Can my employer reduce my wages during lockdown?

During another New Zealand level 4 lockdown many employers are once again attempting to reduce employee’s wages when they cannot work from home.

Employees should be aware that an employer cannot simply enforce a pay reduction for their staff. A lockdown makes no changes to an employees’ contractual rights, even when they cannot work.

Without any agreement for a variation, employers must continue to pay employees their usual wages for their usual hours of work as set out in their individual employment agreement. This means if the agreement requires payment for 40 hours of work, then they must be paid for the full 40 hours at their usual rate.

However, an employer and employee may come to an agreement on reduced wages during a lockdown. This agreement must be reached in good faith, after consultation with each individual employee (or bargaining agent), be recorded in writing and signed by the relevant parties to avoid any future disagreements.

If an employee does not agree to a reduction, an employer must continue to pay them the stated wages in their individual employment agreement.  However, employees should be aware that if employers cannot meet their financial obligations, including payment of wages, they may look to begin a redundancy process.

An employer can encourage their employees to use various forms of leave during this time, however this should again be in consultation and agreement with the individual employee.

If leave cannot be agreed, an employer can possibly force an employee to use their annual leave with 14 days’ notice as permitted under the Holidays Act 2003, but as leave is supposed to be for the purpose of rest and recreation, the Employment Court has not yet ruled on whether leave can be forced in circumstances such as a lockdown.

These rules do not apply if the employer has applied for and received the wage subsidy. In this event the employer must pass on the full amount of the subsidy, as part of an employee’s usual wages.

If you have concerns that your employer is not acting fairly it is wise to speak with an experienced employment lawyer about the options that are available to you.

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