If your business cannot operate do you have to pay staff?

The weather has impacted various regions recently and official advice has included reference to people working from home where possible. For some businesses, this isn’t always a feasible option, so if an employee isn’t able to work from home, the next question is who pays their wages/salary and what are your obligations as an employer.

Defaulting on work obligations – employer or employee?

If an employee is unable to work from home, or other options cannot be mutually agreed, then the question of ‘who pays’ comes down to who is defaulting on their obligations to work, or to provide work under the terms of an employment agreement. For example, if a child’s daycare centre or school is closed due to a MOE directive, but staff are ready, able, and willing to work, then the employer is defaulting and should pay staff their normal pay. However, if an employer has work available, and their premises are undamaged, but an employee is unable to get to work due to the roads being closed, or damage to their vehicle, they are therefore not ready, or able to work, so the employee is defaulting, and the employer is not obligated to pay them their normal pay.

Before assumptions are made about the time away from work, and whether it would be paid or unpaid, you need to look at the employment agreement, workplace policies, and the specific situation you find yourself in. Some employment agreements may specifically cover this type of situation and the extent of any contractual obligations that might apply. If there’s nothing in the employment agreement, then it is up to both the employer and employee to talk about it in good faith and agree what the time away from work will be classed as.

Sick Leave for Dependants

If the employee's partner or dependant family member isn’t injured or sick but requires care, (i.e. because the child's school is closed), the employee can’t take sick leave because their dependant is not sick or injured. If it’s not appropriate or possible for staff to continue working, employees and employers will need to agree on what basis the employee is off work and how that period is going to be managed.

Alternatives to working from home

If you’re employee is unable to work from home, there are various options for leave and/or payment. These include:

annual leave;
annual leave in advance of entitlement;
using any entitled alternative holidays;
discretionary special leave, either as provided for in employment agreements or workplace policies, or by an ad hoc agreement between the employer and employee;
leave without pay;
sick leave (if their partner or dependents are injured or sick);
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, i.e. a temporary loan with the obligation to repay.

Some examples:

Situation:	Possible outcome:
The business cannot operate due to damage as a result of the disaster	If other options aren't able to be reached, then the employer may have the obligation to pay if the employee(s) is ready, willing and able to work.
The business cannot operate and has a force majeure* clause	Depending on the wording and coverage of the clause, this period might be unpaid. You should consult with staff before relying on this type of clause.
An employee cannot come to work as partner or dependant is sick	Use sick leave
An employee cannot come to work as child's daycare or school is closed	Able to work from home – normal pay. Unable to work from home – annual or unpaid leave
An employee cannot come to work as their house has been damaged	Annual or unpaid leave, (or discretionary special leave if employer wants to offer it)
Employee cannot get to work as no transport or roads are closed	Able to work from home – normal pay. Unable to work from home - try to arrange transport. If cannot work from home, or get to work, then annual, or unpaid leave.

Whatever option is agreed on may depend upon the circumstances, including the nature, extent, and duration of the disaster. Once all leave entitlements are exhausted, further options will need to be considered, in good faith, between employers and employees. Employers will need to consider the impact these options will have on business recovery later.

Employers should also carefully check any terms in their insurance policies, particularly any concerning paying staff wages during a natural disaster, and contact their insurer, or insurance broker as soon as possible.

*Force majeure, or as it is often referred to ‘act of God’, is when a natural disaster, or similar unexpected event, makes it impossible to keep a business running. Because of this, the employee’s job may no longer exist.

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GST changes for online marketplaces and apps

25 Apr, 2024

From 1 April 2024 “Electronic Marketplace” transactions will be subject to GST in New Zealand, even if the person delivering the service, is not GST registered. This legislation was passed in 2023, and although National campaigned on repealing this law if they got into power, they confirmed in December 2023 that they will now leave the legislation in place. The new legislation covers more than just properties, it also covers Uber and Uber Eats, for example. But we are just focusing on the property implications and what it means if you own or rent out a room, bach, or an investment property. If you have booked a property for a work or family trip any time after 1 April 2024, you should also continue reading, as there are possibly implications for you too. So, what does the law say? That platforms like Airbnb, Booking.com, Expedia, Vrbo etc. are required to charge GST on all transactions and pay this GST over to Inland Revenue (IRD) where the owner of the property is: GST registered: Pay 15% to IRD. Report your income as zero-rated on your GST return. This ensures the income is declared and you do not pay the GST twice. It also means that you claim your GST on expenses, and will likely receive refunds each GST return. NOT GST registered: Pay 6.5% of the GST to IRD and pay the remaining 8.5% to the property owner. If you are not registered for GST there is nothing for you to do. You only qualify for an exemption if: your income from these activities is over $500,000 per year: or you had more than 2,000 nights booked in a year. This means that all these platforms are frantically updating their software to allow for the collection and payment of GST to IRD. Here’s what we do know: Expedia : They have NOT been able to update their software and will be removing ALL NZ listed properties from 1 April 2024, unless you qualify for the exemption above. If you have a property listed on Expedia, they possibly may remove it. There is no clear guidance as to what happens if you have bookings for the future but we suggest you contact your guests. Be careful how you do this though, as it’s against Expedia’s rules to make contact with guests outside of their system. If you are travelling and made a booking on Expedia, you may also have an issue - contact your host to work out what to do. Vrbo (ex Bookabach): While owned by Expedia, they have upgraded their software and will be able to cope with the new GST. But be aware, from 1 April they will automatically add 15% GST to all bookings. So, this will increase your nightly rate by 15% and make your property more expensive. You will have to manually update your rates to reflect this change. Airbnb: They, too, have decided they will add 15% GST to every booking from 1 April 2024. Their system says they are not yet set up to deal with NZ GST. Booking.com: They have not yet provided guidance on what they are planning to do. Will they be like Expedia and just stop supporting NZ properties or will they be like Airbnb and just add 15% to all bookings? So, a warning, if you are not GST registered, and you have not told your platform provider, it appears they will default to adding 15% GST to your property and pay this 15% to IRD. How you get your 8.5% back remains a mystery. If you are planning on booking accommodation, be wary of using Expedia or Booking.com, as a booking after 1 April 2024 could potentially cost you 15% more! In any event, landlords and holiday makers should revert to their booking platform for the latest information and policies. If you want to know more please reach out to us.

Five ways for better business efficiency

23 Apr, 2024

Everyone likes efficiency, the more efficient something is, the better - right? Especially with the economic climate still needing some work. If you’re wanting to save some time (and money), making your business processes more efficient is a good place to start. It also means that you can put more time into working ON your business, rather than in it. Here are five ways you can make your business a little more efficient. Better invoicing This sounds obvious, but the more efficient you are at invoicing, the less time you spend on it and the more time you save. And time is money. Develop a process that makes this more efficient – which is something that can vary by industry. Think about whether you can set up recurring invoices or have your staff invoice for the job on completion. Where can you reduce the headache of invoicing and make it more efficient? Streamline expense claims Develop a digital solution for your expense claims process. This way your team can submit their receipts and approve expenses online – which reduces mistakes, and not having everything you need to approve the expense. Utilise online/digital software Almost everything has a digital version, so it’s time to utilise it so you have business data wherever you are. No more going back to the office to check a number, getting back to clients with final details, or reworking quotes because the numbers were wrong. If it’s all available at your fingertips, this drives efficiency. Maintain lean(er) stock levels If your business sells inventory, lean inventory management could help you reduce unwanted costs, and become more efficient. The idea is you only produce or order in the stock you actually need. By optimising inventory levels, you can reduce carrying costs and align supply with customer demand, which means you won’t be falling over, or holding space for, excess stock. Review your overheads Another component of business efficiency is keeping costs down – like overheads. Have you checked if the costs from your suppliers, like rent, bills, and transport, are needed? Have you also looked for ways to reduce these costs?Consider whether you can achieve the same outcome for lower costs? Could alternative suppliers provide a quality service at lower cost? Are office supplies being stockpiled from habit rather than need? If you need tailored advice on how you can make your business model more efficient, get in touch with us.

How to write a recruitment advertisement that stands out

18 Apr, 2024

Finding the right staff for your business can be tough. Hiring can be challenging, but the right team can really support the growth of your business. Attracting the right staff starts with writing a recruitment ad that makes your role stand out in the crowd. Here are three ways you can make your job ad more appealing: Sell the role Rather than beginning the ad with the job description or a list of requirements, start with what makes the job most appealing. Is it the industry, location, pay, or perks? Be up front with the advantages so that it’ll grab people’s attention and encourage them to read further. Keep it short and sweet While it can be tempting to write a novel so that it paints your business in the best light, it’s better to keep your job ad short and sweet. Aim for a maximum of 700 words that are straightforward with readable language, and avoid adding unnecessary words or repetition. Avoid meaningless clichés Every job ad mentions their amazing team, or how the environment is fast paced. Everyone says they’re offering a ‘competitive salary’. All jobs are looking for self-starter’s or those who can hit the ground running. Rather than using the same phrases as everyone else, be different. What can you write that makes your business stand out from the crowd – you could provide the actual salary, for instance. Describe the job, the team, and the environment clearly and accurately. This helps the candidate get a genuine understanding of the role and that’s what piques their interest – not the same phrases that everyone else is using. Hiring Now that you’ve attracted the right person for your team, make sure you cover your bases when hiring (especially around trial periods). If you need help with employment contracts or other employment-related questions, let us know we’re here to help.