Employment Law During COVID-19 – Wage Subsidy and Reducing Wages

April 16, 2020

in COVID-19,Employment

By now we’re all aware of the Government’s wage subsidy.  We are also aware that the businesses that haven’t already fallen victim to the lockdown are doing it tough.

Stands to reason then that you should be able to take advantage of the subsidy and put your staff on 80% of their usual earnings, or $585 a week at least.  Anything else, and your business can’t survive.  No point consulting with your staff – the facts and numbers won’t change.  Right?


Even in these difficult times, New Zealand’s employment laws are in full force.

The subsidy is there to help business finances, not to justify an immediate and unilateral drop in pay.

So how does that play-out?

Well as long as you’re paying your staff, you can still take advantage of the subsidy to assist your cashflow – the subsidy is to the business, not the staff, but it is for the purpose of helping to keep paying staff.

Your obligations in receiving the subsidy are to:

  • Use your best efforts to pay your staff at least 80% of their usual weekly earnings – that is a strong standard but it is not absolute, and if you can’t achieve it you can still receive the subsidy; and
  • If you can’t pay your staff a minimum of 80% regardless of using your best efforts, to pay them as much as you can and at least the subsidy amount of $585 per week.

Your obligations under employment law are the same as they have always been.  You must consult on any proposal you have for change, and when it comes to a reduction in pay then arguably you should be getting agreement#.  You also need to put your business case together – everyone should understand the basic business case right now, but you still need to put together hard numbers specific to your business.

# Obviously getting agreement to a reduction in pay could be hard to do.  It may not actually have to be achieved, but it requires careful thought.

If all of that just sounds too hard, please remember:

  • It is all manageable; and
  • We are here to help.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Wallace Revell
09 379 0055

The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.

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