Employer obligations under lockdown

Considerations for employers during the lockdown

This article was written by Renee Butler (senior associate) and Alice Newell (graduate) of Dentons Kensington Swan.  Renee and Alice are members of the firm’s employment and health and safety practice in Wellington.

This article was written during the Alert Level 4 period. The situation is changing rapidly and it is possible that the alert level and relevant restrictions will have changed at the time of publication.

The COVID-19 Level 4 lockdown meant many of those in the industry have had to temporarily ‘down tools’. Only those carrying out ‘essential services’, or working remotely, are permitted to continue during the Level 4 period.

This unprecedented situation creates significant tension between keeping a business going and complying with employment duties and obligations.

In this article, we discuss some aspects of employer/employee obligations in the COVID-19 environment. This article does not discuss obligations under construction contracts or arrangements with independent contractors.

Are employees who are not working entitled to be paid?

 The first question employers are often asking is – are employees who cannot work during the lockdown period entitled to be paid?

The Director-General of Health has exercised the special powers given to Medical Officers of Health under section 70 of the Health Act 1956 for the purposes of preventing the outbreak and spread of COVID-19.

These powers were granted by the Prime Minister in an Epidemic Notice under s 5 of the Epidemic Preparedness Act 2006, and the declaration of a state of emergency under the Civil Defence Emergency Management Act 2002.

Under that order, all premises must be closed, except for essential services, and people are forbidden from congregating in outdoor places.

Because of this order, it is our view that the starting point is that employees are not entitled to be paid where neither party can perform their obligations. This is likely to apply to many building and construction workers who cannot work during the lockdown. However, this is just the starting point – this is an area which requires considerable care, and the answer will vary for different roles and different employers. We urge employers to seek advice on payment options during the lockdown period.

As we transition to different Alert Levels, any further orders the Government makes in relation to restrictions imposed on people and businesses will influence the duties and obligations on employers and employees.

Retaining employees

 The Government has been strongly encouraging employers to retain employees during this period by strongly encouraging employers to access Government support through the Wage Subsidy Scheme to allow them to do this.

Transport Minister Phil Twyford has also announced that advance payments will be made to those who currently have non-essential projects under construction in a scheme called the ‘Advanced Entitlement Payment’.

This will be available to construction contractors companies who have National Land Transport Programme funded projects in construction with the New Zealand Transport Agency. This will enable contractors with these projects to retain their workforce and will enable a faster response in carrying out vital construction work once the lockdown period ends and as the restrictions imposed by the Government are relaxed.

The business impact of the lockdown arrangements and the Covid-19 situation is huge. Many employers are already at a point where they cannot sustain their current workforce, at least on a paid basis.

It is unlikely that the lockdown, or the availability of the Government subsidy schemes, will automatically prevent employers from carrying out necessary restructuring, but the availability of the Wage Subsidy will be a factor that will be taken into account when determining whether redundancy is justifiable.

We suggest seeking advice before restructuring in the midst of the lockdown and while the wage subsidy is available.

Carrying out essential work safely

Construction businesses performing functions which are within the definition of essential services released by the Government are able (and expected) to continue to operate those functions. At the time of writing, these functions include building and construction related to essential services and critical infrastructure and work required to address immediate health or life safety risks or to prevent serious environmental harm.

There is a range of important considerations for employers to address, as employees will be operating in a highly restricted and unusual environment, with potential health and safety hazards.

Any businesses that are deemed essential, or have some essential functions will need to continue to meet requirements under the Health and Safety at Work Act 2015.

At the time of writing, the Government is in the process of developing guidance on what activities will be permissible under Alert Levels 2 and 3, and to a lesser extent under Alert Level 1, to inform people and businesses of the environment that will apply at those times.

It is likely that our country will remain at one of the Alert Levels for an extended period of time (up to 12 months), and different areas of the country may be at differing Alert Levels simultaneously.

All companies will need to plan how they will operate, at each Alert Level, in a way that minimises the risk of Covid-19 transmissions. This may include:

  • minimising, or eliminating if possible physical interaction among staff, and with and between customers and clients;
  • ensuring appropriate health, hygiene and safety measures are in place; and
  • restricting activity to only what is ‘essential’ (or what is in line with the Government’s requirements at the time).

For example, where the work requires assessments of sites with home-owners or occupiers or close contact with other people, steps should be taken to assess the risk of exposure to COVID-19.

We recommend setting up a call to gather information about the site, and the people on the site (e.g. whether they have been exposed to COVID-19 or have any flu-like symptoms). That information should then be used to determine whether the work can be carried out without placing the employee, or others at risk.

In addition, steps should be taken to ensure physical distancing is maintained to the extent possible, such as split shifts, staggered meal breaks and flexible working arrangements. Workers should have access to the necessary equipment to wash and sanitise their hands, as well as Personal Protective Equipment, to eliminate any possibility of contracting Covid-19. Training on the “donning and doffing” of PPE should also be provided.

Finally, the maintenance of morale is key to ensure the workforce is ready to get back to work when they are able to do so.

Employers should be proactive in communicating with their workers and be as transparent as possible in relation to the position of the business.

This will encourage employees to commit to the success of the business and do what they can to assist in keeping it going during this difficult time.

Dentons Kensington Swan offers 15 minutes of free advice on construction issues to CCNZ members.


© 2020 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. Dentons Kensington Swan is a partnership governed by New Zealand law.

This publication is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content.

Dentons Kensington Swan does not accept any liability other than to its clients, and then only in relation to specific requests for advice.

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