12 week variation to terms of employment or need to close down?

by | Apr 20, 2020 | Covid-19, News & Events

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Free 12 week Variation Template

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We are now nearly 3 weeks into Alert Level 4.  The indications are promising that we will be downgraded from Alert Level 4 at some time in the not too far distant future.  However, Level’s 3, 2 and 1 also include restrictions which are liable to impact on your business and your clients.  Under level 3 it currently states “Alternative ways of working required”, under Level 2 it currently states “Employers start alternative ways of working if possible”.

When should I consult with my team again?

The government are planning to announce changes to the Alert Level definitions tomorrow and make announcements about Level 4 restrictions next week.  So, do I consult now, or wait until I have more information?

Under normal circumstances, if you want to vary someone’s terms of employment you consult (approximately 1 week) and then you give notice as per their employment agreement about when the changes will come into effect.  Obviously, if you have consulted about what payments will be made for the first 4 weeks of lockdown, that expires next Thursday (23rd).  So, the normal notice periods are not achievable

Overall, we recommend that you consult early with a worst-case scenario in mind, and then top up pay to higher levels if the future is rosier than anticipated.

What consultation will I still need to do?

At this point you need to consult with all your employees about any temporary changes to pay and conditions over the balance of the 12 week subsidy period. (Free Template attached)

Then, at approximately 6 to 7 weeks into the subsidy period (i.e. sufficient time for you to consult and give proper notice before the end of the 12 weeks period) you will probably need to consult with your employees about any permanent changes to their terms of employment.  However, at this point there are far too many unknowns, and to consult about permanent changes to your employees’ terms of employment is liable to cause greater concern at a time of great uncertainty for everyone.

We will be providing more guidance on consulting about permanent changes to terms of employment as we gain a clearer picture about how to best advise employers on that.

The key thing is to very clearly demonstrate (and keep records of ) the best endeavours you have made to keep higher levels of pay higher e.g. cutting costs, and exploring potential new avenues to put the company in good stead for the future

If you need to close the business for good

Sadly, there are already some companies for whom there will be no recovery from this situation.  We sincerely empathise with you, and please reach out for support.

You do still need to consult with your employees about closing the business and any redundancies and also consider how you deal with the subsidy payment.

We have developed a template and guidance to deal with that which can be found at

In brief summary our guidance is:

  1. Be very sure that you have made best endeavours and that you can evidence this before taking this course of action
  2. The government has been very clear employment law still applies, you do need to consult with your employees
  3. Be very open with your team members about exactly what you have done to prevent this outcome
  4. Payments in the event of redundancy need to be carefully considered and the template provides details on these considerations

 

Can You Do Us A Favour… From One Small Business To Another?

We’re determined to help as many businesses as we can through these tough times and will continue to offer a range of free resources to help you successfully navigate the impacts of COVID-19, however as a small business ourselves we are not immune to the economic fallout.

So what we’re asking is this… if you’ve found these free resources helpful or attended a webinar and thought it was valuable, please consider investing in our Full DIY Document Library for $349 + GST for 12 months access. Not only will you be helping us, but all the employment related templates you’ll find within the document library will be essential as your business gets back to work following the lockdown, as unfortunately the side effects of COVID-19 will likely continue for some time.

We understand that for some businesses this won’t be possible, but for those that can we’d certainly appreciate it!

We are here to help

We can of course help with consultancy support on a pay by the hour basis and our philosophy is to facilitate you to ensure you keep your costs down as much as possible, and also to ensure that what you do is legally compliant.

So, give us a call and we will be very happy to get you through, and help you thrive.  Lisa (021 741 544) or Frances (022 059 5022)

PS, please excuse the Hyperlink-fest, advice is changing so quickly that if you click on a document next week it may already be irrelevant, by Hyperlinking we can keep the main document as up to date as possible