As an employer, can I pay staff less than their normal wages during COVID-19?

Employment law still applies to all employment relationships, regardless of the circumstances that we find ourselves in, including different alert levels during COVID-19. This means you can only reduce employees’ wages if they agree to it, after a discussion in good faith.

As an employer, you need to keep paying your employees at all alert levels, whether they are continuing to work at their usual place of work or from home, or if they are not able to work because of alert levels.

Employees should be paid their wages as set out in their employment agreement. If an employee has an employment agreement with minimum hours, but has been working for more than the minimum hours for some time, you need to calculate their pay according to the number of hours that they have been working, rather than the minimum hours in their employment agreement.

The Wage Subsidy can be used to help pay their wages. You can only reduce how much you pay your employees if the employee has agreed to receive lower pay. This means that if they don’t agree to it, you will need to pay their normal pay, even if this is higher than what you received from the Wage Subsidy. 

If you have money left over from the Wage Subsidy, for example, if an employee no longer works for you, you can use their remaining subsidy to pay other affected employees. If there are no other employees to use the subsidy for, then the remainder must be paid back.

If your employees cannot work normally and your business is struggling to meet its costs, the best thing you can do is to talk to your employees in good faith, explain to them your business’ financial situation and talk about what options are available to you and them, and agree to any changes. If your business has unionised employees, make sure that you involve the union in discussions relating to any changes.

There are other financial support schemes available to help you pay wages during this time. For example, the Leave Support Scheme can help you pay employees who have to self-isolate, even if you don’t qualify for the wage subsidy.