First part of your question – yes there are grants for businesses to cover the costs / contribute to as a result of employees having to self-isolate and/or having being diagnosed with Covid-19 – see a bit of detail at this page – https://covid19.govt.nz/help-and-advice/for-businesses-and-organisations/employers/

the 2nd part, I really am not aware of the legal situation, so hoping others will come on and contributing.