Recent weather has devastated many communities New Zealand. Having only recently addressed issues arising from COVID-19 lockdowns, dealing with flood and storm damage is yet another hurdle for businesses to overcome.
We learnt many things during the various lockdowns, many of which are applicable during present circumstances.
We have compiled a list of Frequently Asked Questions which we hope can provide some insight into how to ensure employment risk is minimised during these difficult times.
1. What are our obligations to employees when it is unsafe to have them work at the workplace?
The first principle in this situation is to ensure that the business is adhering to its obligations under the Health and Safety at Work Act 2015 (HSWA). Central to those obligations is the duty to take all reasonably practicable steps to ensure the health and safety of workers.
Risk identification and assessment
Whether it is safe to open your office or premises will depend on the present risk. At one end of the spectrum, a condemned premises will obviously be unsafe to work from. At the other end, there may be slight water damage to the premises where it is otherwise habitable and structurally safe. Businesses need to conduct their own risk assessments of the workplace to satisfy themselves it is healthy and safe to work from.
It is recommended that businesses work through risk assessments with a qualified health and safety expert, either through an internal Health and Safety Manager or an external provider. It may also be wise for businesses to work with qualified tradespeople/engineers during this process, particularly where there is concern of structural damage to the workplace.
Common risks following a natural disaster may include:
- access to and from the workplace;
- structural damage;
- electrical hazards;
- drainage and plumbing issues;
- mould and microbial growth;
- potentially contaminated flood water and silt;
- potential release of hazardous substances, including chemicals, LPG, asbestos containing material, lead containing material, and sewage;
- noise from surrounding businesses, particularly where demolition or construction is occurring;
- ventilation and temperature; and
The above is illustrative only, as each workplace will have its own unique risks to consider.
It is important that businesses not only identify risks, but assesses those risks as well. Using a risk matrix to assess the likelihood of a risk occurring, and the corresponding consequence if that risk did occur, will give a business a clear view as to the level of risk and whether it is healthy and safe for workers to return to the workplace.
If it is not healthy and safe to work from the workplace, employees should not be required to come into work. In that situation, and where practicable, employees ought to work remotely from their home or from a suitable alternative workplace (if available).
Once a risk is identified and assessed, the next step is to consider what controls ought to be in place as mitigation. It may be the case that some controls are necessary before welcoming workers back to the workplace. Equally, where it is initially deemed healthy and safe to have workers back, there may nevertheless be a need to implement further controls.
In respect of some risks, legislation applies and informs the necessary control before work commences. By way of example, if any asbestos containing material is identified, the Health and Safety at Work (Asbestos) Regulations 2016 apply strict requirements and controls for businesses to meet before work commences.
For other risks, national standards, best practice guidelines and/or WorkSafe guidance may apply and prescribe recommended controls. Working with contaminated flood water and silt, for example, has been addressed in WorkSafe guidance “Working with silt or contaminated soil after Cyclone Gabrielle | WorkSafe”.
In respect of risks that are not subject to legislation or established guidance (which there are very few), businesses ought to work with a qualified expert to develop bespoke controls. Where practicable, businesses should aim to implement controls in accordance with the ‘hierarchy of controls’, being (in order from best to least effective):
- elimination by removing the source of the risk;
- substitution of the hazard that gives rise to the risk, with a hazard that gives rise to a lesser risk;
- isolation of the hazard that gives rise to the risk and preventing contact and interaction;
- using engineering controls, such as extraction fans and guards;
- using administrative controls, such as exclusion zones, emergency plans and procedures; and
- using personal protective equipment, such as gloves, masks, respirators and eye protection.
Businesses should then re-assess risks taking into account actioned controls, which should result in a lower risk score.
Monitoring & training
Common pitfalls for businesses, typically identified in the context of a WorkSafe prosecution, are the failure to monitor controls; and the failure to train staff in respect of those controls. Often, it is what occurs after a control is implemented that gives rise to legal risk, rather than the adequacy of the control itself (although that too is a common feature in prosecutions).
Businesses ought to regularly review the effectiveness of controls. This is particularly so in the context of gradual deterioration that may have been caused by flooding and cyclone damage. Businesses also ought to ensure that any engineering and personal protective equipment controls are reviewed and repaired/replaced as necessary.
As to training, workers need to be aware of how the workplace has changed including any specific things they should be taking into account when conducting their day to day tasks. Pointing out risks to workers, training them on how to navigate risks, and training them on risk controls and how to use them (if applicable), will bode well for ensuring that the business is meeting its obligations under the HSWA.
2. How do we manage remote working arrangements?
By now, many businesses will be used to remote working in some form. Ideally, each business will have established policies and IT infrastructure in place to manage remote working.
One of the key difference between COVID-19 lockdown and the recent weather events is that employees’ homes may have been damaged. In many cases, an employee may not be able to work remotely as they have their own damage to deal with and/or may be without power or internet. Where an employee cannot work in the office or remotely, there is no ability to require them to complete work.
In cases where an employee has advised they can work remotely, it is still important for businesses to conduct risk assessments. A ‘workplace’ under the HSWA includes a remote working environment, meaning an employer’s obligations extend to an employee’s home. An employer may approach such assessment by engaging the employee (through an appropriate questionnaire) to assess risks in their home, including physical risks (trips, slips), health risks (mould, flood damage), and risks relating to security and confidentiality.
3. Do we have to pay employees if there is no, or reduced, available work?
This is a situation we encountered during COVID-19 lockdowns, and indeed one that the Courts have provided clear views on.
The key question is whether an employee is ‘ready, willing and able’ to work. That question is answered from the employee’s perspective. So, if work is unavailable for any reason, but the employee is otherwise ready, willing and able to work, then the employer will need to pay the employee. In contrast, if the employee is not able to come to work (such as transportation issues, or caring for family), then the employer is unlikely to be obliged to pay the employee.
This applies to current and ‘intending’ employees equally. Employment law extends to employees who have signed an employment agreement but are yet to start work. They must be treated with equal care and attention to employees that are presently working. Most importantly, employers cannot revoke an offer for employment where it is already accepted – that will be deemed a dismissal and will attract risk of legal proceedings.
There may be many cases where, due to storm damage, employers cannot open or facilitate remote working, but otherwise still need to pay employees. The next section addresses ways to work with that scenario.
4. What do we do if we cannot afford to pay employees?
This will be a pressing issue for many businesses affected by the storm, in particular SME businesses. The law is protective of an employee’s right to be paid, but there are ways to mitigate financial harm. Below are some suggested methods that can be used individually or, where practicable, collectively.
Check your employment agreements to see whether there is a ‘business interruption’ or ‘force majeure’ clause, and take advice from a lawyer as to whether such a clause can be triggered. While the intent of such clauses is to address a situation like flood damage, each case will turn on its facts and will need to be assessed from a legal perspective.
Employers may reach out to employees to seek agreement on them taking leave, whether paid or unpaid.
If agreement is not given, employers may give notice (14 days) that an employee is required to take paid annual leave.
Reduction of hours
Employers may seek agreement from employees to reduce their working hours on a temporary, or permanent, basis. It is vital that any agreement is clear in its terms, in writing and each employee has the opportunity to seek legal advice before signing.
For waged employees, a reduction in hours will correlate directly to remuneration. For salaried staff, businesses ought to seek agreement with employees on a pro-rated reduction in remuneration to account for the reduced hours of work.
Reduction of pay
As above, any agreement to reduce pay must be in writing and clear as to its terms. An important consideration is whether any reduction will result in an employee being paid less than minimum wage (currently $21.20 per hour). For waged employees, that is a simple exercise. For salaried staff, care needs to be taken to ensure the effective hourly rate does not fall below minimum wage.
It may be necessary to considering downsizing the business to remain viable. For many businesses, the damage caused by the weather may mean reduced income for months to come.
If this is being considered, businesses need to take care to conduct a proper restructuring process. Just because the reason for the restructure may be clear to all, employment law obligations still apply even in the most dire of circumstances. Seeking legal advice before commencing a restructure is important.
5. What if our business is damaged to the extent that we will not re-open?
The principle of ‘frustration’ of contract has been applied in employment law, but very seldom. In brief, it applies where, due to an unforeseen event outside of control or influence of either party (employer and employee), the performance of the contract (employment agreement) is impossible or radically different to what was envisioned at the time of agreement.
That may well be the case for businesses that are condemned or severely damaged. However, relying on frustration is a difficult path to take. There must be sound reasoning as to the effects of flood/storm damage on the operation of the employment agreement, otherwise the business will be exposed to litigation risk. The Authority and Courts have often been slow to accept an argument for frustration in the employment jurisdiction, largely due to the necessity to protect employment rights.
If a business is in a situation where frustration may be applicable, it is important to first seek legal advice before taking action with employees. For more information, please contact a member of our Disaster Recovery Support, Employment or Health and Safety teams.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.