Changing employment agreements during Covid 19

Ronald from Maxron Associates

All normal employment law still applies to all employment relationships – regardless of the circumstances that we now find ourselves in. This includes anything that has been agreed to in an employment agreement.

Deal with each other in good faith
Employers and employees must continue to discuss in good faith the implications of COVID-19 on their working arrangements. Where changes to current working arrangements are proposed by an employer, there are specific good faith requirements that must be followed. Any changes made need to be agreed.

Employers and employees may be considering changes in the workplace, temporary shutdowns, reduced hours. These changes still need people to operate in good faith including consulting with employees and their representatives, providing time to respond to proposals and considering their comments.

There may be a situation, where consultation is over a shortened time frame if rapid adjustments are needed. A shorter process must still occur in good faith and provide opportunity for workers to seek advice.

Flexible working
Working as usual may be difficult for employers and employees due to the impacts of COVID-19. Both parties may want flexible ways of working, i.e. working in the morning and the evening, while caring for children, or an elderly relative. Parties should discuss these matters and agree to arrangements in good faith. These changes should be recorded in writing.

Changes to job description
An employer cannot simply change the job description of an employee without the employee’s agreement. In some situations where an employee is unable to do their existing job, an employer can suggest a different job or role. This could be a temporary change until the employee can resume their existing job.

In these situations, the employer must follow the usual process for workplace change, which includes giving the employee a fair opportunity to consider and respond to the proposed change. Any agreed change should be recorded in writing.

Changes to the rate of pay
An employer cannot change an employee’s rate of pay without the employee’s agreement. In some situations, i.e. genuine financial, commercial problems, or genuine restructuring of the business, reducing an employee’s rate of pay may be put forward as an alternative to redundancy.

In these situations, the employer needs to follow the usual process for workplace change, which includes giving the employee a fair opportunity to consider and respond to the proposed change.
During all Alert Levels, businesses are legally required to pay workers for any work they do and must continue to meet all contractual obligations. This means employees – regardless of whether they are working from home, or from their workplace – must be paid at least the minimum wage of $18.90 per hour, or more if the rate in their contract is higher.

A requirement of the COVID-19 Wage Subsidy Scheme is to make best endeavours to pay employees at least 80% of their usual salary/wages, and to at least pass on the full value of the Wage Subsidy. However, if an employee is working (either from home, or at a workplace), then they must be paid for each and every hour that they work at their agreed wage rate. This rate cannot be below the minimum wage rate, and any agreed change should be recorded in writing.

Changing the hours of work
Generally, if an employment agreement sets the employee's hours of work, then an employer cannot change them without the employee's agreement. This should be recorded in writing. If the employment agreement says that an employer can change the hours of work, the employer still must act fairly and reasonably before they do.
As with changes to the rates of pay, reducing an employee’s hours may be put forward as an alternative to redundancy. Alternatively, employers may propose changes to work times or moving to shift work arrangements to manage physical distancing requirements.
Again, the employer must follow all the usual processes for workplace change.