Employment Law : Managing Omicron

Managing Omicron

While we have been navigating COVID-19 effectively for the past two years, we are about to enter uncharted territory as the new variant Omicron takes hold. Jack Rainbow, Solicitor at Dundas Street Lawyers, examines the serious workforce challenges and business continuity issues we face as this variant arrives.

This article was correct at the time of writing. We appreciate the employment landscape is rapidly changing, and we encourage readers to always seek the latest advice from official government websites.

What is the state of play in New Zealand?

Daily case numbers for COVID-19 are the highest we have seen since the pandemic began, and are still rising.

As part of its plan to manage the outbreak, the government currently requires anyone who returns a positive COVID-19 test or is considered a ‘close household contact’ to enter self-isolation. The isolation period for positive cases who are fully vaccinated for at least 10 days.

What does this mean for businesses?

Given the predicted spread of Omicron, these isolation requirements may result in large amounts of absenteeism: potentially in the tens of thousands. Workers may be required to remain away from the workplace for lengthy periods. The resulting staffing shortfall could hit businesses hard, particularly if several employees are identified as close household contacts at the same time.

Against the backdrop of a tight labour market and record low unemployment, workforce shortages may affect employers across all sectors.

What is happening overseas?

New Zealand is in a uniquely fortunate position because it has mostly controlled the virus for the better part of two years, which has meant we can observe and learn from what is happening in other countries that have not been so lucky.

The outbreak of the Omicron variant in the United Kingdom has reportedly put significant strain on businesses, particularly public services, such as the National Health Service, and education workforce.

Closer to home, Australian businesses have been grappling with mass absenteeism as the virus spreads through the country. Woolworths Group, Australia’s largest supermarket operator, has reported that 10 per cent of its instore staff have been absent from work due to COVID-19, while in its distribution centres, the number has climbed to 20 per cent.

What is the obligation regarding wages?

The answer to this is not straightforward, and several scenarios could play out.

The general legal principle relating to payment obligations is that where an employee is ‘ready, willing and able’ to work, they are entitled to be paid.

This principle was tested during the 2020 and 2021 Alert-level lockdowns, where some employers did not pay employees on the basis that the employees were not ready, willing and able to work because they were confined to their homes during lockdown.

When this approach was challenged, the Employment Relations Authority found that there was a continued obligation to pay employees wages during this time, on the basis they were available to work, but it was the employer who was unable to provide them with work.

What does that mean for isolating employees?

Whether self-isolating employees will continue to be paid depends firstly on whether they can continue to work while in self-isolation.

Where an employee is able to work from home they should be treated no differently than if they were present at work.

In this regard:

• they should receive their ordinary wages for the time worked

• if an employee is technically able to work from home but is too sick to do so, they should be placed on sick leave

• if an employee can work from home but has childcare or other responsibilities that mean they cannot work, other leave options should be discussed and agreed with them.

The situation is slightly more complicated when an employee is unable to work from home while they are in isolation.

If an employee is unable to work due to self-isolation requirements, the workplace remains open and able to provide work. A strong argument, therefore, is that the employer is not required to pay an employee during this period because the employee is not ‘ready, willing and able’ to work.

I must note that this position is untested, and the possibility exists that the courts could take a similar approach to the lockdown wage cases and find a requirement to pay wages. Specific legal advice should be sought on a case-by-case basis.

What support is available for businesses that have staff shortages?

The government has introduced two schemes to help employers with the cost of staff absences as a result of COVID-19.

COVID-19 Leave Support Scheme This COVID-19 Leave Support Scheme is available for employers who have employees who must selfisolate

because of potential exposure to, or contraction of, COVID-19. The scheme pays either $600 a week for full-time workers (20 hours or more) or $359 for part-time workers (fewer than 20 hours).

To be eligible, an employee must:

• have been advised to self-isolate by a doctor or the National Investigation and Tracing Centre, because they have COVID-19 or are considered a close contact to a person with COVID-19

• be required to self-isolate for at least four consecutive days

• be unable to work from home because of the self-isolation requirement.

Importantly, an employer is only eligible when the employee has been told to self-isolate because they are a close household contact or have COVID-19. It does not apply to an employee who has COVID-19-like symptoms who decides to stay home while they get a test.

Employers should be sure to understand the obligations that they sign up to when they apply for the scheme, which includes using best endeavours to pay at least 80 per cent of an employee’s ordinary wages and salary, and to not unlawfully compel an employee to use their leave entitlements during the period the subsidy is received.

Short-Term Absence Payment The Short-Term Absence Payment is another scheme available to employers and applies when an employee is required to stay home while they wait for the result of a COVID-19 test and is unable to work from home. The scheme makes a one-off payment of $359 for each eligible employee, regardless of whether they are full or part time.

An employer must apply within eight weeks of the relevant COVID-19 test being taken, and can only apply once in any 30-day period per employee, unless a doctor or other medical professional advises the employee to get another test.

The scheme notes that an employer should use the subsidy to pay the employee’s contractual or statutory entitlements while they are waiting for a test result (whether sick leave or annual leave). However, if an employee has no entitlements, an employer should use the subsidy to pay the employee’s ordinary wages while they wait for the test result.

Time to plan

The support from the government may go some way to reducing the financial blow for employees and employers who find themselves in difficult positions as COVID-19 takes hold in the community. However, it will not prevent staffing shortages and business interruptions from occurring. Employers should begin preparing contingency plans for COVID-19 absences in the workplace and how they will be managed pragmatically.

Jack Rainbow Ngāti Tūwharetoa, Te Arawa (Tapuika), is a solicitor at Dundas Street Employment Lawyers. He has been providing advice to major public and private sector employers on the implementation of the vaccine mandate order. Jack also volunteers at Community Law and previously worked at a law firm specialising in Māori legal issues, particularly Waitangi Tribunal claims.