Rulebook still applies
So far the Government has paid out $6.6 billion to employers to provide wage subsidies for more than 1 million workers. In announcing changes to the wage subsidy scheme on March 27, Finance Minister Grant Robertson said: ‘‘This ensures businesses not able to operate do not need to lay off staff.
‘‘Even if this requires businesses to operate with no activity, the subsidy allows them to keep their workers on the books, particularly during alert level four.’’
Despite this intent, large employers, including SkyCity Entertainment Group, have opted to make hundreds of employees redundant immediately rather than applying for the subsidy.
This raises the question of why they would effectively deny their employees the opportunity to receive the subsidy and remain employed for at least a further 12 weeks.
The answer most likely relates to the scheme’s other requirements, in particular the obligation on employers to obtain employees’ consent to any reduction in their hours or pay and to make best endeavours to continue to pay employees at least 80 per cent of their ordinary wages and salary.
Further the requirement to retain employees while the subsidy is being received potentially removes the right that employers would otherwise have to make employees redundant during this period.
In this regard employers applying for the scheme after March 27 must agree to retain employees for the period of the subsidy.
There has been recent media criticism of employers for pressuring employees to accept pay cuts, or allowing shorter than usual periods for consultation. However, the reality is that many employers need to take urgent steps to keep their businesses afloat by shedding costs.
It seems SkyCity may have regarded these other avenues to be too difficult and so went straight for the clean option of invoking what were no doubt inevitable redundancies, sooner rather than later.
Unions have a role to play in this. Over the past week I have advised companies seeking to negotiate with unions to get agreement to temporary pay reductions for employees who are not working during the lockdown.
Regrettably the approach that some of these unions have taken has not been a problem-solving one.
Yes it is true that employees are under no obligation to consent to pay cuts, but this may be a short-sighted position to adopt if the business goes to the wall.
The other issue highlighted by the SkyCity situation is the obligation on employers to consult and consider alternatives prior to making employees redundant.
It was reported that 200 SkyCity employees received a letter on a Friday notifying them that their employment would end on the following Monday.
The letter reportedly said: ‘‘We have made these business decisions with a shorter than usual process, given the unprecedented situation. Therefore, given the significant impact on the business and our urgent need to cut costs, there will not be a period of consultation with regard to the decision’’.
Unite Union national secretary Gerard Hehir has been highly critical of this approach, stating: ‘‘The laws of the land have not been changed. Employers still have to obey the law and their contractual obligations.’’
Hehir is likely to be right. Even allowing for the unprecedented circumstances, it is difficult to see how an employer can completely avoid its obligation to consult prior to implementing redundancies.
Even if SkyCity considered the outcome to be inevitable and that any consultation would be a sham, it gave employees no opportunity to suggest alternatives. For example, one option may have been for employees to agree to receive just the value of the wage subsidy for a 12-week period and defer the redundancies until after this.
Ultimately we do not know what compelled SkyCity to do what it did. But as I have said before, employment laws have not gone out the window.
What is ‘‘fair and reasonable’’ must be considered in the context of the current situation, and this would most likely allow for compressed consultation periods and less formal processes than in usual times.
But employers who ignore their obligations will surely be called to account when all of this is over.