Working together in good faith is crucial for survival, recovery

17 Apr 20

Column written by Dunedin Partner John Farrow, published in the business section of the Otago Daily Times on Friday 17 April.

COVID-19 and the Level 4 lockdown have created myriad issues for employers and employees alike. It’s not possible in this brief article to cover all of those issues but I would like to highlight some of the areas of significance.

In the early days employers were looking to cover the downturn in work by asking their employees to take sick leave, annual leave and other forms of accrued leave. Some employers, unfortunately, made unilateral decisions requiring employees to take leave, rather than consulting with them. Variations to the terms of employment need to be agreed by both parties. The Government has emphasised that even in these times, normal employment law principles apply. The most significant of those principles is good faith. At a time such as this, we all need to work together and it is only through a unified approach that businesses will come out the other side.

The Government then introduced its wage subsidy package. While there has been criticism of lack of detail and ambiguity, given the limited time available to cobble this together, it has to be given a pass mark. It has proven to be a lifeline for a number of businesses and as new situations have developed, the Government has responded quickly to improve on the package. The number of businesses categorised as providing ‘‘essential services’’ has also increased as businesses and sectors have lobbied MBIE to be included. Recent changes to the definition of ‘‘essential services’’ have allowed for items such as white-ware and blankets to be supplied to households in lockdown as winter approaches.

While employers and employees alike are understandably anxious, we will come out the other side of this. The Government is already encouraging employers to prepare for Level 3. Employers need to consider how they will retain the expertise that will inevitably be required to regrow their business. A number of businesses are going to be required to work at increased capacity and pace. For that reason alone, businesses should, wherever possible, consider alternatives to redundancies.There are a number of alternatives available. Short of breaching minimum statutory entitlements, an employer and an employee can agree almost any variation to their employment arrangement.

That includes agreed reductions in pay rate, reduced hours of work, and agreed periods of leave without pay. Some of these strategies won’t be necessary because of the wage subsidy but employers should consider all options, including secondment and cross-sector sharing of labour. However, if a business forms the view that it cannot retain its staff, then it is obliged to explain the thinking behind that view, provide supporting information and consult before finalising any decision.The employer/employee relationship is a two-way street and often employees advance novel and innovative suggestions that might ultimately save a business. While it’s the business owner’s business, it is the employee’s livelihood. Both are invested in this together.

There has also been much discussion about force majeure clauses. The reality is that the effectiveness of these is dependent on how well they are drafted. Even a well-drafted force majeure clause does not alter an employer’s obligation to consult with an employee about relying on such a provision to suspend or end the employment relationship.

Somewhat surprisingly, the Level 4 lockdown has highlighted a number of positives. Team members are reporting better connectivity and working more collaboratively. Team brainstorming is also enabling a number of professional businesses to provide a thoroughly considered range of options to their clients. Another positive outcome is the amount of information that is being freely shared by businesses and commentators, for the benefit of all. Free webinars, presentations and publications are commonplace. It seems that at present there is less emphasis on preserving intellectual property and more on finding and sharing solutions.

For those employers who have employees working from home, the home becomes a workplace. Both employer and employee have similar health and safety obligations whether the employee is working at the work premises or at home. It is most important that employers keep in regular contact with their employees and ensure that they are coping, especially with added pressures such as caring for children.

It is often said that the employment relationship is the second most significant relationship we experience. This pandemic has not only caused us concern for our health, it has caused concern for our financial stability and for the security of our employment. We will come out of this — the Government’s messaging indicates sooner rather than later. Businesses will experience a return to productivity. How quickly that occurs, and the extent to which that occurs, will be determined by how effectively employer and employee can work together. Employers need to consider how they will retain the expertise that will inevitably be required to regrow their business.

If you have any questions with regards to the above article, please contact our specialist Employment Law Team.