Covid-19 Lockdown – Can an employee’s pay be reduced or cut?

Potentially - but there are some major considerations!

What we have learned as an outcome to Covid-19 case law from the last year is that the essentials of employment law and good practice still apply.  This includes the duty of good faith and the need for consultation with staff, and unions where applicable, prior to making decisions that could impact on terms and conditions of employment. Those essentials also require that ‘procedural fairness’ and reasonableness is applied.  

If you are looking at your operations and financial position, and what your business may or may not be able to sustain as the lockdown progresses, ask yourself:

  • What lockdown level can or would your business be able to operate at?
  • What limitations are you likely to have that could impact employment when operating at each of Levels 1 -4?
  • Can any or all of employees work from home with consideration given to their work and home situation / care responsibilities?
  • What are your contractual obligations – ordinary hours and pay?
  • What provisions do you have in the employment agreement that you could – or must - consult on if you needed to implement change?
  • What risk management strategies could you adopt to mitigate the impact of any need to make cuts on retention and re-engagement of staff post lockdown?
  • What support could you be eligible for to help you sustain jobs and pay?
  • Have you thought over all possible options and opportunities a lockdown presents?

For any assistance with assessing your options, consultation processes and communications contact a member of the Grow HR team.