COVID-19 is already having an impact on the workplace with many employers having hard conversations about the many ways that this pandemic may affect their operations and, therefore, their employees. Many of the issues created by this public-health crisis are unprecedented, resulting in difficult questions being raised over how employers are expected to react.

The matter is far from straight-forward, and the developing situation means that employers need to be agile and adaptable. However, below we set out some key issues and messages that employers should be aware of.

Dealing with employees who are sick or required to self-isolate

Several options are available to employers in dealing with employees who are required to self-isolate or who are sick.

On 17 March 2020, the Government announced a stimulus package which is intended to assist businesses and the economy absorb the impacts of this crisis. This package includes a COVID-19 leave and self-isolation subsidy, which will assist some employees.

Likely scenarios that employers may need to deal with are:

  • If an employee is not unwell, but is required to self-isolate, and they can carry out work remotely from home, the employee would be paid by the employer as usual. An employee in these circumstances will not be entitled to receive the Government leave subsidy.
  • If an employee is required to self-isolate and is not able to perform work remotely, the employee does not technically qualify for sick leave. However, the parties may agree that the employee takes annual leave for this period, or that leave is taken by the employee without pay. An employee in these circumstances is entitled to receive the Government leave subsidy for the period during which they are unable to attend work (up to 8 weeks).
  • If an employee (or a dependant of the employee) is sick with COVID-19, they should not attend work and are entitled to be paid sick leave by the employer. If an employee does not have sufficient sick leave to cover their time away from work, the parties may agree that the employee takes annual holidays for this period. An employee in these circumstances is entitled to receive the Government leave subsidy for the period during which they are unable to attend work.
  • The provision of special leave by an employer (discretionary paid leave) is also an option for some employers in responding to the above circumstances, particularly where other leave entitlements are exhausted. There is, however, no obligation for an employer to agree to the payment of special leave to an employee. Further, the provision of subsidised leave as a part of the Government's stimulus package is an option in the immediate term.

Under the leave subsidy scheme, persons employed on a full-time basis (20 hours or more) are entitled to receive $585.80 per week, while part-time employees will receive $350.00 per week. Employers are required to apply on behalf of affected employees. Payment will then be made to the employer who will be required to pass this on to the affected employee.

Payments will be backdated to 17 March 2020. This means that employees who have already relied on sick leave prior to this date will not be entitled to receive the subsidy for the period for which they have been away from work prior to 17 March 2020.

It is important to note that employees who have travelled overseas since 16 March 2020 will not be entitled to receive the leave subsidy. For more information about the subsidy scheme, visit the Ministry of Social Development's website.

Health and safety

Employers should be aware of their obligations under the Health and Safety at Work Act 2015, and the potential implications that COVID-19 may have for these obligations.

Under this Act, employers are required to take all practicable steps to mitigate risk and to protect workers from hazards to their health while at work.

Employers should be guided by the information released by the Ministry of Health about what steps should be taken to minimise the risk of spreading infectious diseases in the workplace.

Practical steps that employers should be considering include:

  • Taking reasonable steps to identify the risks of employees becoming infected in the workplace, including by monitoring staff overseas travel.
  • Advising staff to practice good hygiene (and setting out what that involves).
  • Encouraging staff to stay away from the workplace if they are unwell.
  • Encouraging immunisation against other infectious diseases, including influenza.
  • Encouraging the practice of social distancing.
  • Providing workers with trusted advice about COVID-19 symptoms.1

It goes without saying that employers should not require or knowingly allow workers to come to work if they are sick or are displaying symptoms associated with COVID-19.

However, employers should also be taking reasonable steps to ensure that workers who have recently returned from overseas travel (within the last 14 days) are also not attending work.

Failing to take such reasonable steps could constitute a breach of an employer's duties under the Act.

Impact on business and the economy

Unfortunately, it now appears likely that many businesses, and New Zealand more broadly, will be heavily impacted by this public health event. That may mean that some employers will need to either temporarily suspend, or close, parts or all of their business.

The starting point is that, if an employer requires an employee not to attend work due to the suspension or closure of business, employees are entitled to be paid.

However, if the parties have a force majeure clause or similar in the employment agreement, it may enable a period of unpaid suspension of work or more permanent steps. It is important to assess the clause to determine how this clause may be applied, and how.

Employers should, therefore, be considering how they will address the possibility of a workplace closure and be developing contingency plans for this.

Many employers, in the first instance, are considering how services may be delivered through alternative solutions. Those solutions may include remote work, or other options such as agreeing that an employee works reduced hours, receives reduced remuneration, or takes periods of voluntary paid leave. First, advice should be sought as consultation will need to occur with employees for some options.

The Government's stimulus package has also made $5.1 billion of funding available for wage subsidies to support employers who are struggling to retain employees as a result of the impact of COVID-19.

Affected employers are now able to apply to receive a subsidy of $585.80 per week for a full-time employee, and $350.00 per week for a part-time employee, to assist with the retention of staff over a 12-week period. The maximum amount that any one employer can receive under the subsidy is $150,000.00 over this 12-week period.

To qualify, an employer must have either suffered, or be forecast to suffer, a 30 per cent decrease in revenue from that earned by the employer in 2019 for any month between January–June 2020.

The employer must undertake that they will continue to employ affected employees at 80 per cent of their ordinary remuneration for the duration of the subsidy period. Employers must also demonstrate that they have taken steps to mitigate the impact of COVID-19 on its business. Such steps may include, for instance, seeking professional advice on and implementing contingency planning for business interruption stemming from the public health event. For more information about the subsidy, please visit the Ministry of Social Development's website.

As mentioned above, it remains highly likely that many employers will need to either temporarily suspend, or terminate, an employment relationship. The terms and conditions of the employment relationship will normally regulate what steps are able to be taken by an employer in this regard, but employers need to factor in the process that needs to be followed.

An employment relationship may also be brought to an end through a restructuring process, or if the underlying employment agreement is frustrated as a result of the impact of COVID-19.

Given the complexity of the issues involved, we recommend that employers seek advice about these matters before proceeding to commence employment processes as a result of this public health event. Our Employment Team is available for strategic and people planning, as well as implementation of any necessary steps and is just a phone call away.


1 Trusted advice includes information released by the Ministry of Health, the World Health Organisation and other reputable health organisations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.