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

15 February 2023

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.

The art of delegation

11 August 2025
How often do you get to the end of a working day and wonder where the time went? Perhaps you never got to item 3 (or even item 1!!) on your to-do list. How can you solve this problem without working longer hours? The answer is very simple, but the art in the solution is where the gold is. The answer to free up time is to delegate more – either to existing team members, new people you recruit, or externally to outside contractors. However, if delegation were that easy, everyone would be doing it now, right? So, what is the art of delegation? We say art, because delegation is not an exact science; different approaches are needed depending on who the ‘delegate’ is. Time and effort are required to effectively pass on tasks to others. Often, the time the delegator needs to put in initially is greater than if they did the work themselves – that’s why so many people don’t delegate. The view that ‘it’s quicker for you to do it yourself’ holds you trapped and unable to be more productive and effective yourself. It also stops others from developing better ways to do things than you already know, i.e. if you teach them your way, then they can master that AND add their own value – two minds being better than one. Here are some essential principles to apply to help you to delegate (as opposed to abdicate!): Delegation Assess the task, issue to the right person and support - helps build trust and respect Be specific and crystal clear for greater communication Request they repeat back instructions, so you know you were understood, enabling higher productivity Set a time frame and request clarification that the task has been achieved, ensuring jobs are completed on time and are profitable Both parties to review - opens the door for future work Abdication Issue tasks to anyone and forget about it - shows distrust and a lack of respect Giving unclear and little information results in poor communication Don’t ask if you were understood - results in low productivity Don’t set a time frame – it can mean jobs are delayed and over budget Different expectations can result in disgruntled clients No review results in no future work Delegation is a skill to be learned; applying these principles consistently will ensure long-term success. “No person will make a great business who wants to do it all himself or get all the credit” – Andrew Carnagie Action list: Which tasks am I currently doing that I could delegate to others? What can I do with the time I free up? Who are the best people for me to delegate these to? (Make sure they want to do these as part of their career development). What is the best way to document what is expected and how it should be done? What support and review process is needed to ensure success?

Work vehicles? Stay on top of tax with logbooks

11 August 2025
Logbooks are useful records of business expenses relating to work vehicles and this is important when calculating what tax deductions you can claim. Depending on your business entity type, different tax rules apply when you use motor vehicles to earn income, and you might use a logbook to track expenses in different ways. Sole traders and partnerships can claim income tax deductions for motor vehicle expenses if the vehicle is used to help earn income for the business. If you don’t use the vehicle exclusively for business, you can’t claim 100% of vehicle expenses. You need to work out the business use of the motor vehicle to calculate what deduction you can claim. You can do this either by using a logbook to track actual costs or using a logbook over a test period to establish the average business usage. Companies are a bit different. Where company vehicles are used partly to earn income and partly for private use, vehicle costs associated with private use are liable for FBT. Companies can use logbooks to keep track of work-related costs and show either that the vehicles are work-related vehicles which don’t attract FBT where used for work purposes only, or that FBT is accounted for correctly where there is some private use of other vehicles. The logbook becomes a record of work-related use and of private use subject to FBT. Where a company restricts private use of the vehicle, a logbook is used as evidence that employees have complied with the restriction. Whatever type of business structure you have, we can advise you on keeping good records and understanding what you can claim.

Changes to KiwiSaver: How to get your business ready

11 August 2025
Major changes to KiwiSaver were announced in Budget 2025. The KiwiSaver voluntary savings scheme is aimed at helping New Zealand workers save for retirement or buy a first house. But with the rising cost of living, action was needed to make KiwiSaver fit for purpose and more fiscally sustainable as a savings scheme. How will these changes affect your employees and your small business? Let’s take a look at the details of these KiwiSaver changes. Changes affecting your employees First off, let’s outline how the initial changes announced in Budget 2025 will affect your employees and other Kiwi workers: Since 1 July 2025: Younger workers will qualify for government contributions: People aged 16 and 17 will qualify for government contributions, so long as they meet other eligibility requirements. Prior to 1 July 2025, members must be 18 or older to qualify. Government contributions to halve: The government KiwiSaver contribution will halve, reducing the maximum government contribution from $521.43 to $260.72 each year. High earners to lose government contributions: People who earn more than $180,000 of taxable income in a year will no longer qualify for government contributions. No change to 2025 government contributions: There’ll be no change to government contributions for the year ending 30 June 2025. These will be paid in July and August at the current government contribution rate. Changes affecting your small business Next, let’s lay out the KiwiSaver changes that will directly affect your business: From 1 April 2026: Employer contributions will rise to 3.5%: From April 2026, the default KiwiSaver contribution rates for both employers and employees will rise to 3.5% – up from 3%. Employees can choose to remain contributing at 3%: Employees who are members of the KiwiSaver scheme will be able keep their contributions at the current rate. They can apply for a temporary rate reduction from 1 February 2026, if they want to continue contributing at 3% from 1 April 2026. Employers can match the rate reduction: As an employer, you’ll be able to match your employee’s temporary rate reduction. Once your employee moves to a higher contribution rate, you’ll need to increase your employer contributions to the default 3.5% rate. Inland Revenue will notify you of this change. Younger workers will qualify for KiwiSaver contributions: People aged 16 and 17 will qualify for employer contributions. If they contribute to KiwiSaver from their wages, you will need to start making employer contributions. From 1 April 2028, the default contribution rates for employers and employees will rise again to 4% (up from 3.5%). Getting ready for the KiwiSaver changes These amendments to KiwiSaver could have a significant impact for your small business. Increased employer contributions will increase your payroll costs and stretch your cashflow, as will making contributions for younger workers in the 16 to 17-year-old age bracket. You'll also need to update your payroll software and processes, to ensure you’re making the correct contributions for the right people, at the right rates. 
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