Legal Updates

Covid-19: Know your Obligations as an Employer

While the number of cases of Coronavirus (“COVID-19”) in New Zealand remains relatively low, it is now inevitable that the outbreak will have a significant impact on many aspects of daily life. As an employer, the impact on business will likely be at the forefront of your mind, particularly with the recent announcement by the New Zealand government to enforce mandatory self-isolation on nearly all returning from overseas travel. While there are a number of employment issues that will arise from COVID-19, in this article we focus on the issue of employee self-isolation.

Know your duties / obligations

First and foremost, ensure that you remain informed of the status of COVID-19 outbreak. The Ministry of Health (“MOH”) website is a useful source of information: https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-novel-coronavirus

The Ministry of Business, Innovation and Employment (MBIE) is also providing practical guidance to employers: https://www.employment.govt.nz/about/news-and-updates/workplace-response-coronavirus-covid-19/

During these uncertain times, it is important as an employer to be mindful of obligations of good faith and open communication. As the outbreak of COVID-19 continues to unfold, this will mean providing regular updates to employees on how the business/workplace is responding.

Health and safety

Under the Health and Safety at Work Act (“HSWA”) all businesses have a duty to eliminate or minimise any risks and hazards to their workers and others who may come to the workplace. The HSWA requires that a person conducting business or undertaking (PCBU) ensures so far as reasonably practicable, the health and safety of workers.

The government’s new guidelines are requiring all travellers arriving from overseas (excluding Category 2 listed countries on the MOH website) to stay at home (self-isolate) for 14 days from the date of departure or close contact. Any employee included in these guidelines should be directed to work from home where possible, or take sick leave. Failure to implement these guidelines as far as reasonably practicable may be a breach of the HSWA by the employer.

In addition to employees in mandatory self-isolation, as an employer you may consider instituting (following discussion with your employees) a policy regarding keeping higher risk employees out of the workplace. This should include set criteria for who should remain away from the workplace, for example:

  • someone with symptoms considered suspect of COVID-19 (these include a cough, a high temperature of at least 38°C, and shortness of breath); or
  • someone caring for a dependent with symptoms.

Any employee fitting the above criteria could be directed to work from home where possible, or take sick leave.

If an employee refuses to work from home or take sick leave where reasonably directed, this could amount to misconduct.

Sick leave entitlements

If you have employees in self-isolation, whether it be the mandatory 14 day period or otherwise, you will likely be wondering about your obligations to pay salary/wages during the isolation period. Where employees are able to work from home, you must pay the employee as normal. Ultimately, whether it is reasonable to offer an employee paid sick leave beyond statutory entitlements will depend on the circumstances and how the employment agreement is drafted.

Non-mandatory self-isolation

If the employee is exhibiting COVID-19 symptoms (these include a cough, a high temperature of at least 38°C, and shortness of breath) or caring for a dependant with symptoms, they will be entitled to sick leave in accordance with the Holidays Act 2003.

The minimum entitlement for sick leave under the Holidays Act is five days of paid sick leave per annum, but this can accrue from year to year up to 20 days sick leave where the entitlement has not been fully utilised. 

If an employee has exhausted their entitlement to paid sick leave, the employee may seek paid annual leave. It will be for the employer to determine if the employee can utilise their annual leave entitlements. An employer is not able to direct an employee to take annual leave in these circumstances. Once these entitlements are exhausted, the employee can be placed on sick leave without pay. 

There may be situations where an employee wishes to self-isolate, but is not required to under MOH guidelines, or exhibiting COVID-19 symptoms or caring for a dependant with symptoms. It is worth noting that an employee must have a reasonable basis to believe they are at risk of spreading COVID-19. If an employer does not consider the belief to be reasonably held, they must provide explanation for this.

Mandatory self-isolation

If an employee falls under the mandatory self-isolation guidelines, and is unable to work from home but is not showing any symptoms of COVID-19, it may be considered unreasonable to withhold their salary/wages throughout this period, on the basis they could be seen as otherwise “ready willing and able” to work.  MBIE guidance has recommended that the employer should consider special paid sick leave in these circumstances, or another form of paid leave by agreement with the employee.

If an employee falls under the mandatory self-isolation guidelines, and is sick with symptoms of COVID-19, then the statutory guidelines for sick leave will apply to the 14 day period. Once the employee has exhausted sick leave entitlements it will be for the employer to determine if the employee can utilise their annual leave entitlements.  Once these entitlements are exhausted the employee can be placed on sick leave without pay, although the majority of employers appear to be taking a lenient approach to these circumstances.

Notwithstanding this, as above, employers are being encouraged in all circumstances to consider special paid sick leave or another form of paid special leave by agreement, particularly in relation to mandatory self-isolation.

In reality, some businesses will not be in a position to sustain long periods of paid “special leave”.  Where this is the case, careful consideration of the above factors is warranted before moving to the unpaid leave options available or restructuring your business to survive a slow down.    

Force Majeure clauses

A “force majeure” clause drafted into an employment agreement may remove the obligation for an employer to pay sick leave in the event that employees are unable to perform their employment duties due to unforeseen circumstances beyond the control of the employee or employer. However, this will depend on how the clause is drafted and the surrounding circumstances. Although the COVID-19 outbreak is now classified as a “pandemic”, this does not necessarily mean it constitutes a force majeure.

Light at the end of the tunnel

The government has this week announced a “Coronavirus financial package”, including an economy-wide wage subsidy and sick leave scheme aimed at keeping people in work. Further details of the financial package will be announced in the coming weeks. Regardless of entitlement to subsidies and the sick leave scheme, employers are still expected to meet normal sick leave and employment law obligations.

The COVID-19 leave payment scheme will provide support (through employers/to sole traders and the self-employed) for people in self-isolation as per MOH guidelines, sick with COVID-19, caring for others with COVID-19, and who are unable to work from home.

If you are paying salary/wages to workers in mandatory self-isolation, nothing in this scheme will require you to pay an employee more than the employee would have received had they worked. If you have paid employees during the mandatory self-isolation periods, you can still be eligible to receive the leave payment on behalf of employees.

More information on the sick leave scheme, including how to apply, and other support for businesses can be found at www.govt.nz/coronavirus, and www.business.govt.nz.

Concluding comments

It is important to respond to the coronavirus in a way that does not create further panic, but protects your business’ greatest asset – its people.

We note that the above is intended as a general guide – as the situation is constantly changing, we recommend seeking advice on specific queries.

If you have any further questions regarding issues discussed in this article or general employment matters, please contact Jaesen, Nina or Nicola.