The Employment Relations Authority has held that two employers breached the rights of their employee while receiving the wage subsidy during the Covid-19 lockdown.

The first employer told its employees that it would be reducing their wages to 80% of the usual rate while it claimed the subsidy. Later, the employer decided that it would carry out a redundancy process. The employer doubled the notice period for employees.

The ERA held that by reducing the employee’s wages to 80% and doubling the redundancy notice period without consultation, or employee agreement, the employee’s rights were breached.

Employers must not change employee’s employment agreements without their consent. This is regardless of whether the change would disadvantage or benefit the employee. No penalty has been awarded in this case yet.

The second employer gained the consent of its employees to pay them 80% of their normal wage as it collected the subsidy. However, on 01 April 2020 the minimum wage increased from $17.70 per hour to $18.90 per hour.

Due to the minimum wage increase during lockdown, paying the employees at 80% of $17.70 per hour meant that the employer was paying the employees below minimum wage.

The ERA held that due to the increase in minimum wage, the weekly amount that the employer paid its employees from the subsidy should have been increased as well.

In this instance, no penalty was imposed, but the employer is required to repay the employees the shortfall in their wages.

These cases illustrate what employers were told from the beginning of the lockdown. Although the lockdown and claiming the subsidy were difficult and unusual times for employers, at no point was employment law changed or suspended. Employers were required to follow the regular employment laws and their obligations throughout.

If there are concerns about how an employer acted during the lockdown, or about an employer’s wage subsidy claim, it is wise to speak with a professional experienced in the area.

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 team who can answer your questions and put you on the right track.


Alan Knowsley
Employment Lawyer