wage subsidy. · before applying for the wage subsidy, seek financial advice regarding the best way...

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Wage subsidy.A guide for New Zealand employers and businesses.

Contents

General

Page 4 Eligibility

Page 5 Communication with employees

Page 6 Payment and superannuation

Page 7 Employee management

Page 9 Leave and entitlements

Page 10 Redundancy

Please note that this Guide is written to provide employers with general guidance and an overarching understanding of the COVID-19 Wage Subsidy. Every business is unique – with different agreements and policies. And often times, similar situa-tions can warrant different modes of action due to contrasting circumstances. If you are unsure or if you find yourself con-fronted with a complicated situation, Employsure advisers are always available to help – even on public holidays. For peace of mind, please call our Advice Line on 0800 675 700.

Version 1 - 5th June 2020

What is it?

There is a wage subsidy scheme (the Wage Subsidy) set up to provide support to all New Zealand employers, contractors, sole-traders, self-employment people, registered charities and incorporated societies affected by COVID-19. A business can apply to receive a payment from Work and Income that they use to help them pay their wages to staff. It is aimed at reducing redundancies and restructures during the COVID-19 outbreak. The Wage Subsidy is intended to allow employers to continue to pay their employees and allow employees to still receive an income even if they are unable to work. The initial Wage Subsidy was in place between 17 March 2020 and 9 June 2020. An extended Wage Subsidy, with different eligibility criteria is available from 10 June 2020 to 1 September 2020.

When does it start?

The subsidy was announced on 17 March 2020 as part of the COVID-19 Economic Response Package, however it has gone through several iterations. The extended Wage Subsidy is in place from 10 June 2020 to 1 September 2020. If a business is receiving the initial Wage Subsidy, they will have to wait to apply until the 12 weeks of the initial Wage Subsidy has expiredThe extended Wage Subsidy is paid as a lump sum for eight weeks.

As an employer, how do I apply?

Businesses can apply using the online form found on Work and Income’s website.

Do I have to apply?

No, there is no obligation to apply for the Wage Subsidy. It is an individual decision for each business. However, if you do not apply, you will not receive access to the Wage Subsidy. As part of the application, businesses are required to have taken active steps to mitigate the financial impact of COVID-19 on their business, which can include seeking financial advice or support and activating any business continuity plan.

General

https://www.workandincome.govt.nz/covid-19/wage-subsidy-extension/index.html

General

Can I apply more than once?

A business can’t apply for the same employee twice, rather it can only apply again for employees whom the business hasn’t already applied for. Before applying for the Wage Subsidy, seek financial advice regarding the best way to utilise the Wage Subsidy for your business. If a business applied for the initial Wage Subsidy, they can apply for the extended Wage Subsidy if they meet the eligibility criteria, provided the initial Wage Subsidy period has finished.

How and when will the Wage Subsidy payment be made?

The Wage Subsidy is paid as a lump sum for 8 weeks per employee based on flat rates of:

• $585.80 for people working 20 hours or more per week• $350.00 for people working less than 20 hours per week

Is this the same as the leave payment?

No, there’s a separate leave support scheme for workers who are unable to work due to COVID-19 (“Leave Support Scheme”). A business cannot receive payments for the Wage Subsidy and the Leave Support Scheme at the same time. A business should apply for the scheme that is most appropriate for their employee’s situation.

Can people find out if I have applied for the Wage Subsidy?

Yes, there is a public register that anyone can search found on the Ministry of Social Development’s website.

Can my employee complain about how I am using the Wage Subsidy?

Yes, employees should firstly discuss any concerns with their employer, however, if they cannot resolve their complaint, they can make a complaint to Employment New Zealand. Outside of the Wage Subsidy, your employee is still able to raise a personal grievance if they believe their employment rights have been breached.

https://www.msd.govt.nz/about-msd-and-our-work/newsroom/2020/covid-19/covid-19-wage-subsidy-employer-search.html

Do I qualify?

Most businesses will qualify to receive the extended Wage Subsidy, provided they meet certain eligibility criteria. Government and crown entities, schools and tertiary education institutions are not able to receive the Wage Subsidy. To qualify:• The business must be registered and operating in New Zealand;• The business’ employees must be legally working in New Zealand (including employees

who have a New Zealand work visa, have a condition on their New Zealand temporary work visa that allows them to work in NZ, those who are international students whose visa allows them to work in New Zealand);

• The business must have a revenue loss of at least 40% for a 30-day period in the 40 days immediately prior to the application date (but beginning no earlier than 10 May 2020) compared to the nearest comparable period last year;

• The business has taken active steps to mitigate the impact of COVID-19; and• The business retains the employees named in their application for the period of the

Wage Subsidy.

I hired an employee recently; can I still apply for them?

Yes, provided you meet the eligibility criteria.

I re-hired employees after making them redundant, can I apply for them?

Yes, provided you meet the eligibility criteria. An employer who has recently terminated an employee’s employment due to COVID-19 is able to apply for the Wage Subsidy if they re-hire that employee.

Eligibility

Communication with employees

Do I have to tell my employee that we are participating in the Wage Subsidy scheme?

You will need your employee’s consent to provide their information as part of the Wage Subsidy application. As such, they will need to know if you are applying for the Wage Subsidy on their behalf. Employees can also search the public register to see if their employer has applied.

Do my employees need to sign anything? And what if they don’t agree?

Yes, if you’re applying for the Wage Subsidy on behalf of your employee, they will need to consent to their information being shared with the Ministry of Social Development and other departments. If they do not consent, then you will not be able to make the application in respect of their wages.

My employees do not agree to making changes to their employment terms and conditions, what can I do?

Consider what their feedback is to any changes and see if you can come to an agreement. If you cannot reach an agreement, you may be able to make changes without their consent provided you follow a fair and reasonable restructure process. Seek advice from Work and Income regarding the implications this may have on the Wage Subsidy as it will depend upon when you applied for the Wage Subsidy. Seek workplace relations advice for specific guidance on how to commence a restructure process.

Payment and superannuation

Can I pay my employee less than the minimum wage?

This will depend on whether or not your employee is working. Employees should get at least the minimum wage for every hour worked, whether or not you have received the Wage Subsidy for them. If they are not working, and you have agreed to pay a percentage of their normal wage, then this would not increase to take into account the minimum wage increase unless you had agreed to that.

Do I need to make deductions for tax or KiwiSaver on the Wage Subsidy?

Payments to employees under the Wage Subsidy are wages, and therefore will be subject to normal deductions such as PAYE, KiwiSaver and student loan repayments.

I engage an independent contractor; do I get the Wage Subsidy for them?

Contractors and those who are self-employed should apply for themselves directly with Work and Income if they wish to receive the Wage Subsidy.

What if my employee earns less than the subsidy normally?

Pay them as normal, using the Wage Subsidy (if you are receiving it). If they normally earn less than the Wage Subsidy amount, seek advice from Work and Income regarding how to use the remainder, as normally this should be used for other affected employees.

Can I reduce my employee’s pay?

Workers should still receive their normal wages. If this is not possible, a business must try their hardest to pay at least 80% of their usual wages, and the employee must at least receive the subsidy rate. If you are not able to pay your employees their normal wage, consult with them and seek their agreement to any changes.

How often should I pay my staff?

Pay your employees on their normal pay cycle frequency or any other frequency that has been agreed with them.

Employee management

What if I don’t have any work?

This does not change your ability to apply for the Wage Subsidy if you are eligible. Workers should still receive their normal wages. If this is not possible, a business must try their hardest to pay at least 80% of their usual wages, and the employee must at least receive the subsidy rate even if there is no work available. If you are not able to pay your employees their normal wage or there is no work, consult with the employee and seek their agreement to any changes.

If my employee is not working, will they still receive the Wage Subsidy?

Yes, if you have applied for them. Workers should still receive their normal wages. If this is not possible, a business must try their hardest to pay at least 80% of their usual wages, and the employee must at least receive the subsidy rate even if there is no work available. If you are not able to pay your employees their normal wage or there is no work, consult with the employee and seek their agreement to any changes.

If I don’t have work for everyone, how do I choose which ones to attend work?

This can be hard for businesses. An employer may wish to consider:• Asking for expressions of interest from employees• Scheduling a rotating roster• Using objective selection criteria (such as the roles or experience needed)Employers should consult with all employees and give them a chance to give feedback on any proposals. If the employer is looking to use selection criteria, the employee should be told what the proposed criteria is, and where they rank on the criteria before any final decisions are made.

Can I still take performance management or disciplinary action against my employees?

Yes, the Wage Subsidy does not affect your employment relations rights and obligations. Whether it is fair and reasonable to continue with any processes will depend. For some processes, for example performance management if the employee is not currently working, it will be fair to postpone the process and keep the employee informed when you intend to recommence the process. Keep in mind that if you are planning on dismissing an employee, this may affect your Wage Subsidy.

Employee management

Can I dismiss an employee while also receiving the Wage Subsidy?

The idea behind the Wage Subsidy is to keep people in jobs. Seek specific advice from Work and Income as ending an employee’s employment may have implications on the Wage Subsidy.

What happens if my employee resigns while I am receiving the Wage Subsidy for them?

You need to notify Work and Income. Ordinarily you will not have to return the Wage Subsidy that you have already paid but seek specific advice from Work and Income or your financial adviser.

Leave and entitlements

Can I ask my employees to take leave?

There are requirements for asking your employees to take leave. One of the obligations when receiving the Wage Subsidy is that you will not unlawfully compel or require the employees in your application to use their leave entitlements while you are receiving the Wage Subsidy. If you are receiving the Wage Subsidy, you can agree with your employees if they want to use any of their leave entitlements, recording any agreement in writing.

What about public holidays?

You can use the Wage Subsidy to assist in paying your staff for public holidays. What (if anything) an employee is paid for a public holiday will depend on if they work and if the public holiday is what’s called an otherwise working day. To determine an otherwise working day, consider what the work pattern was before changes due to COVID-19.

Redundancy

Can I get the Wage Subsidy and make my staff redundant?

Under the Wage Subsidy, an employer needs to do their best to retain their employees. If a business applied for the Wage Subsidy after 4pm on 27 March 2020, they must retain their employees. If they cannot do so they should contact Work and Income as they may need to repay the Wage Subsidy. Those who applied before 4pm on 27 March 2020 should seek advice from Work and Income. Under the extended Wage Subsidy an employer must retain the employees for the duration of the subsidy.

I am halfway through a redundancy process, what are my options?

Your eligibility to keep the subsidy will depend on when you applied for the Wage Subsidy. If you apply for the Wage Subsidy, you will have to retain the employees named in your application. Towards the end of the Wage Subsidy period, reassess your operations to determine if a restructure is required. With the extended Wage Subsidy, if you’ve given the employee notice that they are being made redundant, you cannot apply for the subsidy for that employee unless you withdraw the notice.

SITUATION RECOMMENDATION RISK

You do not have any work for your employees temporarily

This does not change your ability to apply for the Wage Subsidy if you are eligible.

Workers should still receive their normal wages. If this is not possible, a business must try their hardest to pay at least 80% of their usual wages, and the employee must at least receive the subsidy rate.

If you are not able to pay your employees their normal wage, consult with them and seek their agreement to any changes

• Employees are entitled to their usual wages. Receiving the Wage Subsidy does not prevent the employee from raising a complaint that their employer changed their terms and conditions without consulting with them.

• If you make your employees redundant, you may need to repay some or all of the Wage Subsidy (depending on when you applied for the Wage Subsidy).

Your employees are not working their normal hours, but they are still working



If you are not able to pay your employees their normal wage, consult with them and seek their agreement to any changes.

Make sure they are receiving at least minimum wage for every hour worked.


• The employee must receive at least the applicable minimum wage rate for every hour worked.

Your employees are still working their normal hours




Make sure they are receiving at least minimum wage for every hour worked.


• The employee must receive at least the applicable minimum wage rate for every hour worked.

SITUATION RECOMMENDATION RISK

Your employee works less than 20 hours a week

This is considered part time. Pay them as normal, using the Wage Subsidy. If they normally earn less than the wage subsidy amount, seek advice from Work and Income regarding how to use the remainder, as normally this should be used for other affected employees.




Your employee works more than 20 hours a week

This is considered full time. Pay them as normal using the Wage Subsidy.




Your employee’s work pattern varies

To decide which rate to apply for, look at the average hours worked over the last twelve months. If the employee has not been employed with you for twelve months, look at the average over the time they have worked. If the average is 20 hours or more per week, they are considered full time. If the average is less than 20 hours, they are considered part time.




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Why Employsure?At Employsure, we believe all New Zealand employers, no matter the size, deserve access to comprehensive, quality, honest advice and support that is scalable to the needs of their business.

Unlike big corporations, small businesses don’t always have HR and legal departments to interpret the complex language of the Employment Relations Act. Changes to legislation and workplace compliance are complex and difficult to manage, especially for overstretched small business owners. Employsure was established in response to these challenges. It is our aim to ensure New Zealand business owners have access to cost-effective, professional advice on all employment relations and work health and safety issues.

What we offerEmploysure provides customised documentation, unlimited advice, policy and procedure review, legal representation for small business owners.

Being an Employsure client means no surprises – we keep our clients updated about workplace relations changes, wage updates and essential compliance issues. Our expert advisers are available 24 hours a day to guide employers through any difficulties they may face.

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