COVID-19 Checklist: Key Issues for Businesses

The unprecedented situation we are currently facing with COVID-19 is causing a great deal of uncertainty and stress for business owners.  We have put together a quick check list for businesses to address the most topical issues they are dealing with right now. 

Rent Relief

Talk to your landlord:  If you are struggling financially and cannot pay your rent, talk with your landlord as soon as possible.  Be upfront and try to work out a compromise that works for both parties – your landlord may prefer to take a temporary reduction in rent rather than have a vacant property with no rental income at all.

No access clause:  If your lease is on the standard Auckland District Law Society form and was signed in 2012 or later, you may have a “no access in emergency” clause (27.5) which allows your rent and outgoings to be temporarily reduced by a fair proportion because of the level four shutdown.

Cancellation for non-payment:  If they follow the right steps, your landlord can cancel your lease if your rent remains unpaid.  It is best to talk with your landlord and get legal advice before you reach that point.

Government wage subsidy

If you are an employer, contractor, sole trader, or self-employed then you may qualify for the COVID-19 wage subsidy.  This subsidy is a lump sum payment designed to help you meet essential costs over the next few months.  The Work and Income website has detailed information about what is available and how to apply. 

Lending

The Government has implemented a Business Finance Guarantee scheme to provide loans of up to $500,000 for businesses with annual revenues between $250,000 and $80 million, for up to three years.  Up to 80% of the lending will be guaranteed by the Government.  Talk to your bank for more information. 

Business tax changes

The Government’s economic response includes a number of business tax changes – a provisional tax threshold lift, the reinstatement of building depreciation, and writing off interest on the late payment of tax.  Talk to your accountant for more information. 

Redundancy and employment concerns

Redundancy:  If you decide you cannot keep staff on (if you do not qualify for the subsidies or they will not be sufficient to avoid redundancies) then you can follow a redundancy process. You must consult with employees who would be impacted by any proposed restructure before you make decisions. You should put your proposal to employees and give them a reasonable opportunity to provide their feedback on the proposal. You must then fairly consider the feedback before reaching any decisions on the restructure. If a redundancy proceeds you should remind staff made redundant they can apply for the redundancy support that the Government has announced.

Annual leave:  You cannot force employees to take annual leave unless you have first consulted with them and then given them 14 days’ written notice to take their leave.

Leave without pay:  You cannot force employees to take leave without pay, unless you have given 14 days’ notice of a shutdown. Be aware that you can only have one shutdown period per year, so you will not be able to have one now and one at Christmas etc. You might already have had a shutdown for this year in January, so cannot have another one now.

If you put staff off on unpaid leave, it must be either a shutdown (as above) or with their agreement. If you just force it on them, it will be an unjustified sending away from work and therefore an unjustified dismissal. This can lead to orders for unpaid wages, plus compensation for hurt and humiliation from the Employment Relations Authority, plus penalties.

Get legal advice

Talk with your legal advisor for more detailed advice that suits your business.  Many legal advisors are working from home and can talk to you by email, telephone and video call.