Pay reductions & staff underpayments become the new normal in NZ business sector

Reports suggest that many employers in New Zealand are underpaying their employees. Small businesses are also reluctant to pay their staff because of the financial distress caused by COVID-19. 

OPSM/Luxottica has been giving 80% of their normal rate of pay as salaries to their NZ employees. When they were asked about it, they clarified that “the pay reduction is “consistent with previous long-term lockdowns”. 

OCS has recently decided to pause a proposal that demanded that employees not be paid at all. The staff were told that payments will continue if work sites remain open or if they are paid by clients. As of now, if OCS qualifies for the Government’s wage subsidy, it will pay the staff in full for the period of 1st- 14th September 2021. 

The Government’s wage subsidy will be given to the businesses who are facing an economic crisis because of the COVID-19 lockdowns if they pay their staff at least 80% of their usual rate.  

Susan Hornsby-Geluk, employment lawyer emphatically stated that employers paying less than what is written in employees’ contracts can face a court trial. She referred to the decisions of the Employee Relations Authority since the last lockdown in which it was found that employers cannot unilaterally deduct wages. This causes a risk of breaching the employment agreement which can lead to potential backpay, humiliation and distress, and also penalties.

First Union’s Tali Williams blatantly quashed the employer's arguments of not paying employees until they know what is going to happen next. She said that profitable businesses need to pay workers 100% of their wages. She expected to see more workers being on the wrong side of the edge as Level 4 lockdown continues in the north of the country. The trend is dangerously poised to continue if the lockdown is extended in Auckland and Northland.