COVID-19 – Employer Obligations

During this time of uncertainty there is understandable anxiety and concern about the implications of Covid-19 on many fronts. This is certainly the case for many employers and employees across the country.

We are seeing some excellent examples of employers implementing pandemic plans to keep things flowing for their business and their staff. We have seen employers going above and beyond for their employees and adapting to this unique situation. When considering solutions, understanding the legal rights and obligations is important.

Generally speaking, what should employers be doing at this time?

Employers have a lot to work through to protect the health and wellbeing of their staff (as well as other persons within their workplace).  Employers must take this pandemic seriously and manage all risks that COVID-19 poses to employee health – both physical and mental.  Employers should:

  • Have a pandemic plan or COVID-19 strategy in place for the workplace;
  • Be familiar with, and constantly monitoring, Government directives and guidelines;
  • Complete an assessment of employee health, leave entitlements and ability to work from home;
  • Look closely at policies around working remotely, including the health and safety implications of this. Employers are responsible for the health and safety of their employees while at work, and this will extend to wherever work is being carried out; and
  • Communicate key messages and actions – not to spread panic or create concern, but to provide certainty and security.

On the flipside, employees need to play their part by complying with those reasonable guidelines and instructions from an employer.  In particular, employees should be sensible when it comes to their health and protecting others through physical distancing and good hygiene.

How do you manage leave for self-isolation cases?

Employees who have been told to self-isolate under Ministry of Health guidelines (for example, after a period of overseas travel) cannot come into work.

During a period of self-isolation, if an employee can work from home and wishes to do so, then the employee can do so and receive their ordinary pay.  If an employee cannot feasibly work from home, the employer should consider paying the employee paid special leave, or another form of leave as agreed between the employer and employee.  We would recommend that, in the current circumstances, employers make all efforts to enable staff to safely work remotely if it is reasonably practicable.  This is certainly the case for those who may be immune-compromised or elderly.

What about leave and travel requests?

If an employee wishes to take leave or travel (to the extent possible), the employer may refuse the annual leave request.  Alternatively, if leave or travel is approved there will need to be discussions around what will happen during any period of mandatory self-isolation.  Options could include the employee taking paid annual or special leave, unpaid leave, working from home, or a combination of these.  The above options will depend on whether the employee can feasibly work from home, and what leave the employee has available.  In the absence of an arrangement, the period of self-isolation will become unpaid leave.

How do we manage potential business closures?

If we reach the point where the Government requires the physical closure of certain businesses, where all employees must stay home, an employer may consider a closedown period to all, or parts of, their business, if:

  • COVID-19 has detrimentally affected an employer’s operations; and/or
  • There is a risk of general infection in the workplace; and/or
  • The business is cannot operate effectively due to absences.

The Government has announced a support package to assist employers/employees that meet certain criteria through the pandemic.  Details can be found online – here.

Where employees can work remotely and avoid using leave entitlements, we would encourage that to happen, in line with the Government guidelines.  By working with staff, ensuring proper preparation and resourcing, and maintaining communications, more employers will be able to continue to operate in some way through this difficult time and without needing to resort to restructures and/or redundancies.

Remembering what’s important

An employer’s focus is to look after employees and the wider working environment.  This means ensuring they understand all health and safety obligations and legal issues when it comes to managing leave arrangements for employees when required.  Of course, at a very practical and human level, employers should be mindful of how their employees may be feeling in this unique situation and avoid unnecessary anxiety by continuing to communicate internal protocols and steps being taken when it comes to COVID-19.

If you need assistance on how to manage any of the employment issues that are arising, and changing, on a daily basis during this time, please contact Renika Siciliano or Jerome Burgess.

Renika is a Director and leads our Workplace Law Team. She can be contacted on 07 958 7429.

Jerome is an Associate in our Workplace Law Team and can be contacted on 07 958 7427.

Business law issues arising from COVID-19

With COVID-19 (novel coronavirus) now being declared a pandemic, what are some of the potential legal issues for New Zealand businesses to consider?

Capital markets have been shaken and global supply chains and international trade has been disrupted. These effects are already being felt by businesses in New Zealand.

Existing Contracts

As New Zealand businesses prepare to deal with the short and longer-term impact of COVID-19, one aspect of a broader risk management strategy is to review key commercial contracts with customers and suppliers. Key elements to consider include:

  • Termination provisions.  For example, what options (if any) are there for you to terminate early?  Equally, what is the likelihood of you being on the receiving end of a contract termination notice?
  • Termination provisions.  For example, what options (if any) are there for you to terminate early?  Equally, what is the likelihood of you being on the receiving end of a contract termination notice?
  • Liability and damages:  What are the consequences of a failure to deliver products on time?  Is your liability capped, or is it potentially unlimited?
  • Insurance:  Check with your insurer to see whether your current policies include cover for business interruption in the current circumstances.
  • Force majeure clauses:  Does the contract contain a provision designed to protect the parties in an event beyond the parties’ control?  Although there is no such thing as a “standard” force majeure clause, such provisions tend to cover catastrophic events such as acts of God, civil unrest, war, terrorism, widespread industrial action and the like.  Acts of government (such as closure of borders or restrictions on exports/imports) would normally also be included as a force majeure event, so even if pandemic itself is not expressly mentioned it may still be possible to claim force majeure in those circumstances.

Contracts may have a “boilerplate” force majeure clause tucked away in the back, or (less likely) the parties may have specifically negotiated the allocation of risk for unforeseen or catastrophic events.

Contracts may contain a force majeure-type clause even if they aren’t specifically characterised as such.  For example, some New Zealand standard form construction contracts relieve contractors of their obligation to complete on time in “any circumstances not reasonably foreseeable by an experienced contractor at the time of tendering and not due to the fault of the contractor” – although in that case a contractor will likely not be entitled to financial compensation (in other words they will get extra time, but not extra money).

New Contracts

For any new contracts, it will likely be difficult for parties to argue that the effects of the Coronavirus weren’t foreseeable at the time of contracting. Extra caution may now be required around the allocation of risk and responsibilities; this might even include specific drafting to address particular identified risks such as disrupted supply chains and unavailability of labour.

Frustration

The contractual doctrine of frustration may also provide some relief. The Contract and Commercial Law Act 2017 has codified in statute the treatment of frustrated contracts, but the starting-point is still always the terms of the contract itself.

It should be noted that there is a high threshold to reach before parties are released from their contractual obligations due to frustration: it’s usually not enough that future performance has simply been rendered more expensive, onerous or difficult.

Mitigation

In most cases parties still have a duty to mitigate losses. For example, contracting parties will likely need to be proactive in attempting to source alternative suppliers or resequencing construction projects.

Conclusion

A thorough understanding of your key commercial contracts should be part of a prudent COVID-19 risk management strategy.

In most cases early communication – with the other contracting party, with the bank, with insurers, with other key stakeholders – is generally the best approach.

If you would like further information please contact Laura Monahan on 07 958 7479.

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