Payroll changes due to Force Majeure (unforeseeable circumstances)

Force Majeure blog Post Image

Refer to the table below and consider your situation.

The article by Buddle Findlay employment lawyer Sherridan Cook is worthy of a read. 

The Health and Safety at Work Act 2015 requires businesses to mitigate health and safety risks and protect their workers from them, as far as is reasonably practicable.

The Employment contract is also critical. Does the contract include the “force majeure” clause which means unforeseeable circumstances such as a pandemic, war, earthquake etc? Read over your contracts and consider your response when asked by your employees.

Apply for the government grant if sales will suffer by more than 30% in any one month compared to last year.


Employee Situation

Employer response

Employee sick

Sick leave or annual leave (if available)

Employee not sick but dependents (children/partner) sick.

Sick leave or annual leave (if available)

Employee not sick, children not sick but children home from school.

No sick leave/annual leave unless otherwise agreed.

Employee voluntarily stays at home due to potential virus risk (self-isolation)

No obligation to pay.

Employee fit for work but no work available.

Employee entitled to be paid even if no work. Employer should consider redundancy.

Contractor in self-isolation

No obligation to pay.

*Everything must be agreed and in writing.

If you are interested in reading the full article by Buddle Findlay employment lawyer, Sherridan Cook... click here

Change of work pattern (e.g. 5 days to 3 days)

What if you need to change the work pattern for your current employee?. We’ve had several employers needing to reduce the ‘normal hrs’ worked to keep people employed due to the downturn. One employer is moving employees from 5 days to 3 days and suggesting employees take an annual day leave (so the employee gets paid for 4 days).

What to do in any payroll?

Example: Reduce employees normal hours per week from 5 days to 4 days.

  1. Print the Holiday Pay report – this is the amount owed to your employee = $XX (A)
  2. Alter your days worked (say from 5 days to 3 days)
  3. Recalculate the leave balance so the total balance = $XX (A)

Important Notes:

  • Keep screenshots of the holiday pay before and after the change.
  • Make sure you communicate the change to your employee and the employment contract is updated and signed.

If you’re not sure how to do this in your payroll, contact us.

Lynley Averis

Lynley is an MYOB Certified Consultant & has been involved in training in New Zealand since 1985. She's written various accounting & MYOB workbooks including co-authoring “Bookkeeping for Dummies”. She has consulted on all versions of MYOB Accounting, Retail and Payroll over the past 18 years and has previously worked for MYOB. She currently consults to NZ businesses on all aspects of business systems - her mission for clients is for them to spend as little time as possible doing accounting!