Rise in ‘pandemic clauses’ leaving workers without pay – Stuff.co.nz

Auckland staff at Mecca Cosmetics will now be reimbursed for pay they thought they might lose during this weeks lockdown, due to a clause in their contract.

Mecca told First Union on Thursday that the issue had been resolved after some staff complained they had been told to use up any leave before the company would top up their pay.

They had a clause in their contract which indicated the company was not obliged to pay their workers in exceptional situations such as a pandemic.

The use of pandemic clauses in workers' contracts has been noted in other workplaces.

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A worker at Amazon Surf told Stuff that some staff were not being paid at all during the lockdown because their contracts stated that they needed to take unpaid leave if a pandemic closed the business.

The worker, whom Stuff has agreed not to name, said the company required staff to take unpaid leave if either they could not work or the business required them to not to work, for three days or longer, due to unforeseen circumstances beyond either party's control.

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Grant Robertson announces wage subsidy plan for Auckland businesses.

Events included a pandemic or other act of God unless the parties otherwise agree.

When the worker queried whether the company would apply for a government wage subsidy, they were told the company was unsure it would be eligible.

The worker said they and their co-workers were understandably fuming because they had also gone without pay during Auckland's August and February lockdowns.

They were on minimum wage, and the worker said they were finding the company's reasoning hard to swallow if its revenue had not fallen greatly.

I have savings that I rely on. A lot of my co-workers, who are young and studying, live at home but I know my 2IC was really, really stressed about the potential for another lockdown because she has rent to pay.

Were just kind of living on breadcrumbs, really.

The worker was also not a union member and said they were unsure how to go about it.

We're all under 23, minimum wage workers, studying at the same time. We're not really sure of our rights.

Amazon Surf has been contacted for comment.

Rob Stock/Stuff

First Union retail secretary Tali Williams says it's immoral use pandemic clauses to not pay staff.

An employment lawyer said the worker's clause was probably enforceable, but Tali Williams, First Union's retail spokesperson, said it was immoral to apply force majeure-style clauses in a lockdown.

These types of clauses are meant to deal with situations of devastation, of earthquakes that rock all the buildings to the ground, creating nowhere where they can operate. Thats the kind of disaster scenario that force majeure is for, not for a seven-day lockdown.

If you can afford to pay people, which a lot of employers can, then they should. That's their commitment to the community and the consumer.

Regarding the Mecca situation, Williams said she believed it was an unlawful situation.

That's not what annual leave is for. This is the very reason the Government introduced the wage subsidy, was to ensure workers were paid and didnt have to dip into leave.

Supplied

The key is whether the worker understood their contract when they signed it, employment lawyer Susan Hornsby-Geluk says.

An Australian-based spokeswoman for Mecca said where it was unable to provide work due to the current lockdown, it was paying workers their rostered shifts from Mecca's Covid support fund.

Mecca was working hard to ensure staff and customer safety and to 'adhere to legislative requirements for all locations in which we operate.

Employment lawyer Susan Hornsby-Geluk of Dundas Street Partners said the leave clause in the Amazon Surf case was probably legally binding, but the employee needed to have understood it when they agreed to it.

Where employees freely enter into an employment agreement which provides that they will not be paid in certain circumstances, including during a Government lockdown or pandemic, it is likely this will be enforceable. In other words, they will not be entitled to be paid.

Another employment lawyer, Chris Scarrott of Cullen Law, agreed that in general, an employment agreement could provide for a stand down in the case of a pandemic-related shutdown.

We are (unsurprisingly) seeing these clauses more frequently since the emergence of Covid-19. They are likely legal. In essence they are setting the hours of work for the employee.

A more straightforward example would be a school bus driver having hours of work only during the school term.

The difference with these stand down clauses is the unpredictability of when they will be activated. The clauses do disadvantage the employee, so there would also likely be an obligation to consult before starting the stand down.

Williams said it was important staff knew that their contract was a two-way street when they signed up.

My concern is all of the un-unionised sites out there, where people don't know their rights and there might well be stuff going on and they don't realise it's wrong. I don't know the scale of that problem because we're not in touch with those people.

Retail NZ spokesman Greg Harford said retailers had rules to follow.

You can't unilaterally reduce your employee's wages without getting their agreement. But there had been confusion about the lack of information about the Governments new wage subsidy.

The Government announced on Wednesday that it had reinstated the wage subsidy for employers who had suffered a major drop in revenue since mid-February.

Other retailers to be criticised for underpaying workers during lockdown are OPSM, which is said to be paying workers 25 per cent of their usual pay, and H&M, which is paying its workers 60 per cent.

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Rise in 'pandemic clauses' leaving workers without pay - Stuff.co.nz