The recent flooding in Auckland and the upper North Island has left employers with several questions regarding employee pay. While natural disasters can present difficult circumstances for all affected, it is important to be aware that employment law obligations endure.
Where a natural disaster prevents an employee from working, the employer’s obligation to pay is fact specific. Namely, employers need to consider why the employee is unable to work. For example:
- Are the work servers down so I’ve told the employee not to work?
- Are the roads into work flooded and the employee can’t swim the necessary 30km?
- Has a school unexpectedly closed and released little terrors back into the employee’s care?
Direction not to work
If you’re looking at the first scenario, or a variation of it, and you’ve directed your employee not to work, the starting point is that you need to pay them their ordinary wages. An exception may apply if the employee’s employment agreement contains a ‘force majeure’ clause, which excuses a party from their contractual obligations if a specified event, such as a natural disaster, prevents them from performing those obligations.
However, it is rare for the Employment Relations Authority (Authority) or Employment Court (Court) to find that a force majeure clause is clear and specific enough to be relied on. Even if the clause is effective, employers must:
- first consult with the employee to comply with their good-faith obligations under section 4 of the Employment Relations Act 2000; and
- if their employee is a ‘shift’ worker and the employer cancels the shift without giving reasonable notice, the employer must pay cancellation compensation. This should be specified in the employee’s employment agreement.
An alternative option is to rely on the legal concept of ‘frustration of contract’. However, it is even rarer for this approach to be deemed effective by the Authority or Court.
Roads are flooded
If your workplace is open but your employee cannot work from home and cannot get to work because of nearby flooding, or similar, then the position is less clear. The employee is ready and willing to work, though not necessarily “able” to do so, and the employer is likewise ready and willing (and “able”) to provide work.
In our view, because responsibility for getting to work lies with the employee (unless agreed otherwise), the employer does not have an obligation to pay ordinary wages in this scenario. A force majeure clause is also more likely to cover this scenario.
However, this position is untested and employers should first check the employment agreements and their policies, as well as consult with employees to agree on how this unworked period will be treated. Options include:
- annual holidays;
- leave without pay;
- special paid leave;
- an advance on wages or leave entitlements;
- using an entitled alternative holiday (i.e. from previously working a public holiday that was an otherwise working day); or
- a combination of the above.
School closure
If an employee is unable to work because they have suddenly had their children thrust back upon them with closure of schools or daycares, the position is more straightforward. The employer is not obliged to pay them their ordinary wages, as they are not “ready and willing” to work. Again however, employers should check the employment agreement and their policies. Employers should also consult with employees on the above options to avoid the effects of a natural disaster becoming overly detrimental to employees.
Final considerations
A natural disaster can obviously be disruptive, damaging and unsettling on an individual level. Employers will need to take into account the human side of the situation and talk to employees about their individual circumstances. Options like paid special leave and lending a helping hand if someone has been hard-hit may well be consistent with an employer’s values and ultimately be the best way forward for continuing a constructive relationship.
To simplify the above and potentially make the situation easier for everyone, employers should also check their insurance policies and discuss with their insurers what cover is available. Absent this quick fix however, the position is fact specific and it is sensible to obtain legal advice before taking action.
