Government urged to clear up ambiguities around wage subsidy rules

Government urged to clear up ambiguities around wage subsidy rules
Employers have been accused of taking advantage of badly worded wage subsidy rules and not paying workers what they are due.

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By the end of August, there were more than 5500 complaints made through an online dedicated subsidy complaint page with more than 1000 still unresolved.
Photo: 123RF

Advocates and unions said there is currently disagreement over how certain rules should be interpreted.

For workers who believe they’ve been wronged by their employer, and have filed a complaint against them, the confusion is causing delays in having their grievance resolved.

There’s particular concern over the use of certain phrases, such as “best endeavours”.

In its wage subsidy guidance, the government said businesses receiving the subsidy must make their best endeavours to pay staff at least 80 percent of their normal salary.

“What is the level of endeavour?” asked Jared Abbott, FIRST Union’s Transport, Logistics and Manufacturing secretary.

“Does it mean you can’t make a profit? Or does it mean that you have to reduce your profit? Or does it mean that if everything’s amazing then you do pay it? It’s very unclear wording.”

Advocates helping those with employment woes have reported a doubling in the numbers of complaints lodged, as a result of Covid-19. They said the system is straining at the seams.

A proportion of the complaints specifically related to the wage subsidy.

By the end of August, there were more than 5500 complaints made through an online dedicated subsidy complaint page – more than 1000 of which are still unresolved.

Many subsidy-related complaints have been made through other channels, though it’s not known how many.

Ambiguous wording causing grief for complainants

At least part of the surge in complaints is being slated back to vague terminology around the wage subsidy rules.

“Best endeavours” isn’t the only phrase which has caused problems – Abbott said during the first lockdown, people were being forced to take annual leave.

It would have been cleared up if there was straightforward guidance from the government, he said, but that didn’t happen.

“Rather than the government just coming out and saying, ‘You cannot use annual leave if you’re collecting the subsidy, you must use the subsidy,’ instead they came out and said, ‘Well, annual leave cannot be used unlawfully’ which implied there was a lawful way to harvest people’s annual leave.”

The ambiguous wording has made it difficult to resolve problems.

An employment law advocate, Gerard Elwell, said employers are receiving conflicting advice over what the terms actually mean, and a lot of time is being taken up reaching an agreed interpretation.

He said because this is all so new for everyone, there’s not a huge number of historical cases on which to draw – take “best endeavours”, for example.

“It also has seldom been used in New Zealand, so we’re having to look to UK precedents,” he said. “We’re really feeling our way as we go, to try and get a handle on how to interpret some of this terminology.”

The impact of this confusion is being made greater by the significant number of employment complaints being made.

“It wasn’t a quick process prior, and this is probably just going to bog it down. It’s easy to forget that people live with these issues day to day until they’re resolved.

“A delay of a few months is very unpleasant for some people who want their matter resolved, and are experiencing health issues around that.”

Government intervention urged

Resolving the issue is not considered to be an easy task.

“I do feel in this extreme situation that we’re in, [there should be] some government direct intervention and articulation of how they see the wage subsidy and being really clear on what their interpretation of ‘best endeavours’, for example, is, and just clearly spelling that out,” Elwell said.

In a statement, the Workplace Relations Minister Andrew Little said they were conscious of the problem.

“Queries have been raised about some of the general web-based advice,” he said, “and we are considering those queries as well as issues raised in a small number of cases that have gone to the Employment Relations Authority.”

But whether the government could come in and establish rules, which employers’ might argue they weren’t aware of at the time, is up for debate.

“If the government had come out at the start and said, ‘These are the conditions for raising a wage subsidy: you must pay people 80 percent, you’re not allowed to use people’s annual leave while collecting the wage subsidy,’ then these issues wouldn’t have arisen,” Jared Abbott from FIRST Union said.

“I think it is very difficult now to retrospectively do that – there is probably an argument from the businesses that have done that to say, ‘well hold on, you can’t add conditions after we’ve already done the agreement.’

“Those things really needed to be in place at the time.”

The confusion could be overcome if cases go through the Employment Court, or a higher court, as the rulings would set legal precedent and provide guidance when it comes to interpretation.

However, that route is likely to take years.

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