New Zealand businesses often face disruptions from emergencies like fuel shortages, extreme weather, or public health crises. During these times, employers must maintain their good faith obligations while managing staff and operations. Practical planning and early consultation are essential to overcoming hurdles like commuting issues or stalled deliveries.

How should New Zealand employers prepare for anticipated disruptions?

Employers should begin by reviewing existing employment agreements and workplace policies to identify the level of flexibility available for changing work locations, hours, and rosters. This preparation involves identifying which roles can transition to remote work and ensuring the necessary equipment and access are available.

Key Preparation Actions for Workplaces:

• Review Employment Agreements: Check for specific clauses regarding “business interruption” or flexible work locations.
  • Strategic Consideration: Evaluate whether current clauses allow for a mandatory return to the office once the crisis abates, to mitigate the risk of unintended permanent variations to work location.
• Assess Infrastructure and Costs: Confirm which employees have the tools required to work from home effectively.
  • Strategic Consideration: Consider establishing a clear policy on the reimbursement of home-office utilities (internet/electricity) to provide certainty and avoid later claims for business expenses.
• Develop Potential Alternatives: Explore practical shifts such as carpooling, staggered start and finish times, or temporary redeployment to different sites.
  • Strategic Consideration: Consider setting defined review dates for temporary measures (like carpooling or remote work) to ensure the business can reassess if the crisis extends long-term.
• Review Leave Protocols: Revisit processes for annual leave, leave in advance, and leave without pay to ensure they align with the Holidays Act 2003.
• Initiate Communication: Establish early contact with staff, as a crisis does not suspend the legal requirement to act in good faith.

What are the good faith obligations for NZ employers during a crisis?

Good faith obligations remain fully active during a crisis, requiring employers to be communicative, share relevant information, and genuinely consider employee feedback before making decisions.

The Consultation Process:

1. Early Engagement: Notify staff as soon as potential changes to work conditions are identified. Ensure the potential changes are ones the employer is entitled to make following consultation (see below)
2. Information Sharing: Provide employees with relevant data regarding how the crisis is impacting the business, what changes are being proposed and why.
3. Feedback: Seek feedback (in some cases, an invitation to bring a support person/representative will be required). Genuinely listen to and consider employee suggestions or concerns before finalising any decisions.
4. Documentation: Clearly document all changes to hours, duties, or pay to prevent future disputes.

What leave and pay options are available under the Holidays Act 2003?

When employees cannot attend work due to crisis conditions, the primary options include remote work, agreed annual leave, or in some cases, leave without pay. Whether wages must be paid if no work is performed depends heavily on the specific wording of the employment agreement and the specific factual scenario the business is facing and the process followed before stopping pay. Specific advice is recommended before stopping pay.

Legal Leave Options Under the Holidays Act 2003¹:

• Annual Leave (By Agreement): This is the preferred approach under Section 18(3) where the employee cannot work and wants paid time off.
• Annual Leave (By Direction): Under Section 19(2), if agreement has been attempted and cannot be reached, an employer may require leave by giving at least 14 days’ written notice. (See E Tū Inc v Carter Holt Harvey LVL Ltd [2022] NZEmpC 141 regarding leave on notice during lockdowns).
• Leave in Advance: This may be used by mutual agreement under Section 20 if the employee has not yet accrued sufficient leave.
• Leave Without Pay: An option by mutual agreement where annual leave is sought by the employee but is unavailable or not preferred by the employee.
• Annual Closedown: Governed by Sections 29–32, this applies only where work is “customarily” discontinued once per year; an emergency closure is not automatically a closedown.

How should businesses handle specific fuel-related or weather emergency staffing scenarios?

Employers should prioritise exploring reasonable alternatives, such as different hours or sites, before considering pay deductions or relying on complex legal clauses. Legal concepts like “frustration of contract” or “force majeure” have high thresholds and are not simple solutions for crisis-related disruptions.

Common Scenario Responses:

• Employee cannot afford fuel or safely travel to work: While transport is typically the employee’s responsibility, employers should focus on remote work or agreed leave rather than immediate “docking” of pay.
• Legal driving restrictions: Focus on whether the work can be performed in another way (Step 1) before moving to leave and pay options (Step 2).
• Business closure: Check if any part of the work can continue in another form; seek legal advice before invoking “force majeure” or “business interruption” clauses.
• School/Childcare closures: Implement flexibility through adjusted hours, temporary part-time status, agreed leave, or remote work where possible.

When is it necessary to contact an Auckland employment lawyer?

Employers should seek tailored legal advice before making significant changes to wages, directing annual leave, or initiating restructuring due to crisis situations. Early legal intervention helps ensure compliance with the Holidays Act and reduces the risk of costly personal grievances.

Situations Requiring Legal Advice:

• Wage/Hour Reductions: Proposing any downward changes to contractual pay or hours.
• Directing Leave: Forcing an employee to take annual leave without their consent.
• Contractual Clauses: Attempting to rely on force majeure or “business interruption” wording (e.g., Wilson-Grange Investments Ltd v Guerra [2023] NZEmpC 39).
• Restructuring: Starting a redundancy process where a “genuine business rationale” and full consultation are required.

Frequently Asked Questions (FAQ)

Can I force my employees to take annual leave if they can’t get to work? Under the Holidays Act 2003, you must first try to reach an agreement with the employee. If you cannot agree, you can direct them to take leave by providing at least 14 days’ written notice.

Do I have to pay employees who cannot attend work because they have no fuel or cannot safely travel to work? Transport to work is generally the employee’s responsibility, and there may be no automatic entitlement to wages if no work is performed. However, you must check your specific employment agreement and should consult with the employee to explore alternatives like remote work or leave before stopping pay.

Can I make roles redundant if a fuel crisis or weather event causes a drop in business? Potentially, but the usual New Zealand restructuring rules apply. You must have a genuine business reason, share all relevant information with affected staff, and conduct a full consultation process before making any final decisions.  Cases from the Covid-19 pandemic suggest that redundancies may not be justified due to a temporary situation.

Is an emergency closure considered an “annual closedown” under NZ law? Not automatically. An annual closedown under the Holidays Act 2003 typically refers to a period where work is “customarily” discontinued once per year (e.g. at the same time every year, like a Christmas break), and specific notice requirements must be met.

Footnotes & Resources

• Legal Reference 1: Leave can be taken by agreement (s 18(3)), by direction with 14 days’ notice (s 19(2)), or in advance (s 20).
• Case Law: E Tū Inc v Carter Holt Harvey LVL Ltd [2022] NZEmpC 141 (annual leave on notice) and Wilson-Grange Investments Ltd v Guerra [2023] NZEmpC 39.
• Government Guidance: Fuel Response Plan Factsheets.
• Legislation: Holidays Act 2003.

  Disclaimer: This article contains general information only and should not be relied upon in place of obtaining legal advice about your situation. If you require any advice or further information on the subject matter, please contact a Rice Craig partner/solicitor.
  
  About the Author
  Rani Amaranathan is an experienced Auckland employment lawyer and leads the Employment Law team at Rice Craig. Specialising in practical and strategic legal advice, she serves clients across the South Auckland and Franklin regions, as well as the wider Auckland area and throughout New Zealand. Rani focuses on helping businesses navigate complex workplace disruptions, ensuring compliance with the Holidays Act 2003 and maintaining good faith obligations during periods of operational uncertainty.