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Every business with employees grapples with wages. Business owners, whether they know their maths or not, have to calculate how much they owe employees. And more importantly they have to get that figure correct.
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In this exclusive webinar, Employsure Workplace Relations Consultant Sharne Reed discusses the impact of COVID-19 lockdown on small businesses. She also discusses 2020 minimum wage rates and outlines the details of the NZ government wage subsidy.
Good morning, everybody. And thank you for joining us this morning for our webinar on the COVID-19 lock down update. We're going to talk through two topics this morning, the first one being shutdowns and your employees, and the second one being confidence with the minimum wage changes that came in today. So shutdowns and your employees. As of 11:59 p.m. Wednesday 25th of March, New Zealand entered a nationwide lockdown when the government imposed Alert Level 4. So what does this mean for you? If you have employees who are able to work from home, then your business will continue as normal.
You may have a business where you can only allocate some employees to work from home and you might have other departments that need to be put on lockdown or be closed. And if that's the case, then your employees who aren't able to work from home, then your employees can take annual leave and paid leave during this time. There are options available to business owners such as the wage subsidy. So if you're struggling financially when paying wages, take a look at that wage subsidy and apply for it. There are a lot of applications that are getting approved every day, but the feedback is that it does take some time to get approved.
So if you've seen through your application and haven't heard back in about a week, then follow up with that then. Shutdowns and stand downs. If you are one of our clients and you'll have the stand down clause in your employee handbooks, what this means is it's just informing your staff that you may have to shut down the business due to circumstances outside of your control. This coronavirus lockdown that we're experiencing at the moment is something that's outside of your control. So standing down your staff without pay may be an option. If you do have employees who have annual leave there, then you can let them take that leave and they've exhausted all their leave and then not to let them take their leave without pay.
Another option that you have there is, you're able to bring forward your annual shutdown if you have a clause written into your employment documentation. Normally, businesses choose to shut down over the Christmas and New Year period. However, given the environment that we are in and you can consult with your staff and just let them know that you want to bring forward that you'll shut down, in which case you'll need to give yourself 14 days' notice of that intention. And I acknowledge the fact that we are a week into lockdown already. Some businesses may have gone into lockdown earlier having their staff work from home. If you are finding that the work that you're doing is starting to dry out and you're not sure that you're going to have enough to get you through the next three weeks, then you can bring forward that and you'll shut down.
If you want to bring it down sooner, you can consult with your staff, but legislation does state that it has to be 14 days' notice. So with the government imposing annual leave for restrictions, what does this mean for you if someone in your employment is sick or contracts coronavirus while working from home? So if your employee isn't sick at all, then they just carry on normal working from home. And unless during that time they themselves get sick, they have a spouse or a child or someone, a dependent living with them who does get sick, in which case they may be able to take sick leave during that time.
If your business doesn't have staff working from home, and then they're still on annual leave or unpaid leave. However, if they do get sick provided that they bring you a medical certificate, you can choose to pay them separately for their time. If they have sick leave, yeah. If they don't have sick leave, you can look to let them take their annual leave, or that will be unpaid leave. So if your employee does get sick while you're in the lockdown at the moment, then I would encourage them to go to a doctor or get some form of a medical certificate outlining that they're always set for either themselves or for someone that they care for.
So it could be their child, it could be their spouse, it could be if they've got elderly parents staying with them, so that they can take care of them during this time. It could be that they're taking care of their parents. So their medical certificate will outline that they are unable to work due to having to care for this person. Once that person is better, then I would encourage you to get a medical clearance for them, regardless of whether it's them it's actually sick or it's their parents or child or spouse. If they've being allocated as being the person responsible for caring for that person during the time of the illness, then you want to make sure that that person is actually well before they can get to work.
If they don't receive a medical clearance, then they just remain on leave. Like I said before, if they do exhaust all their sick leave, then you can look to pay them annual leave for their time, but you don't have to. So what happens if you've exhausted all your options and you can no longer pay your employees? The government has outlined that redundancies should be a last resort for businesses after they've exhausted all options available to them. So when you're deciding if redundancy is what needs to happen for you and your business, just consider whether you've looked into the wage subsidy and the government reduce the cap on that wage subsidy last week. So that means that there's no restriction on how much you will be given.
Previously, there was $150,000 kit that has since been removed. So you may be able to receive more for that wage subsidy. And everything about when you've got staff who can take unpaid leave during this time. Have a think about whether you can reduce people's guaranteed hours. For example, if you've got people who are working 40 hours a week, can you consult with them and look to reduce it down to maybe 30, which would then allow you to keep people working for a little bit longer. Have you consulted with your staff and ask them to take...if you've got a wage subsidy, have you consulted with them as to whether they can take 80% of the pay rather than the full 100%.
Once you've gone through that whole thought process, you've exhausted all your options that are available to you, then you can look to redundancies. They still will need to follow a process though. And granted, we can't do face-to-face meetings at the moment. However, there are so many options available to you. You can look at doing phone conferences, you can look at doing Zoom or Skype sessions. And that way, you're still having meetings with all of your staff at one time, rather than picking up the phone and finding each individual employee one at a time. The reason I would encourage you to do group meetings is, if you're looking to find one person at a time, by the time you get off the phone with one person, they're probably already on the phone to the next employee, talking through what's been discussed and potentially misconstruing the message that you actually want to get across.
So if you are looking at redundancies, it is still a process that you need to follow. So what the process looks like as you're inviting your staff to a meeting to inform them that, you know, things are getting tough at the moment and you may be looking to redundancies. You want to get them to put ideas forward to you on other alternatives that you can consider during this time. For example, they may say, "Well, what about if some of us take voluntary redundancy?" Does it mean that that will save some people's roles or they may ask if they can reduce hours, all of that sort of thing? They'll come forward and they'll give you ideas on what they want to propose.
From there, you'll go away, you'll consider what it is exactly that they've put forward to you. Consider whether it can work for your business, whether it as a viable option. And then what you do is you invite them back to a meeting, you will discuss with them what the proposal is going to be. If you're looking at redundancies in your outline, what the selection criteria is, for example, if you're only looking to put off a couple of staff rather than a whole business...or the whole business, I should say, then what you do is you outline what the selection criteria looks.
So is it that you are looking for two people to remain out of a department as opposed to four people? And you'll put through what qualifications you want the person to have, the skills and experience, while still keeping it broad enough that it will take into account all of those employees. That way it might be construed that you're specifically looking to keep two certain people on or a certain number of people on and exactly who those people are. You should never pre-empt who exactly you want to put there or never make it known that you are actually looking towards one person over another this. Granted, this is a different time at the moment, what we're going through.
So it may be deemed fair and reasonable that that process needs to be shortened for whatever reason. I'd still encourage you to follow the process as much as you can and always seek independent advice before you go ahead with a process like this. So what happens if you've got employees while they're working from home, who have children that they need to take care of? What I would encourage you to do is investigate with your staff, whether they're actually able to continue to do the job in the full capacity or whether they need to take some form of leave.
Potentially, your employees will have their partner or spouse or someone else at home with them, who may be able to take care of the children while your employee continues to work. Not always a given but that is an option that's there. What you can also do is have a chat with the employees and see whether you can actually structure a bit of a routine so that you're swapping the childcare between the two parents if both parents actually need to work. I have spoken to some of our clients who have both husband and wife or full families working for them and in order to ensure that they can still run the business while still taking care of their employees. And what they've done is actually they've rostered the periods so that one parent is always caring for the child, and one parent is always working.
While the parent who's caring for the child isn't at work, they're taking leave during that time. If you find that your employees aren't able to work at all, and then they'll either need to take annual, non-service leave if that's an option for your business or unpaid leave. If you have employees who have children who are over the age of 14, then legally they're old enough to take care of themselves for short periods of time. So it could be deemed reasonable that you have an employee at work who's got a 14-year-old at home or older who can help look after the younger ones.
However, if you have employees with children younger than 14, I wouldn't encourage it that those children are left to their own devices. Legally in New Zealand, you do need to be of the age of 14 to be home for a short period of time. So that's where I'm drawing a bit of advice from. If your employer is saying to you, "No, my children are pretty, you know, self-reliant and they can take care themselves, I can get their own lunches and I can check in on them," chances are that those kids are actually going to struggle with it anyway. You know, as big of a change as is it for us, it is a big change for the children to adjust into suddenly being at home, going to not seeing their friends.
So they are going to be more reliant on their parent. So I would encourage you to have that conversation with your employees and just see what options they have available to them. So you're one of the lucky businesses who can have their employees working from home and still function, how do you manage your staff and ensure that they're completing the tasks that are required of them? Working from home does require you to have a large trust school with your employees. Granted, people work different when they're working from home than when they may be working in the office.
Some people may absolutely thrive working from home, and some people may really struggle, probably the extrovert type, so you're used to having people to talk to in the office. And so make sure you have regular catch ups with your team just to ensure that they have direction on what needs to happen for that day. Make them feel like they're still part of the team and they're not out isolated. You can look at different ways to make these catch ups happen so that people do still feel like they're part of that team. You know, you've got phone conferences, you've got Zoom, you've got Skype, which a lot of businesses are actually making use of these days.
Personally, Zoom is something that I use to keep in contact with my team, to keep in contact with my manager, so that, you know, our team is still feeling like they're part of a team, that they're not missing out on anything, that we're still communicating and they haven't been left out on their own, we haven't forgotten about them. If you do find that working from home is no longer a viable option for you, then you can consult with your staff advising that they're now required to take annual leave or unpaid leave. And then you may get to a point where you find that working from home cancel will happen but you need to have shorter hours to ensure that there's still work for people to go back to.
So you can consult with your staff about reducing, about getting them to take annual leave or unpaid leave for a period of time. Like I said before, employees who are used to working in office environments, who are used to having people around them, may really struggle during the staff isolation. I know I'm normally based at home anyway, so for me personally, this isn't a big adjustment that I need to make. Those employees who are used to working in an office, suddenly working from home, chances are they're looking around and saying things that need to be done like the washing the house with the dishes and all of those sorts of things and they may get sidetracked.
So keep those communication lines open with your staff while they're in self-isolation. Make sure that if your staff are part of the essential services list, so they're still working, that you're looking for ways that they can still be as isolated as possible during this time, not just to protect themselves but to protect the people around them as well. This can involve things like putting them on shift work. So structuring the day so that you've got some people who come in for a morning shift, some who may come in for an afternoon shift or some who might do a day shift and then an evening shift. Stick to those Western meal breaks. And what I mean by that is, have the rest of the meal breaks so that not all of your employees are taking that break at the same time.
You might have one person going to break at say 12:00, the next one take their break at 12:30 and so on. If you've got meetings, regardless of whether people are in the office or in the business itself, then do those meetings over Zoom or Skype or through phone conferencing. That way you are limiting the number of people who are in the room, you're limiting the exposure that people are having to each other. If you can operate that way for whatever reason, then try and keep those meetings short, make sure that there's enough space between the employees, so you're looking at about a two-meter space if you can do it that way, or take the meetings to no more than 15 minutes.
You can look at flexible labor arrangements. And by that I mean, you've got employees who are taking leave or unstructured time. And so it might be that you've got shorter hours and those employees can take leave and might be that you're on a roster system where you've got one team who might work for a week and then you're on leave for a week, and then we'll come back to work. So you've got those sorts of options available to you as well. Ensure that you're providing your staff with the PPE equipment that they need as well. As a minimum, a lot of businesses are ensuring that they're providing face masks and that their employees are wearing gloves. Either then incorporating things like ensuring that they're de-sanitizing equipment and the cleaning routine has [inaudible 00:17:33] quite a bit. So everything is getting wiped down as soon as someone touches it.
If you notice that you've got employees at work who start coughing or showing signs of the coronavirus, then I encourage you to send them home get them seen too by the doctor. The government did announce that the selection criteria for testing has been widened now, and essentially anyone who shows signs of having the Coronavirus will be tested so that we can get a bigger idea of how that spread is happening. So definitely don't expect people to come into work if they're not feeling very well, if they're coughing, if they're sneezing, if they've got a fever, they should be staying at home. So make sure you're communicating that to your staff as well.
So the wage subsidy was something that the government announced quite early on in this whole system and around the time that they announced their alert levels. What the government did was they put together a wage subsidy for employers in all regions designed to support your business if you're impacted by the COVID-19 and face the prospect of laying off your staff wages or reducing the hours. So if you're an employer, you're a contractor, you're a sole trader or a staff employee, then you may qualify for the COVID-19 wage subsidy. The subsidy is designed for wages and salaries only and covers 12 weeks. It's paid as a lump sum payment, which covers 12 weeks for your employees and to keep those staff employed while you consider what changes may be needed in your business.
There are requirements that need to be met, and you need to fill in forms, you need to ensure that you're still attempting to pay your staff at least 80% of the wages. If you can't do it, it needs to be outlined as to why and you need to be making the best efforts you can to retain the employees for that subsequence period. So currently, that amount is $585.80 for employees who are working 20 hours or more. And for employees who work 20 hours or less, that amount is $350. Like I said, it's paid in one lump sum, but it's designed to cover 12 weeks of wages for your employees. What about if you've got employees who haven't been working with you for 12 months or if you've got people who are on variable hours.
So if you've got employees who have been working for you for less than 12 months, they'll still be entitled to their subsidy, and they'll still get the payments and just carry on as per normal for, like, your other employees who have been with you for a long period of time. For those employees who have variable hours though...and by variable hours I mean, you can't work out what it is that they work each week, whether they would always work over 20 hours, whether they may fall below that 20 hours. What you do is you look back over the last 12 months, you take the average of what they've worked each week, and basically that will let you know whether they've worked 20 hours or more, or 20 hours or less.
And if they've worked more than 20 hours each week or the average comes out to be more than 20 hours, then you're entitled to the $585.80. If they fall below the 20 hours, then you're entitled to the $350. What some businesses are doing if they've got employees who work less than 20 hours and that $350 is more than what they earn, is they'll just pay them the normal wage. And that money can set aside for other employees or to ensure that you can keep them going for a bit longer. If you've got employees where the $585 doesn't even cover what they would earn, what you can do is either let them take and you'll need to top it up, or you can top them up yourself. It's up to you there. If you're paying them less than 100%, then you consult with them.
Normal wages is classed as what they would normally get each week. So if you've got employees who are guaranteed 40 hours and receive $20 an hour, then 40 hours is what the normal wages are. It doesn't take into account things like bonuses, and commission and that sort of thing. It's just the normal wage. Minimum wages came into effect yesterday. And there was a lot of pressure on the government to put that on hold but we've gone ahead with it. What that means is, if you have any employees who are now paid below $18.90, you need to top up their wages and give them a pay increase $18.90 an hour. For your full time employees that work 40 hours a week, it means that they're getting an extra $48 a week before tax.
This increase is in line with the government's plan to achieve a $20 an hour minimum wage by 2021. Whether there is still something that carries on, it remains to be seen, but those are the guidelines that they are actually wanting to achieve. If you have employees on an inclusive wage or salary, what that means is the employer contribution of KiwiSaver is included in the hourly rate or in the annual salary. Then you need to ensure that you're paying 3% above $18.90. What it basically means is that, if your employees are paid $18.90 an hour and your employer contribution is part of that, they're going to fall below the minimum wage which reaches the X basically.
You need to ensure that they're paid at least $18.90 hour in the hand before tax with your KiwiSaver contribution taken out of it. If you're a company that pays your employer contribution on top of the hourly wage, that's fine, just increase their pay to $18.90 an hour. We have had a question come through. "So we have a wine tour business and have casual tour guides. How long can you continue without offering them work before laying them off and making them redundant?" So when you mention casual employees, if they're a true casual employee, and by this I mean, someone who doesn't have an expectation of ongoing work.
So a casual employee is someone who would have some sick leave or annual leave, come and prepare when you're busy for a couple of hours, there's no [inaudible 00:24:20] of work for them. So for example, they wouldn't work one day a week and that one day might change. It's not that they're working 40 hours a week for you. They're a very casual person. So you might bring them up on a Monday and say, "Hey, we've got some work coming up, are you free to come in and cover that?" Or it might be that they...you know, you might ring them for one day, one week and then not offer them any work for another couple of weeks.
And then you might give them a call and say, "Hey, can you come in for a couple of days, we've got someone on leave?" So that's generally what a casual person is. There should be no expectation of ongoing work. They're not expected to receive calls, just like you're not expected to offer them work. So if you can honestly say that those people are casuals that there is no passion of work, then you don't have to offer them any more work. Essentially, if there is a pattern of work there, it all depends on your business really, how you can operate, whether you can keep them on, whether you need to lay them off or all those sorts of things before you make them redundant.
If you can show that there's no work there, you're not sure when the works coming through, you've done everything that you can to help them out through this time, then redundancies are an option. And we did have some clients who look for redundancies straightaway, and we've got clients who've tried to hold off on redundancy. So it's whatever works best for your business and when they're actually sending your business under, so to speak. So hopefully, that's out. Another question, regarding the COVID-19 wage subsidy, how should pay slips look? Is this subsidized in your name, sick leave or should the pay show ordinary hours?
With the wage subsidy, I would just show the ordinary hours on their pay slips. If you consulted with them and you're paying them less, then you just calculate that out and put that into your payroll system. If they're taking annual leave during this time, their annual leave should be paid at the normal rate, in which case, you and your annual leave will be shown on the pay slips, that you're taking sick leave during that time then you'll break out the different types of leave. So essentially, if you're getting the wage subsidy, you just chuck it in as in normal hours and it might just be that then this...you'll put on any annual leave that they're getting or taking or any sick leave that they're taking. So it will still look like a normal pay slip.
Thank you very much for joining us this morning. The idea of this is basically that we can give you as much information as we can and help answer any questions that you may have at this time. Like I've said, it is a very different time for everybody. There are a lot of questions that are coming up. And so if there's any way that we can help, please reach out to us. You can follow us on social media, we've got Facebook, Twitter, Instagram, LinkedIn, YouTube channel. Or alternatively, give us a call on 0800-675-701 or email us at [email protected] Thank you very much for joining us this morning. Have a great afternoon.
Core statutes in New Zealand include:
Yes. Every employee in New Zealand must be covered by a collective agreement or have a written individual employment agreement. Failure to ensure the employment agreement is in writing may result in a fine of $1,000 per employee.
Notice periods in New Zealand are not legislated. An employment agreement should include the notice period required to be given by the employee or employer to end the relationship. If the employment agreement doesn’t have a notice period, then fair and reasonable notice must be given. This should take into account length of service, type of job, how long it might take to replace the employee and common practice in the workplace. Depending on the role 2 to 4 weeks’ notice is often seen as fair. Keep in mind that when an employer wants to give notice to end an employment relationship, they can only do so on completion of the relevant fair and reasonable process.
Employers should provide a safe workplace and comply with employment legislation, employment agreements and any other agreements and policies and procedures that apply to their workplace.
Employment relationships are underpinned by the duty of good faith. Good faith means dealing with each other honestly, openly, and without misleading each other. It requires parties to be active and constructive in establishing and maintaining a productive relationship in which they are responsive and communicative.
In some cases you may not be a in a position to approve annual leave at the time the employee requests it. An employer may decline a request for annual leave if they have a genuine business reason for doing so. However, the rules specify that an employer must not unreasonably withhold consent, so they must have considered the request and provide a valid business reason.
For example, another employee has already requested leave for this period of time, or it is an exceptionally busy period for the business and annual leave cannot be granted during this period. Employers should keep in mind that an employee must be allowed to take their entitled leave within 12 months of their entitlement arising should the employee wish to do so. In addition, if the employee elects to take two weeks’ of entitled leave continuously this must also be allowed.
The Employment Relations Authority is an investigative body set up to resolve employment relationship problems by establishing facts and making a determination according to the merits. Authority Members are appointed by the Governor General. The Employment Relations Authority has exclusive jurisdiction over employment relationship problems.
Ministry of Business, Innovation and Employment (MBIE) is a group of governmental departments relating to the business sector.
If you need to make changes to an employee’s terms and conditions of employment:
The specific process will depend on the type of change and the individual employees so always contact an employment relations specialist for specific guidance.
We would like to apologise as Employsure is unable to assist with advice for employees.
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