Updated Wage Subsidy
April 2, 2020
We wanted to contact you all and summarise the recent announcements and modifications the Government made the to wage subsidy. These announcements and modifications are to ensure people don’t lose their jobs during this national lockdown.
Finance Minister, Grant Robertson said the aim is to soften the impact of COVID-19 on workers, families and businesses, and position them to exit the lockdown and look to recovery.
The modifications focus on keeping businesses and workers connected during this unprecedented time, and include:
- Businesses accessing the scheme must still undertake best endeavours to pay employees 80% of their pre-COVID income. Where that is not possible – in particular where a business has no activity whatsoever due to the shutdown and workers are not working any hours – they must pass on at least the whole value of the wage subsidy to each affected worker. $585.80 is considered the gross value.
- Businesses must undertake to keep employees in employment for the period of the subsidy.
- They are folding the previous sick leave scheme into this scheme to prevent double-dipping. The original sick leave scheme was designed when few people were in self-isolation, and it is no longer fit for purpose. We are working on arrangements for those in essential work who require sick leave due to COVID-19.
The Treasury now estimates the financial cost of the scheme will be between $8 billion and $12 billion depending on uptake by businesses.
This wage subsidy is $585.80 a week for full-time workers (who worked 20 or more hours per week before COVID-19) and $350 a week for part-time workers (fewer than 20 hours). It will continue to be paid out in a lump sum covering the 12 weeks, meaning a $7,029.60 payment per full time worker.
There are also other support measures in place to help support Kiwi’s, which include:
- The $500 million increase to public health funding for the immediate response.
- A six-month deferred mortgage scheme for home-owners affected by the virus, so people don’t lose their homes due to COVID-19.
- The $6.25 billion Business Finance Guarantee, and business tax measures to support cashflow, and help businesses continue to operate. Please do let us know if you wish to explore this.
- A doubling of the Winter Energy Payment so older New Zealanders can stay warm during winter.
- Main benefit increases, and
- Residential Rent freezes and a ban on terminations of tenancies/evictions other than in exceptional circumstances.
Lastly, we are already getting warning signals that abusers of the subsidy will be treated harshly, for committing “Fraud”. They will, or should if resources permit, be checking, in every case:
- Employers who don’t pay out 100% of the subsidy to employees will be severely treated
- The business must be registered and operating in New Zealand
- Employees claimed for must be legally working in New Zealand in the employment of the business
- Employers who don’t have 30% or greater reduction in actual turnover, with that decline due to COVID-19, in any month January – June 2020 compared to the same month in the previous year. There are exceptions when the business has recently started, that can be 30% below projections.
- Employers who haven’t taken other steps, such as checking insurance policies and conversing with their bankers.
- The business has taken active steps to mitigate the impact of COVID-19
- The business has retained covered employees in employment for the period of the subsidy. – that is, they are employed for 12 weeks, unless circumstances have materially changed since the date of the subsidy application.
Should you need any help with the above applications or have any queries regarding this, please do get in touch.
Stay safe out there.