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COVID-19 Impact for Employers - Mortlock McCormack Law | Property and Commercial Law | Christchurch, New Zealand
COVID-19 Impact for Employers - Mortlock McCormack Law | Property and Commercial Law | Christchurch, New Zealand
COVID-19 Impact for Employers - Mortlock McCormack Law | Property and Commercial Law | Christchurch, New Zealand
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COVID-19 Impact for Employers

April 2020

Michael O’Flaherty

We have been contacted by a few clients concerned about the impact the COVID-19 restrictions will have on their businesses. It is likely that some businesses will need to reduce staffing numbers or alter positions from full time to part time to address the potential strain on their profitability from reduced custom.

It is important for all employers, and employees, to be aware that while the COVID-19 pandemic poses a threat to their ability to trade, employers still need to comply with their obligations in respect of staff employment. An employer cannot unilaterally amend an employee’s terms and conditions of employment. Generally, the test an employer must meet in order to prove an action was genuine is that they had substantive justification for that action and that the process leading up to that action was fair.

For employers considering making changes to staffing levels in response to the COVID-19 this will mean providing evidence to affected employees of the financial threat that the pandemic carries as well as ensuring that there is robust consultation with those employees. You will need to justify your reasoning for any action which means putting together a business case with detailed reasons as to why the business considers it is at risk. Robust consultation is not just a one-off meeting with staff. It requires the employer to meet individually with staff, consider any feedback received and explore all options put on the table.

Termination of employment should be the last resort in these cases. An employer should consider keeping all staff at reduced hours if that is possible. If redundancies are required then an employer should first enquire as to whether any employee wishes to volunteer redundancy. If you have other vacancies within the business you must consider redeployment. If termination is the only option then think about ways to mitigate the effects of this including compensation or rights of first refusal for future employment.

If you are contemplating restructuring your business to address concerns stemming from the COVID-19, please contact Michael O'Flaherty, Associate (DDI 03 343 8587 / michael@mmlaw.co.nz)