With New Zealand now in effective lock down, many businesses are having to consider implementing urgent staff cuts in order to stay afloat.
Employment law continues to apply, and the legal test an employer will be measured against remains the same – whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred. However, “all the circumstances” will now include the economic effects of COVID-19 on the business. That may mean the process to implement redundancies can justifiably be shortened, and other obligations such as the information disclosure requirements may be more easily met.
As each situation is different, we urge employers to take legal advice prior to making staff redundant. However, as a start, employers considering redundancies should:
- Work through the Government’s support package to ascertain what is available for the business. If that is not adequate, the employer should be able to justify why it cannot sustain its staff, with reference to real numbers in terms of business sustainability/efficiency.
- Consider the terms of each individual employment agreement and/or collective agreement. Force majeure or business interruption clauses may be used to provide temporary wage relief but keep staff employed long term.
- Genuinely consider all other options before proposing redundancies, and be able to show why those options are not suitable. Other options could include employees taking annual leave, or leave without pay for a period of time, or reducing hours across the workforce instead of reducing total job numbers.
- Reasonable consultation with potentially affected staff will almost always still be required. Consider how long the business can reasonably provide for employees to consider a proposal and provide feedback.
- Understand the risks of non-compliance. Along with the usual risk of a personal grievance from aggrieved employee(s), breaches of employment law can also have significant consequences for those who employ migrant workers. Employment law non-compliance can result in a mandatory stand down period for employing migrant workers, and could also impact on accreditation applications or renewals. From mid-2021 all employers will need accreditation status to support migrant workers on work visas.