Two recent decisions of the Employment Relations Authority have considered pay issues arising out of the COVID 19 level 4 lockdown. While both cases are being challenged in the Employment Court so the law is not yet settled, the Authority found both employers liable to pay their employees.
The cases are Sandhu v Gate Gourmet New Zealand Limited  NZERA 259 and Raggett v Dove Hospice  NZERA 266.
Gate provides inflight catering services for aircraft at Auckland airport. It was an “essential service”, so could operate during the level 4 lockdown.
However, there was very little work for employees. Few aircraft were flying. Gate therefore closed operations partially, and directed employees to stay home unless rostered. Gate obtained the COVID 19 wage subsidy, and paid employees not working only 80% of their normal pay. Employees were normally paid the minimum wage ($17.70 before 1 April 2020), and normally worked 40 hours work per week.
On 1 April 2020, the minimum wage increased to $18.90. Employees who did not work continued to be paid 80% of their normal pay based on the $17.70 minimum wage.
Employees argued they could not be paid less than the minimum wage. They also argued they were entitled to be paid 100% of normal pay because they were ready and willing to work. Gate argued employees were not ready, willing and able to work, were not actually working, and so were not entitled to be paid at all.
The Authority sided with the employees. It concluded they were not working due to Gate’s directions, rather than lockdown restrictions. Employees were therefore ready, willing and able to work. Further, by paying employees at 80% of normal pay, Gate had breached the Minimum Wage Act, and so employees were entitled to pay for the 20% difference.
In contrast, Dove ran retail stores in addition to hospices. The stores were not “essential services”, so legally had to close during lockdown. Employees could not work in the stores.
Dove also obtained the wage subsidy, and also paid employees not working 80% of their normal pay. Dove then made some employees redundant. Employees received extended redundancy notice of 8 weeks (their employment agreements provided 4 weeks’ notice). Employees were paid 80% of normal pay for the first 4 weeks, and only the wage subsidy for the second 4 weeks. Dove’s employees appear to have been paid over the minimum wage.
The employees argued they did not agree to be paid anything less than normal pay. Dove ran the same argument as Gate; that the employees were not ready, willing and able to work.
Again, the Authority sided with the employees. It concluded the employees were ready and willing to work. It also concluded Dove had made a unilateral deduction from pay from what was required under employees’ employment agreements, which was unlawful.
Unfortunately, what the Authority did not do in this case was analyse whether employees were “able” to work. In our view, employees in Dove’s stores simply were unable to work during the lockdown. That was as a result of a legal restriction, rather than any decision by Dove. We think this is the distinguishing factor between the cases, but the ultimate outcome is hard to predict.
The Gate case was heard by a Full Court of the Employment Court on 13 October 2020, with the CTU and Business NZ involved in the case. The Dove case will be heard by a Full Court in early December. We will update you when a decision is released.