What to do when disaster strikes? Practical Guidance for Employers Following a Natural Disaster

Following the flooding in January and Cyclone Gabrielle in February the lives of many individuals (both employees and employers) in the North Island have been thrown into turmoil.  Many were devastated by the destructive forces which hit, leaving people homeless, stranded, without power and unable to communicate with the outside world.  The aftermath has seen most businesses in disarray, some destroyed, and many workplaces unrecognisable. 

Once the focus has turned from the initial emergency response, and the immediate safety of individuals, many business owners and employees will be in a position to start thinking about work.  As with the Christchurch earthquakes, and more recently with the Covid-19 pandemic, employment law continues to apply.  It is critical that employers are able to navigate this difficult time with their staff in a supportive manner which complies with the duties and obligations owed to those individuals.  This is a reciprocal duty and while the employment relationship remains afoot, employees must continue to deal with their employers in good faith.  Whether there are continuing obligations and, if so, the extent of them will depend on the nature of the employment relationship, specifically, the employment agreement, and the circumstances that apply to that particular employment including the impact of this event. 

The courts will have considerable sympathy for parties seriously impacted by circumstances which are not of their making but the circumstances themselves are not a licence to ignore the law because it has become inconvenient.

Communication with employees is imperative and employers should be making the effort to remain in contact with their workers, advising them of the disaster’s impact on the workplace and the expectations for staff.  This may include specific matters related to business continuity and whether or not they are required to work.  It is important to ensure that everyone is aware of where they stand during this chaotic time.  The ability to pivot is critical.  That is straightforward with agreement, which is always preferred, but not so straightforward where agreement cannot be reached between the parties. 

Health and safety concerns

Health and safety should be at the forefront of employers’ minds at the moment.  Ensuring that the workplace is safe for employees, workers and visitors is vital.  The Health and Safety at Work Act 2015 (“HSWA”) requires that an employer provides its staff with a safe place of work, and that the place and the work does not put its employees, other workers or visitors at risk of harm or injury.  If, following a disaster, the workplace is not safe to re-enter, the employer cannot require its staff to return to work until it is safe to do so.  For example, an assessment should be undertaken where the employer believes that the premises may have been damaged, where they are aware of any existing structural weakness or where there is an ongoing risk of contamination.  

Employers should instruct their employees to remain home if an assessment has taken place and it has been established that the premises are unsafe to return to.  If the premises have been damaged, the employer will need to consider if there are any suitable alternatives.  For example, whether they can relocate to alternative premises whilst repairs take place, or whether they should allow those employees that can work from home (if it is safe and suitable) to do so.

Section 83 of the HSWA provides that an employee can cease working, or refuse to carry out work, if they think that doing so would unduly expose themselves or others to a serious risk to Health and Safety from an “immediate or imminent exposure to a hazard”.

Employees may lawfully refuse to work if they believe that carrying out work in their workplace could expose themselves or anyone else to serious risk.  The duty of good faith requires the employee to inform their employer of their concerns as soon as possible to allow the employer an opportunity to rectify the issue.  Where the employer fails to address or remedy the issue, the employee may be in a position to advise the employer that they will not be returning until the problem has been remedied.

The standards of “immediate or imminent exposure to a hazard” and “serious risk” are high.  An employee may not lawfully refuse to work if these standards are not met.

If the employer fails to rectify the issue or continues to persuade the employee to return to an unsafe workplace, the matter may then be raised with WorkSafe who may take action to investigate the claim and take any course of action they deem necessary in the circumstances.  Alternatively, the employee may raise a personal grievance using the framework in the Employment Relations Act 2000 (“ERA”).

Absence from the workplace following a disaster

There are several reasons why an employee may be unable to work following a natural disaster.  This may include:

• An employee’s inability to access the workplace due to road closures, evacuation, or damage to infrastructure and transportation routes.
• An employee is required to look after a dependant due to the Ministry of Education imposed early childcare or school closures;
• An employee (or their spouse/partner or a dependant) is sick or injured;
• An employer is unable to provide work for their employee who is ready, willing and able to work e.g. where the workplace is unsafe.

The question of “ready, willing and able to work” and what that means, particularly in different circumstances, is yet to be thoroughly examined in New Zealand.  To ascertain if an employee’s absence from the workplace is paid or unpaid, the employer will need to review the particular circumstances on a case-by-case basis, taking into consideration the terms of the employee’s employment agreement and any policies in place.

Business interruption or force majeure 

Since the Christchurch earthquakes, many employers have incorporated “Business Interruption” or “force majeure” clauses into their employment agreements, and many of these were modified following the prevalence of Covid-19.  Broadly, these clauses state that if the employer’s business is interrupted as a result of a specific event (usually a natural disaster, adverse weather, failure of utility services, pandemic, government action, cyber-attack etc) following consultation with the employee the employer may be entitled to terminate, suspend or be excused from specific contractual obligations.

Typically, these clauses allow for the following courses of action:

• Amending an employee’s hours, duties and location of work;
• Amending their remuneration;
• Instructing an employee to take annual leave entitlement during a period of business interruption; and/or
• Taking more drastic steps to establish if the affected employee’s employment should come to an end.   

The validity of these clauses and the ability to rely upon them is up for debate and entirely fact specific.  Employers will need to engage in robust consultation with staff before relying upon those clauses.  If an employer wants to rely on a business interruption clause, they should seek guidance on whether any action may result in a disadvantage to the employee and the performance of their employment.

If the employment agreement and policies in place do not specifically reference the contractual obligations that may apply in the circumstances, it will be up to the parties to communicate with each other in good faith to ascertain the classification of their time away from work, and any alternative that may apply.

Sick leave and other leave entitlements 

Natural disasters often not only have a physical impact, but also take a psychological and emotional toll on staff.  As such employers should be sensitive when dealing with staff.  Where a member of staff (or their spouse or partner, or dependant) is injured or dealing with the psychological effects of the disaster, they will be entitled to sick leave in accordance with the Holidays Act 2003.

If an employee’s sick leave entitlement is exhausted before they are well enough to return to work other forms of leave may be available to them (see below).

If the workplace has been assessed by an appropriate expert and is safe to return to, the employer may want the employee to return to work.  However, the employee may themselves not be able to attend work due to damage to their own property, damage to the surrounding infrastructure, inability to access transport or being required to look after children who are unable to go to school.  In this case, the employee is not sick or injured (or caring for a sick or injured partner or dependant) and will not be entitled to sick leave.  The following forms of leave may be available:

• Leave without pay.
• The parties can agree that the employee takes his or her annual leave.  However, the employee would need to agree to use his or her annual leave.  If the parties cannot agree on when annual leave will be taken, then, following consultation, the employer can instruct the employee to take annual leave by providing 14 days’ notice. 
• Anticipated annual leave in advance (if the employee has a deficit of leave at the termination of their employment, the employer may deduct this sum from the employee’s final pay if the employment agreement provides for a deduction for the overpayment).
• Using any entitled alternative holidays.
• Special leave, stipulated in the employee’s employment agreements, workplace policies or by agreement between the employer and employee.
• Other paid or unpaid leave either as provided for in employment agreements or workplace policies, or by agreement between the employer and employee.
• Advance on wages.

Whichever option for leave is agreed upon between the parties will be fact specific and depend on the nature and scope of the disaster.  Once an employee has exhausted their leave entitlements, the employee and employer will need to consider (in good faith) any further options which may be applicable (considerations should be given to the impact of these options on business recovery). 

Working from home 

Your employees may be available and ready to attend the workplace, however, the workplace may not be suitable for work or assessed as safe.  Broadly, where a specific provision in the employment agreement or policy is not applicable, an employer will be required to pay an employee that is ready, able and willing to perform work.  In those circumstances, employers must engage with their employees in good faith and ask whether they can perform their duties from home (assuming that their homes are safe to work from and have the necessary equipment). Where an employee can safely work from home, with the agreement of their employer, they must be paid their normal salary or wage for the hours worked.  This may be applicable to staff members that work in accounting, payroll or logistics.  For employees that work onsite, this may not be a possibility (e.g. those that work as waitstaff and chefs).

If the workplace is severely damaged it may be closed for some time.  As a result, there may not be any reasonable alternatives available, or which are practicable in the circumstances.  Employers may be required to re-evaluate their staff requirements.  If that is the case, legal advice should be sought on the options available.

Cancelling shifts for shift workers 

Shift workers are in a slightly different situation than other employees. There are particular rules which apply for shift workers where a shift is cancelled, or a current shift is ended early. A shift will be considered to be cancelled where the shift worker is willing and able to carry out their agreed hours of work, but their employer either:

• can’t provide them with access to a suitable and safe workplace; or
• can’t provide them with work.

Whether an employee is entitled to compensation for an employer “cancelling” their agreed shifts or ending a current shift early will depend on the terms of their employment agreement and the specific circumstances of the cancellation.

When cancelling shifts, employers must comply with the cancellation requirements contained in the ERA.  This means that for an employer to cancel a shift they must have an express provision in their employment agreement which allows for shift cancellation by:

• providing a reasonable period of notice for the cancellation (what is “reasonable” will depend on the circumstances and work performed by the employee); and
• reasonable compensation payable where the shift is cancelled without reasonable notice.

Where the employee’s employment agreement does not have valid shift cancellation provisions and the employer cancels a shift, the employee will be entitled to full compensation for the hours they were rostered on to work, even if they did not perform the work.  The employee will also be entitled to be paid as if they have worked their shift if:

• the employee is not informed of the cancellation until the start of the shift; or
• the shift is cancelled once the employee commences work.

EAP

The psychological impact of a disaster affects individuals in various ways.  Employers should recognise and understand that employees may have been disproportionately impacted. There may be residual anxiety and distress as a consequence of these disasters. If you are aware of staff who have been impacted, it may be an opportunity to consider whether you are able to offer employees EAP or provide information about appropriate counselling services available.

Preparing for a natural disaster

These disasters have been a wake-up call for many and have spurred employers to assess whether they are ‘disaster ready’.  This involves conducting a risk assessment and implementing an emergency plan for your business.  This plan will need to be articulated to staff to ensure they are aware of and able to implement any plan in place.   

Employers should ensure their premises are equipped with an emergency survival kit, and that they have educated their employees on evacuation procedures and what action to take in the event of an emergency or disaster.

It is also wise for employers to review their insurance coverage, including their business interruption insurance to confirm that they are covered in the event of further natural disasters.  As part of being disaster ready, employers should ensure that the employment agreement and policies are up to date and include clear terms which relate to natural disasters, this will alleviate stress for both employees and employers if and when the time comes.

A summary of employee entitlements:

* See the exceptions regarding shift workers above.

If you have any questions about what actions you should take following a natural disaster, please get in touch with our employment team or your usual contact at Hesketh Henry.

Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.