Can my boss cut my pay during a Covid-19 lockdown?

Monday, 1 March 2021

Aucklanders are again getting used to life in Alert Level 3.

Employers could face legal action if they fail to top up the wage subsidy without workers’ consent, an employment lawyer says.

New community cases of Covid-19 moved Auckland back into Alert Level 3 and the rest of the country to level 2 on Sunday. Because the alert level changes would last for at least a week, businesses could apply for the wage subsidy payment.

During last month’s three-say lockdown, at least two major retailers, H&M and OPSM were found to be underpaying staff.

Dundas Street Employment Lawyers senior associate Chloe Luscombe said businesses that were paying staff less than their contracted pay without their agreement could face wage arrears claims.

* More than $700m of the Covid-19 wage subsidy repaid before alert level change

* Do employers have to pay staff even if workers' shifts are cancelled?

Generic image: file photo, work from home, pets, cat, couch, ipad, illustrator, home office.

Luscombe said employers could pay staff less than their normal wage, and top it up with annual holidays, but only if employees agreed to this.

Businesses taking the wage subsidy were expected to top up the wage subsidy to at least 80 per cent of the workers’ salary if they could afford to.

The Wage Subsidy Scheme would also be available to businesses that had experienced a 40 per cent drop in revenue over a 14-day period, compared to a typical fortnightly revenue period in the six weeks before the rise in alert level.

As at February 26, MSD had completed 10,902 audits of the wage subsidy and resolved 4750 allegations of misuse.

Finance Minister Grant Robertson said the subsidy would be paid in a lump sum and more details on the application would be revealed later on Monday.

Luscombe said employers that forced workers to take annual leave during the lockdown, without genuine consultation and less than 14 days notice, acted unlawfully.

Have you been affected? Get in touch anuja.nadkarni@stuff.co.nz

During lockdowns last year the Ministry of Social Development indicated that employers taking the wage subsidy scheme were subject to audit by the Government.

If an employer failed to comply with the terms of that scheme, at the time they took the subsidy, it was possible that the Government could consider taking legal action against them.

In a recent case heard by the Employment Relations Authority, Murray Cousens was awarded $25,000 in compensation when his employer, Star Holdings Limited, refused to pass on the wage subsidy to him during the lockdown and then asked him to sign an illegal zero hours contract.

Luscombe said an employer needed to be “transparent, communicative and responsive” to workers when discussing these issues, and changes to contractual terms require the agreement of the employee and the employer.

“Good faith obligations continue, whether we are in lockdown or not.”