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COVID-19 Wage Subsidy

By Gibson Sheat

COVID-19 Wage Subsidy

26 March 2020

As a result of the COVID-19 pandemic and the government’s initiation of a level 4 alert, wage subsidies will be available for all businesses that are significantly impacted by COVID-19 including:

  • employers that are struggling to retain employees;
  • sole traders;
  • self-employed;
  • existing businesses;
  • registered charities;
  • non-government organisations;
  • incorporated societies;
  • post settlement governance entities; and
  • new businesses less than a year old

No cap

The government has removed the cap on wage subsidies that can be paid to employers affected by COVID-19.
There are some requirements you must meet to qualify for the wage subsidy:

  • your business must be registered and operating in New Zealand
  • your employees must be legally working in New Zealand
  • the business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19
  • your business must have taken active steps to mitigate the impact of COVID-19
  • you must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period (the subsidised period is currently 12 weeks). [Refer https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/wage-subsidy/]

The amount available is fixed:

  •  
  • $585.80 for a full time employee.
  • $350 a week for a part time employee.

Summary

Employers can apply for a lump sum payment for their employees over 12 weeks if they have experienced a 30% actual or predicted decline in revenue over the period of a month when compared to a month last year, and that decline is related to COVID-19.  

There is no maximum amount of assistance a business can receive.

If you apply for the subsidy for your employees, you must undertake to use your best endeavours to pay them a minimum of 80% of their normal income for the 12 weeks. Where this is not possible, in particular, where a business has no activity during shutdown and the workers are not working any hours – employers must pass on at least the whole value of the wage subsidy to each affected worker.

Businesses must also undertake to keep employees in employment for the period of the subsidy.

For some employers, there will be difficult decisions to make surrounding staff whose salaries (even at 80%) are much higher than the available lump sum.

Other businesses may find it difficult to ascertain whether they have experienced a 30% actual or predicted loss in revenue.

There are difficult decisions ahead for businesses. Gibson Sheat wants to continue to support our community during these unprecedented times by providing sound legal advice. 

Please contact Gibson Sheat for a strategic discussion if your business is affected by COVID-19 and you would like to consider your options.

         
Claire Byrne  | email Claire  | P: 04 916 7483
Mike Gould  | email Mike  | P: 04 916 6302