As of 9.00am today, applications are open for the eight-week Wage Subsidy Extension Scheme.
Q. Is my business eligible for the Wage Subsidy Extension?
Your business must have:
- had a revenue loss of at least 40 per cent for a continuous 30-day period; and
- this period must be in the 40 days before you apply (but no earlier than 10 May 2020) and must be compared to the closest period last year.
You cannot apply for the Wage Subsidy Extension until any other COVID-related support that your business has been receiving (e.g. the 12-week wage subsidy or the Leave Support scheme) ends.
Q. What payments will my business receive under the Extension?
It is paid at the same rate as the wage subsidy:
- $585.80 gross per week for employees working 20 hours or more per week; and
- $350 gross per week for employees working less than 20 hours per week.
The payments are for a period of eight weeks.
Q. What are my obligations under the Wage Subsidy Extension?
Work and Income New Zealand (“WINZ”) has set out the following obligations in respect of the Wage Subsidy Extension:
you must pass on the subsidy to your employees;
- you must retain your employees for the duration of the subsidy;
- if you have given an employee notice of redundancy before you apply for the Wage Subsidy Extension, you cannot apply for those employees unless the redundancy notice is withdrawn;
- you must pass on at least the full amount of the subsidy claimed to the employee for the eight-week period. But, if the employee’s usual wages are less than the subsidy, you must pay the employee their usual wages. Any difference should be used to meet the wages of other affected staff;
- you must do your best to pay your employees 80 per cent of their normal pay; and
- you must have taken active steps to mitigate the impact of COVID-19.
In applying for the Wage Subsidy Extension, you must also advise your employees that they have the right to request all information held about them under the Privacy Act, and that they can utilise WINZ’s online Wage Subsidy Employer Search.
You cannot apply for an employee that is currently receiving ACC earnings-related compensation. If an employee who is receiving the Wage Subsidy Extension is injured during the eight-week subsidy period, the employee’s wages must be declared to ACC and the Wage Subsidy Extension payments will be deducted from their ACC payments.
Q. If I have already given notice of redundancy to my employee(s) prior to applying for the Wage Subsidy Extension, can I extend their notice to align with the Wage Subsidy Extension period?
You cannot apply for the Wage Subsidy Extension if you have extended an employee’s notice period so that their end date aligns with the end of the extension period.
If you have commenced a restructure process and provided affected staff with notice of redundancy prior to 10 June 2020, you will not be able to apply for the Wage Subsidy Extension in respect of those employees unless you formally withdraw the notice of redundancy. If the redundancy notice is withdrawn, the employee will remain employed according to the terms and conditions of their employment agreement and/or any variation letter.
If during the eight-week Wage Subsidy Extension, your business/organisation identifies that a restructure/redundancies are still necessary, then it would need to commence another consultation process from the beginning (there may be limited situations where the business/organisation could pick up from where it left off the previous restructuring process).
Q. When would I need to repay the Wage Subsidy Extension?
Surplus subsidy
Where an employee’s usual wages are less than the subsidy amount, the surplus can be used to top-up other (higher earner) employees’ wages. However, if there are no other affected employees to top-up, then any surplus wage subsidy payment must be repaid.
Redundancies
Employers are obligated to retain the named employees for the duration of the eight-week subsidy period. However, WINZ has advised that if redundancies are necessary during the Wage Subsidy Extension period, you can use the Wage Subsidy Extension to pay any notice period arising from the redundancy. Any remaining wage subsidy payments must then be repaid to WINZ. It cannot be used to make any contractual redundancy payments (i.e. redundancy compensation) or to top-up other staff.
Resignation
Where an employee voluntarily ends their employment during the Wage Subsidy Extension period, you must advise WINZ, but you will not have to repay the Wage Subsidy Extension for that employee. Instead, you can use the remaining wage subsidy payments to pay the wages of other affected staff.
If you have any employment related questions regarding the impact of COVID-19 on the workplace, you can see further information at our website www.edwardslaw.co.nz or contact our offices on:
Auckland: (09) 953 9757
Hamilton: (07) 981 3140
Authors:
- Aishleen Sluiters, Managing Barrister
- Kate Fitz-John, Associate
