Employment rights and duties in the event of an epidemic like Coronavirus/Covid-19 (Part 2) …

The country went into lock down on 25 March so employees, except in essential services, are not allowed to work unless they can do so from home. 

Wage subsidies have been announced along with Leave subsidies and financial assistance packages including mortgage holidays. Consult the various government websites such as the Ministry of Social Development tie details on who qualifies and how to apply.

As Coronavirus (Covid-19) spreads throughout New Zealand, the impact will likely be felt by the local workforce.  Employers should be aware of their obligations, and also the measure they can put in place to minimise the impact.  In particular, employers should ensure they are familiar with the law around:

• Sick leave;
• Obligations to keep employees and patrons/clients/customers safe;
• Contractual provisions to protect employers; and
• Dealing with quarantine measures implemented by the government.

To read more about sick leave and health and safety obligations, Read Part 1 of this article.

Contractual protection for employers

If an employee is unable to work or the employer asks them to remain at home, questions may arise around whether the employee is entitled to be paid.  The key consideration in this situation is the readiness of the employee to work.  If the employee is healthy and refuses to attend work, then payment of ordinary wages/salary may be withheld.  However, if the employer asks their employee (who is ready and healthy to work) to remain away from work, the employer will still have to pay them.

Where flexible working is not possible, a “force majeure” clause in an Individual Employment Agreements may assist an employer.  A force majeure clause usually spells out what happens in the event of something like a natural disaster, workplace fire, flood or epidemic.  Some force majeure clauses will result in an employee’s job being terminated without notice.  In many cases the clause may not be as extreme and is likely to simply protect the employer from having to pay the employee.  

It is not clear whether, and how much, government support will be available for employees who find themselves in this situation.  Employees who are expectantly unemployed may face hardship, and for this reason, employees may want to ensure they have income protection insurance. 

The more difficult question to answer will be at which point Covid-19 triggers the force majeure clause.  In each case, it will come down to the wording of the specific clause and the facts of each case. 

In circumstances where employment agreements do not contain a force majeure clause, and employees are unable to attend work for an extended period of time, some employers may look to rely on the principle of “contractual frustration”.  Contractual frustration is when an agreement is no longer possible to complete or radically different from what was anticipated when the agreement was made.

Employers should be careful in trying to rely on these clauses due to the high threshold required in order to satisfy the test. In situations where employees can work remotely (especially if this arrangement is envisaged to be temporary), a court is unlikely to find the employment agreement cannot be carried out or that it is radically different to the anticipated agreement.

If you are unsure of your rights on duties, it is a good idea to seek expert advice.  Getting things wrong can be very costly.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-priced Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced employment law team who can answer your questions and put you on the right track.