Employment Law During Lockdown
For many of us, the latest COVID19 lockdown and alert levels have created uncertainty about how the crisis impacts employment, and how employment law responds. The crisis has not suspended employment law which means we are required to follow established legal principles while navigating our way through the issues.
I, therefore, thought it would be helpful to summarise some of the questions I’m being asked, and how the relevant employment law principles apply, to help identify the path to follow. Hopefully, employers and employees can then make good decisions based on clear principles and avoid the types of legal problems that often arise in challenging situations such as these.
CAN MY EMPLOYER STOP PAYING ME BECAUSE OF COVID-19?
Employers’ and employees’ basic employment rights and powers are contained in the employment agreement. The agreement is a contract like other contracts and is interpreted in light of its terms and the parties intentions.
Unlike other contracts, however, employment agreements also require both parties to deal with each other in good faith. This obligation does not exist in garden-variety contracts and requires the parties to be responsive and communicative, and not do anything likely to mislead or deceive the other party.
Unless an agreement clearly states that the employer may stop paying their employee at certain times, such as during the epidemic, the employer must keep performing the agreement. That contractual obligation continues despite the lockdown, alert level, or other temporary interruption.
An employer is also not entitled to “suspend” their business and stop paying their staff during the period of suspension unless their staff expressly agree to the suspension, or the contract provides for it. Contracts that do provide for such a suspension will be carefully scrutinised as a right of that nature is uncommon in employment agreements.
This means is that an employee should continue to be paid their usual salary or wage during the crisis while they are available to work, even if the alert level prevents them from attending the workplace. An employer who simply stops paying their employees during the crisis risks claims of unjustified dismissal.
CAN MY EMPLOYER CHANGE MY EMPLOYMENT AGREEMENT BECAUSE OF COVID-19?
An employer cannot unilaterally vary an employment agreement because of the COVID19 lockdown. Like any contract, an employment agreement can only be varied by the parties when they both agree to the proposed variation.
If an employer proposes to vary an employee’s employment, they must follow the ‘test of justification’ provisions of Section 103A of the Employment Relations Act 2000. These provisions apply to any change to an employment agreement such as redundancies and dismissals and are still highly relevant during the current crisis.
Section 103A requires an employer to have a good reason to propose a variation and observe natural justice when making a decision whether to implement its proposal. The duty of good faith means that the employer must be open with their employees about the reason for the proposal, and divulge all relevant information, including business and financial information (if the reasons given for the proposal are financial).
Proposed changes also cannot be a fait accompli. Even when an employer believes there are no other options available, the duty of good faith requires the employer to consult with their employees and genuinely consider their feedback before making any decision.
CAN YOUR EMPLOYER FORCE YOU TO TAKE THE LOCKDOWN PERIOD AS LEAVE?
Section 18(3) of the Holidays Act 2003 requires an employer and employee to agree when the employee will take annual leave. Both parties must approach those discussions in good faith (i.e., communicatively, and responsively). Mediation may be required to help the parties reach an agreement.
If the parties cannot agree when annual leave will be used, an employer may require an employee to take annual holidays after giving the employee 14 days’ notice (Section 19, Holidays Act 2003).
WHAT HAPPENS IF MY EMPLOYER MAKES ME REDUNDANT BECAUSE OF COVID-19?
An employer is entitled to propose redundancy when they have genuine reasons and follow a fair process. Redundancy has to be a fair process.
There are some obvious traps for employers proposing redundancy that would make the redundancy unjustified:
Taking the wage subsidy for an employee. Making an employee redundant for whom the employer has received a subsidy will likely create double-risk for the employer: an unjustified dismissal claim from their employee, and an investigation by MSD for inappropriately obtaining the subsidy (check the declaration wording carefully!).
Declaring that redundancy is inevitable. The obligations of good faith and natural justice mean that there is no such thing as an inevitable redundancy.
Selecting which employees (from a group of similar employees) will lose their jobs. Section 103A requires employers to act impartially and approach selection for redundancy objectively. This normally means employers must fairly assess their employees to determine who is made redundant and who isn’t.
Changing your tune. Employers who make employees redundant are required to have a good reason before their decision is legally justifiable. Any reason given for the redundancy must fit the facts and bear a test of time. If the reason changes, the redundancy will be hard to justify.
Being too quick. Good faith requires the parties to consult, share relevant information, and consider each other’s views before a decision is made. Quick decisions struggle to meet these requirements.
An employee who wishes to challenge their employer’s redundancy proposal is entitled to request all relevant information. In some cases, the employer’s confidential information must be shared so that the employee is properly informed of the facts before giving their response.
There are several requirements for employers and safeguards against wrongful redundancies. If you think you have been made unfairly redundant, you may need to get a lawyer involved.
If you are experiencing any issues with employment due to the Covid-19 lockdown, please feel free to contact me on 021 901 735. Stay safe, and let’s unite to stop the spread of Covid-19.
