.

What does a PCBU need to do to keep workers safe?

The government guidance requires a minimum of one metre physical distancing in the office (this also applies to any clients or customers who visit the office). It will be important to impose proper safety precautions to comply with this requirement. This may include stopping people congregating in lunch rooms and not having everyone in the office at the same time, or staggered start and finish times. Registers should in place for visitors to the office for tracing purposes.

PCBUs should continue to enable safe hygiene practices and anyone who is sick should be asked to stay away from the premises.