Publications
FYI
Employment Law
24 Mar 2011
Employer Obligations in the Event of a Natural Disaster
The recent earthquake in the Canterbury region has had devastating consequences. The scale of the loss of life and damage is immense and our thoughts are with local residents and businesses as they deal with the aftermath.
As the recovery efforts wind down, and the extent of the destruction becomes clearer, some employers and employees are facing tough decisions at a time of high stress.
While the health and safety of employees is paramount, practical issues arise such as whether employees get paid if the workplace cannot open and what to do if employees refuse to attend work. These issues need to be addressed with compassion and good communication is essential. This FYI sets out some guidelines.
Health and Safety in Employment Act 1992
Safety is the primary consideration. Even post a natural disaster of this scale, the Health and Safety in Employment Act 1992 (HSEA) still applies. This means employers must still take all practicable steps to provide a safe workplace for employees and any other people who might enter the premises (for example, contractors, customers and any other visitors). Do not allow employees back into the workplace until the building has officially been deemed structurally safe. In addition, even if there are no restrictions on the use of the building, make sure the workplace is free from hazards, eg bare electrical cables, gas leaks, unstable stock or machinery.
The HSEA also stipulates that employers must take all practicable steps to provide facilities for employees at every place of work. "Facilities" include working toilets and hand washing facilities and all practicable steps must be taken to ensure that clean drinking water is provided to employees at every place of work.
While highly desirable, this has simply not been possible for many people who have tried to work in the aftermath. Even now, it may still not be possible. What employers have to do is provide what is reasonably practicable in the circumstances. If your workplace has no running water, providing employees with bottled water and having toilet facilities in close proximity to the worksite, may meet the requirement of what is reasonably practicable in the circumstances while you recover or relocate.
However, we recommend making it clear to staff returning to work that there are restrictions on facilities given the seriousness of the disaster. In these circumstances, it is advisable to reiterate that the employer is doing all that it can in the circumstances and the situation will be constantly monitored to ensure a safe working environment.
Psychological Harm
In addition to the physical hazards, some employees may be suffering from psychological conditions such as post traumatic shock disorder, depression or anxiety as a result of the earthquake. These conditions may be exacerbated by returning to the workplace.
Under the HSEA, employers must take all reasonably practicable steps to minimise the risk of employees suffering psychological harm at work. Some employees may need extra support or time off work as a result of their condition. The offer and provision of employee assistance programmes and counselling to affected employees are also ways of meeting obligations under the HSEA.
Payment of wages
As a general rule, an employer cannot cease payment of wages, remove benefits or suspend employees without pay unless this is agreed, even if a natural disaster means that an employer is unable to operate normally and/or provide work to an employee.
Unless there are employees who have agreed in their employment agreements that their salary/wages will be withheld during any period the employer is unable to provide work (which is unlikely), where an employee is ready and willing to attend work, the employer must continue to pay that employee their standard wages/salary, even if the business is temporarily closed.
We recommend that employers check their insurance policies as continuity insurance may provide continuity of income which would assist with the payment of employees' wages.
Employers may also be able to access the government's assistance package. Details can be found on the Department of Labour's website.
Other options
Where employees can not attend work because their workplace has been damaged but are willing and able, employers could explore the options of alternative premises or staff working from home. As the obligation to provide a safe working environment extends to all workplaces, before allowing an employee to work from home, an employer would have to be satisfied that the employee's home is safe and structurally sound.
Annual leave
Employers could require employees to take annual leave during the time the workplace is not accessible. However, the Holidays Act 1993 stipulates that an employee must be given a minimum of 14 days' notice to take annual leave. Employers may also want to consider alternatives, such as unpaid leave and leave in advance.
Can you require employees to come back to work?
Employers can require employees to return to work if the workplace is safe and the employees are able (as opposed to willing) to work. If an employee refuses to return to work in those circumstances, and there are no reasonable reasons for the refusal, as a last resort employers could take disciplinary action or take steps to terminate employment due to abandonment.
In the circumstances, a principled, sensitive and compassionate approach should be taken when considering individual circumstances. Obviously, some employees may want to return to work as soon as possible, while others may be struggling to come to terms with what has happened and not feel up to it. Individual employee circumstances will need to be taken into account to determine whether they are able to return to work and, if they are not, discuss with them the reasons why and what you can do to assist and to facilitate a return to work.
If an employee is unable or unwilling to work because they need to look after children who cannot go to school, or simply want to be with their families or deal with the damage to their property, employers could seek to agree with the employee that they will take annual holidays, special leave (with or without pay), work from home, undertake alternative duties or do reduced hours, or they could make up time at a later point. Where the employee is injured or caring for injured dependants there would be an entitlement to any unused sick leave. Whatever is agreed, we recommend that agreed timeframes be put in place, preferably recorded in writing, and that communication is maintained, so that both parties know where they stand.
Another issue that will need to be taken into account is the location of any temporary facilities. If the premises are relocated to a very different location to that described in the employment agreement then issues could arise as to whether the new location is within the scope of the terms of the relevant employment agreement.
Options in the event of long-term or permanent closure
If an employer is forced to close the workplace for an extended period of time or it appears that there is no possibility of recommencing operations, employers may have to consider termination of employment due to redundancy or frustration of contract.
Redundancy
If the employer is unable to provide employees with work for a prolonged period of time, or there is an urgent need to reduce costs as a result of the earthquake, businesses could look to implement redundancies following an appropriate consultation process. The obligation of good faith will apply, even for those businesses which sadly have no prospect of re-opening.
Frustration of contract
Frustration of contract occurs when due to unforeseen events after the contract is formed, performance of the contract becomes either impossible or only possible in a radically different way from what was originally contemplated. In such circumstances, the parties no longer have to fulfil their obligations under the contract.
In the event an employer is forced to cease operating for an extended period of time as a result of the earthquake, the employer could potentially terminate an employee's employment on the basis that their employment agreement has been frustrated.
However, relying on frustration of contract would be subject to the duty of good faith and good employer duties which means that proper consultation, consideration of alternatives and genuine efforts to prevent frustration of the employment agreement is required.
Communication is key
Good communication with employees is crucial. The scale of this disaster is unprecedented. While we can provide general guidelines, there will not be a one-size fits all approach for employees, as people are dealing with the aftermath in different ways. It is critical that employers stay in touch with their employees and provide regular updates.
Authors
Charlotte Bates
Senior Associate - Employment
DDI: +64 4 924 3578
Mobile: +64 21 817 041
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Carl Blake
Senior Associate - Dispute Resolution
DDI: +64 9 977 5163
Mobile: +64 21 477 228
Email:
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Katherine Burson
Senior Associate - Employment
DDI: +64 9 977 5112
Mobile: +64 21 498 624
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Lucy Jenkins
Senior Associate - Employment
DDI: +64 4 924 3401
Mobile: +64 21 221 4534
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In This Article:
While the health and safety of employees is paramount, practical issues arise such as whether employees get paid if the workplace cannot open and what to do if employees refuse to attend work. These issues need to be addressed with compassion and good communication is essential. This FYI sets out some guidelines.
