10.6092/issn.1561-8048/10956
The New Zealand Government closed the borders and introduced a strict national lockdown relatively early in the spread of the disease. While so far successful in preventing a large-scale outbreak, there are significant economic consequences. A range of measures have been introduced to support businesses and workers during the lockdown and stimulate the economy following, including wage subsidies, interest-free small business loans and local infrastructure job-creation projects.
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1561-8048
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Dawn Duncan
Italian Labour Law e-Journal
Business loans
COVID-19 and Labour Law: New Zealand
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National Reports
2020-05-11
2020-05-09
2020-04-15
2020-09-15
ILLeJ
Dawn Duncan
2020/05/11
10.6092/issn.1561-8048/10956
University of Otago
1561-8048
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Business loans
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COVID-19 and Labour Law: New Zealand
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COVID-19 and Labour Law: New Zealand                                              Italian Labour Law e-Journal
Dawn Duncan                                                                      Special Issue 1, Vol. 13 (2020)
dawn.duncan@otago.ac.nz                                            Covid-19 and Labour Law. A Global Review
                                                                                               ISSN 1561-8048
                                                                https://doi.org/10.6092/issn.1561-8048/10956




             COVID-19 and Labour Law: New Zealand
                        Dawn Duncan*

                                                 Abstract
     The New Zealand Government closed the borders and introduced a strict national lockdown
     relatively early in the spread of the disease. While so far successful in preventing a large-scale
     outbreak, there are significant economic consequences. A range of measures have been
     introduced to support businesses and workers during the lockdown and stimulate the
     economy following, including wage subsidies, interest-free small business loans and local
     infrastructure job-creation projects.
     Keywords: Covid-19; Labour Law; Lock-down; Four-level alert system; Wage subsidy;
     Business loans.


 1. General Framework

     In response to the Covid-19 pandemic, the New Zealand Government pursued what it
 describes as a “go hard, go early” strategy1. Starting in early February, increasing entry
 restrictions and quarantine requirements were imposed on travellers, with borders closed
 on 18 March2. The New Zealand economy is heavily reliant on tourism (16.2% of export
 earnings, employing 8% of total workforce) with border closures having an immediate
 economic impact3. On 21 March the Prime Minister announced a four-level alert system,
 with the country moving in to level three the following day, and then level four, 48 hours
 later4. A National State of Emergency was declared on 31 March, with further declarations
 on 2, 8 and 15 April5.
     The level four lockdown operated from 24 March to 27 April, with people required to
 stay in their homes, and avoid contact with anyone not from their household “bubble”.
 Non-essential businesses were required to close their premises, but could continue to have
 people working from home. The list of essential services included hospitals and medical

 *
   Faculty of Law, University of Otago (Dunedin, New Zealand).
 1  New Zealand Government media releases available here: https://www.beehive.govt.nz/release/covid-
 economic-scenarios-back
 2 New Zealand citizens and residents were permitted to return home on a limited number of charter flights

 and required to enter strict quarantine.
 3 New Zealand-Aotearoa Government Tourism Strategy (May 2019), available at:

  https://www.mbie.govt.nz/immigration-and-tourism/tourism/new-zealand-aotearoa-government-tourism-
 strategy/
 4 Orders were made under the Health Act 1956, and Epidemic Preparedness Act 2006 amended by the

 COVID-19 Response (Urgent Management Measures) Legislation Bill allowing a wider range of directions to
 be given.
 5 Under the Civil Defence Emergency Management Act 2002 a state of emergency can only last for 7 days.
    Dawn Duncan                                                             Italian Labour Law e-Journal
                                                                           Special Issue 1, Vol. 13 (2020)
                                                              Covid-19 and Labour Law. A Global Review
                                                                                Section: National Reports




services, life-line utilities, supermarkets and petrol stations. The lockdown was strictly
enforced, with wide-spread economic consequences, but received high levels of public
support6.
   On 28 April, New Zealand moved to alert level three having declared “transmission of
the virus eliminated”7. As at 3 May, total confirmed and probable cases stood at 1,487, with
20 deaths8. In alert level three people are still required to stay at home, but enjoy greater
personal freedom to move around their local area. Many businesses are permitted to re-
open their premises, but not interact with customers, conforming to strict contact-less
trading and social-distancing rules. Public venues remain closed, and workers able to work
from home are required to continue to do so. The level three lockdown will be reviewed on
11 May.


2. Regulatory interventions

   There was a high degree of political cooperation in the pandemic response. The Leader
of the Opposition was appointed to chair the special Epidemic Response Committee and
meetings were livestreamed to enhance transparency and democratic scrutiny9. There was
also ongoing consultation with scientific experts, unions and business groups, resulting in a
high-level of consensus over the measures introduced.


a) National wage subsidy scheme

   On 17 March, a national wage subsidy scheme was established. The subsidy was
available for 12 weeks and comprised a flat rate payment of $585.50 for employees working
over 20 hours per week, and $350 for those working less that 20 hours10. By mid-April,
over 40% of New Zealand’s workforce was being supported by the scheme, costing 9.9b
NZD (more than 10% of total core Crown revenue for the previous year)11. To receive the
subsidy, employers were required to declare they would keep employees at a minimum of


6 Reporting on independent polling can be found here:
<https://www.rnz.co.nz/news/national/414069/most-new-zealanders-willing-to-extend-covid-19-
lockdown-pain-survey>
7 Media reporting of the Prime Minister’s announcement:

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12327811
8 New Zealand Ministry of Health Covid-19 data available here: https://www.health.govt.nz/our-

work/diseases-and-conditions/covid-19-novel-coronavirus/covid-19-current-situation/covid-19-current-
cases
9 Information about, and recordings of, the Committee can be accessed here:

https://www.parliament.nz/en/pb/sc/scl/epidemic-response/tab/business
10 Information on the wage subsidy scheme can be found here:< https://www.employment.govt.nz/leave-

and-holidays/other-types-of-leave/coronavirus-workplace/wage-subsidy/>
11 Minister on Finance speaking on Radio New Zealand available here:

https://www.rnz.co.nz/national/programmes/checkpoint/audio/2018743103/covid-19-wage-subsidy-bill-
nears-10b-govt-starts-auditing

https://doi.org/10.6092/issn.1561-8048/10956                                                             2
     Dawn Duncan                                                               Italian Labour Law e-Journal
                                                                              Special Issue 1, Vol. 13 (2020)
                                                                 Covid-19 and Labour Law. A Global Review
                                                                                   Section: National Reports




80% of their incomes12. Stories of opportunistic employer behaviours in claiming the
subsidy resulted in the New Zealand Council of Trade Unions, and later, government
agencies setting up online and freephone complaint lines. A publicly searchable database of
employers claiming the subsidy was also set up13. Employer actions in unjustifiably making
staff redundant or wrongly claiming subsidies will likely result in considerable legal action
when the courts reopen.


b) Leave entitlements and subsidies

   A leave subsidy, paid at the rates above, was also available for essential workers forced
to take leave “due to public health guidance” (e.g. the worker is quarantined)14. Many
essential workers, such as those in aged care and supermarkets, have only the minimum 5
days’ paid sick leave per year, which would be insufficient to cover the quarantine period15.
There are also reports of employers illegally trying to force employees unable to work
during lockdown to use accrued sick leave or annual leave, which will likely result in union
and regulator action when the courts reopen. The Holidays Act 2003 was already under
review and these issues may hasten the pace of reform.


c) Temporary workers

   Changes to the Immigration Act 2009 were made to extend the expiry dates of a range
of temporary class work visas16. People on these visas and unable to work during
lockdown, however, cannot access social welfare benefits, with unions and migrant worker
advocates highlighting the hardships and risks of exploitation faced by this group.


d) Childcare

   Fully-funded in-home childcare was made available for essential workers where there
was no one in their bubble to provide care17. People working from home were required to
find a way to balance work and childcare themselves. In level three, schools reopened on a

12  Parliamentary Media Statement, accessible here: https://www.beehive.govt.nz/sites/default/files/2020-
03/Wage%20subsidy%20scheme%20factsheet.pdf
13 The wage subsidy database and complaint facilities can be accessed here:

 < https://www.msd.govt.nz/about-msd-and-our-work/newsroom/2020/covid-19/covid-19-wage-subsidy-
employer-search.html>
14 Information on the leave subsidy can be accessed here: < https://workandincome.govt.nz/covid-19/leave-

support-scheme/index.html>
15 Holidays Act 2003, s 65.
16 Information on immigration changes can be accessed here: https://www.immigration.govt.nz/about-

us/covid-19/visa-conditions-epidemic-statusvisa-conditions-epidemic-status
17 Information on the childcare subsidy can be accessed here: http://education.govt.nz/covid-19/home-

based-care-options-for-children-aged-0-14-of-essential-workers/

https://doi.org/10.6092/issn.1561-8048/10956                                                                3
     Dawn Duncan                                                                   Italian Labour Law e-Journal
                                                                                  Special Issue 1, Vol. 13 (2020)
                                                                     Covid-19 and Labour Law. A Global Review
                                                                                       Section: National Reports




limited basis for children unable to be cared for at home18. Distance learning, technology
grants and a national educational television channel operates to support those teaching
children at home.


e) Health and safety workers’ compensation

   Distribution of PPE for essential workers, especially those in the aged care sector, was a
significant issue. Workers’ compensation is currently not available to workers that contract
Covid-19 at work, with changes likely to be sought by unions.


f) Social welfare and housing

    On 1 April, welfare benefits in New Zealand were increased, with the winter energy
payment doubling (paid from May to October to help with winter heating costs)19. The
normal “stand-down” period was removed for people accessing an unemployment benefit,
with new regional job agencies created. A temporary programme for housing the homeless,
utilizing empty hotel rooms, was implemented, with reforms to tenancy laws making rent
increases unlawful and introducing new restrictions on terminating tenancies20. Many pre-
existing problems in the welfare system are currently being highlighted with calls for
substantial reform being made by unions and other advocates.


g) Financial support for businesses

   At the beginning of lockdown, the Government introduced changes to allow businesses
to put debts “in to hibernation” until they could start trading again to avoid insolvency21. A
significant package of tax relief and financial support is also available, including the
Business Finance Guarantee Scheme, making it easier for businesses to borrow from
banks. The Small Business Cashflow (loan) Scheme will also be available from 12 May
providing one-off interest-free loans to small and medium sized businesses (50 employees
or less). Each business will receive a base $10,000, plus $1,800 for each employee, up to
$100,000 NZD. Some industry-specific measures have also been introduced, such as
“income equalisation assistance” for “farmers, fishers and growers”22.

18 Schools reopened for years’ 1-10 (aged about 5 to 13), as children are not legally allowed to be left at home
alone. Schools did not reopen for older children.
19 The rates were increased to $40.91 per week for single people and $63.64 per week for couples and those

with children. More information can be accessed here: < https://www.workandincome.govt.nz/products/a-
z-benefits/winter-energy-payment.html>
20 A new Schedule 5 to the Residential Tenancies Act 1986 was added to do this.
21 Where there was the agreement of 50% of creditors.
22 Information on these programmes can be accessed here: < https://www.ird.govt.nz/covid-19/business-

and-organisations/income-equalisation-assistance-for-farmers-fishers-and-growers>

https://doi.org/10.6092/issn.1561-8048/10956                                                                    4
 Dawn Duncan                                                            Italian Labour Law e-Journal
                                                                       Special Issue 1, Vol. 13 (2020)
                                                          Covid-19 and Labour Law. A Global Review
                                                                            Section: National Reports




h) Job creation through infrastructure development

   On 1 April, local authorities were asked to nominate “shovel ready” local infrastructure
projects that could be used to create jobs, with future “job rich” infrastructure, housing and
environmental restoration projects forming a core component of the signalled economic
recovery package.




Copyright © 2020 Dawn Duncan. This article is released under a Creative Commons
Attribution 4.0 International License




https://doi.org/10.6092/issn.1561-8048/10956                                                         5
