Urgent Legal and Funding Updates

Tuesday 14th July 2020

Two important developments:

  1. Additional Funding for the Covid Business Advisory Fund
  2. The first ERA determination in relation to the Wage Subsidy environment - the Dove Hospice case. Here is some key information on it, a summary of our thoughts and what you need to know.

Also in this Update are some recent changes the Government have announced in the last week:

New Covid Advisory funding
Obligations to pay during the Civil Defence State of Emergency
Extended Government Loan Scheme
Immigration issues
Triangular Employment Act in force

Further assistance for those made redundant:

New Covid Advisory Funding

The government have just announced an additional $40m to be added to the Advisory funding provided through the Regional Business Partners Network.  So, if you have been waiting for them to get back to you – or if you are on the waiting list – now would be a great time to give them a call.  And for those of you wanting to make use of the Consultant funding, my service is called:

HR Advice on Changing staff numbers, hours, pay or tasks under the Covid-19 Support Category

And if you now need some HR (or other consultancy) help in relation to Covid recovery you need to register with the RBPN via this site https://app.regionalbusinesspartners.co.nz/Business/SelfRegister

Obligations to pay during the Civil Defence State of Emergency

We now have the first ERA determination in relation to the Wage Subsidy environment - the Dove Hospice case.  The key point of interest relates to the fact that they were closed down during lockdown and employees were told by their employer that they would be paid at 80%.  The Authority found that terms of employment could not be unilaterally varied and that the decision to pay less than 100% was such a variation and as there was no consultation over the change, the employees would be entitled to wage arrears.  For the full Determination refer to https://www.employment.govt.nz/assets/elawpdf/2020/2020_NZERA_266.pdf

Key implications for you:

If you were locked down and reduced pay below the 100% level, you should consider:

  • Did you get agreement to the changes - you're OK
  • Did you consult staff over the changes, so that it cannot be claimed to have been unilaterally imposed - you're OK
  • If not, you may have a challenge ahead of you

I must say that I find this decision very disappointing - it is based on an assessment that employees were "ready, willing, and … able to work", but for the intervening event of Covid-19.  The fact is, of course, that they were not "able" to work.  And I am concerned that something that appears not to have been considered is the impact of Government decisions under the State of Emergency.  Grant Robertson was very clear on March 27 when he stated (highlight added):

“This ensures businesses not able to operate do not need to lay off staff. Even if this requires businesses to operate with no activity, the subsidy allows them to keep their workers on the books, particularly during Alert Level 4.”

The wage subsidy is a Government payment to help employers pay wages. It does not change any other employment law obligations, meaning employees must be paid appropriately under their employment agreements for the hours they do if they work during the lockdown.

Clearly, he was indicating a particular change in employment law obligations (and it related to the Wage subsidy), and I believe that this still needs to be clarified.  So, if you are challenged about your process or outcomes in relation to pay during the lockdown period, please let me know and we can work out the best response.

Extended Government Loan Scheme

The Government have announced a second extension to the Interest-free Cashflow Loan Scheme, introduced to help small businesses in the wake of Covid-19.

Eligible Businesses now have until 31st December to apply for the Government supplied loan. The idea is that businesses will not be rushed into deciding whether or not they need to take on the loan or whether they can operate without the extra cashflow. It compliments the Wage Subsidy in order to assist with non-wage costs.

-       SME’s employing 50 or fewer staff, who were eligible for the original wage subsidy, are eligible to apply for the one-off loan can borrow up to $10,000 plus $1,800 per equivalent full-time employee, up to a maximum amount of $100,000

More information can be found at www.ird.govt.nz/covid-19/business-and-organisations/small-business-cash-flow-loan

Immigration Issues

Seasonal Workers

Seasonal workers working with Recognised Seasonal Employers (RSE’s) will be able to continue working and supporting themselves under more flexibility.

The temporary visa changes are:

-       Stranded RSE workers will be able to work part-time (a minimum of 15 hours per week) with no limits on roles they are allowed to do

-       The workers will need to have an employment agreement with an RSE employer who will need to continue to honour the commitments under the RSE scheme

-       Any additional time that an RSE worker spends in New Zealand will not count towards the time they would usually have to spend overseas before they can return for seasonal work

It is still the RSE employers responsibility to comply with the employment law and pastoral care requirements.

Due to the rise in New Zealanders looking for work, the Government have kept the RSE scheme annual cap at 14,400 for the next year, rather than increasing it as originally planned.

Of course, workers looking to enter New Zealand for the next season will only be able to do so if the border restrictions allow.

Work Visa’s

The Government are:

-       Extending temporary work visa’s due to expire by the end of 2020 by 6 months. (This will affect 16,500 workers)

-       Shifting the stand down by 6 months to February 2021. (This delays the 12-month stand down offshore period by 6 months and enables them to stay meanwhile)

-       Ensuring New Zealanders needing work continue to be prioritised.

Moving forward, new low-skilled work visas will only be granted for six months, rather than twelve.  And the Government are also working on changes, including a different way to define lower skilled/lower paid employment and a new process for employer-assisted work visas expected to be fully in place by mid-2021.

Migrant workers on a temporary employer-assisted visa whose job has ended need to apply for a new visa or leave New Zealand if able to.

Implications for SMEs:

  1. With visas being extended, Employers will find that the associated vacancies arise that much later.  When they do, however, Employers are expected to genuinely seek New Zealanders to fill them as a priority and this will be tested.
  2. Employers will need to change their longer-term planning for staff, and especially for the likelihood that New Zealanders may now exist who were not available before – you’ll need to plan to train new staff.

Triangular Employment Amendment

This amendment Act to the ERA took effect from 28th June 2020.  Just a quick reminder for you all that if you use workers provided by another organisation (such as a temp agency), you can now be joined to a PG claim taken by the employee against their employer, where you are alleged to have caused or contributed to the problem. 

Typically this could include bullying or unjustified disadvantaging actions that are alleged. 

Implications for SMEs: It is important that you treat such temps as if they were your own staff, except that your management of their hours is as agreed with the Temp agency, so you don't have the same sort of responsibilities for guaranteed hours. 

In-Work Tax Credits

From the 1st July 2020, the minimum number of hours needing to have been worked to qualify for the In-Work Tax Credits has been removed.

Previously, couples needed to have been working at least 30 hours per week, combined. Single parents needed to have been working at least 20 hours per week.

Now, In-Work Tax Credits are available to all families who are receiving an income from paid work and who are not also receiving an income tested benefit or a student allowance.

For more information, please see https://www.ird.govt.nz/in-work

Local Projects that will support Employment

The Government have introduced a list of projects around the country that they are investing in, leading to more employment opportunities – particularly for those who have been displaced since Covid-19.

For more information please find:




If you need any assistance in making sure that you are all set up and complying with any new legislation, please get in touch – we are here to help!

For ongoing help, contact Mike on 027 2808546 and mike@essentialhr.co.nz or Beccy on beccy@essentialhr.co.nz or 027 2909070 – and if you phone our landline 03 659 0377 you can leave a message that gets delivered to us automatically. 

Need help managing staff?

Mike has a wealth of experience advising on every aspect of the employer-employee relationship. I can give you per-phone guidance or work along side you to make things happen.

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