Financial support for employers during lockdown
There are four types of support scheme available to employers to help pay employees where the employer’s business and employee’s ability to work has been affected by the COVID-19 Alert Level 4 restrictions.
Three of these support schemes are administered by the Ministry of Social Development (MSD): the Covid-19 Wage Subsidy August 2021, Short Term Absence Payment and the Covid-19 Leave Support Scheme. You can only apply for one of these three types of support scheme in respect of the same employee.
The fourth scheme is administered by the Inland Revenue Department (IRD). Applications for the Resurgence Support Payment (RSP) can be made in addition to applications for one of the support schemes administered by MSD.
- COVID- 19 Wage Subsidy August 2021
Business and self-employed people who meet the criteria can apply for the COVID-19 Wage Subsidy August 2021 (Wage Subsidy) from 20 August 2021 for a period of two weeks. The Wage Subsidy is to help employers keep paying staff wages during the period from Friday 20 August to Friday 3 September (Wage Subsidy Period).
Who is eligible?
Your business must be a registered New Zealand business.
That means your business is on the Companies Office website, has an NZBN number and includes:
- registered businesses, sole traders or self-employed people;
- registered charities;
- incorporated societies;
- non-government organisations, post settlement governance entities or, under specified circumstances, a commonly-owned group.
If you are not sure whether your business is registered or falls within one of these categories, please contact SRB for advice.
Your employees must:
- be legally employed by your business;
- be employed in New Zealand; and
- have not been given notice of redundancy at the date of your application.
You must discuss the application with the employees named in the application and get their consent to share their details with MSD for the purposes of the application.
Your business must meet the revenue decline test.
This means that:
- your business is or will be affected by the move to Alert Level 4 on 17 August 2021 (Alert Level move); and
- the Alert Level move has resulted or will result in a decline in revenue for your business, meaning:
- at least 40% decline over the period from 17 August 2021 to 30 August 2021 (inclusive) (revenue test period), when compared to a typical 14-day consecutive period of revenue in the six weeks immediately prior to the Alert Level move (default comparator period); or
- if your business has highly seasonal revenue, at least 40% decline over the revenue test period when compared to the same 14 consecutive days in 2020 or 2019 (seasonal comparator period), but you need to provide evidence of the seasonal nature of your business in order to use this test.
You need to prepare and retain evidence to show what you have done to mitigate that impact on your business.
For more advice about how the support scheme applies to start-up businesses and commonly-owned groups, please contact us.
How much is the Wage Subsidy?
- $600 per week for each full-time employee – being employees working for 20 hours week or more;
- $359 per week for each part-time employee – being employees working for less than 20 hours per week.
You can use the Wage Subsidy to pay casual employees or employees whose hours fluctuate. Use the employee’s average hours worked over the last 12 months (or over the period of time they have been employed, if less than 12 months) to work out which rate applies.
What are your Obligations?
Normal employment law rules still apply.
You must use your best endeavours to pay each employee named in the application at least 80% of their usual wages.
If it is not possible to pay employees 80% of their usual wages, you must pay at least all of the relevant Wage Subsidy rate to each the employee.
If you need to reduce staff wages, remember that employees must agree to a wage reduction. Employers cannot unilaterally reduce employees’ wages or make any changes to employees’ hours of work and leave entitlements.
If an employee’s usual wages are less than the Wage Subsidy rate, continue to pay that employee their usual wages. You can use the difference between that employee’s usual wage and the Wage Subsidy rate to pay other employees.
You must retain the employees named in the application for the Wage Subsidy Period. That means you must not make employees redundant during that time.
You must repay any amount of the Wage Subsidy received if you do not retain employees for the Wage Subsidy Period; or if you no longer meet the eligibility criteria; the predicted 40% revenue decline did not eventuate; or you receive an insurance pay out for any costs covered by the Wage Subsidy.
How to Apply
Applicants need to fill out the declaration and an application form.
The declaration and application form can be found online on the Work and Income website.
- Short Term Absence Payment
Who is eligible?
This continues to be available to help businesses to keep paying an eligible employee who:
- cannot work from home; but
- needs to stay at home and miss work while waiting for the results of a COVID-19 test (in accordance with public health guidance).
This applies where the person waiting for the test results is:
- the employee;
- a dependent of the employee;
- a member of the employee’s household.
Most New Zealand businesses will be eligible for the Short Term Absence payment, provided that they are not receiving any other COVID-19 Wage Subsidies or Leave Support scheme payments in respect of the same employee.
How much is it?
It is a one-off payment of $350 for each eligible worker. You can apply for it once, for each eligible worker, in any 30-day period – unless the worker is told to get another test by a doctor or a public health official.
- COVID-19 Leave Support Scheme
This used to be called the COVID-19 Essential Workers Leave Support payment because it was only available to essential businesses operating under Alert Level 4. This has now been expanded to apply to all businesses who return to work under Alert Level 3 to help businesses to keep paying eligible employees who:
- need to self-isolate in accordance with public health guidance; and
- cannot work from home.
Who is eligible?
- are sick with COVID-19 and must self-isolate until a doctor tells them they can leave isolation;
- are identified as someone who has been in close contact with someone who has COVID-19 and have been told to self-isolate for a period by a health official through the National Contact Tracing process;
- are the parent or caregiver of a dependant who has been told to self-isolate for a period by a doctor or health official through the National Contact Tracing process and the dependant needs support to do so safely;
- have been directed to self-isolate, or are the parent or caregiver of a dependant who has been directed to self-isolate, by a Medical Officer of Health in accordance with the Health Act 1956;
- are considered 'higher risk' if they contract COVID-19 and a doctor has told them to self-isolate while there's active community transmission, or
- have household members who are considered 'higher risk' if they contract COVID-19 and a medical practitioner has told them to self-isolate, to reduce the risk of transmitting the virus to vulnerable household members.
Employees are not eligible if they are away from work for another reason and their absence is covered by another type of leave such as sick leave or bereavement leave. It is not available for employees who have been named in an application for another support scheme such as the Wage Subsidy.
How much is it?
It is paid as a two-week lump sum payment for each eligible employee. The rates are:
- $600 a week for a full time employee, who works more than 20 hours per week;
- $359 a week for a part time employee, who works less than 20 hours per week.
- Resurgence Support Payment
Applications for the latest Resurgence Support Payment (RSP) opened at 8am on 24 August 2021. The RSP is administered by Inland Revenue and you can apply online here.
What is the RSP?
The RSP is a payment to support viable and ongoing businesses or organisations following a COVID-19 alert level increase to level 2 or higher.
Who is eligible?
The RSP is available nationally, even if the alert level is not increased across the whole country.
A business or organisation is eligible to apply if it has experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period as a result of the increased COVID-19 alert level.
Once activated any business in New Zealand that has experienced a 30% drop in revenue or capital raising ability over a 7-day period as a result of the alert level increase would be eligible (subject to all other criteria being met).
How much can be applied for?
Eligible businesses and organisations can expect to receive the lesser of:
- $1,500 plus $400 per full-time equivalent (FTE) employee, up to a maximum of 50 FTEs;
- four times (4x) the actual revenue decline experienced by the applicant.
Please contact the SRB Employment Law team if you have any questions regarding this article.
The above information is of a general nature only. The information in this article does in no way constitute legal advice and all readers should contact a law firm for advice relating to your specific circumstances.
About Vanessa Baakman
Vanessa is an Associate in our Litigation team and specialises in employment and family law.
About Ramses Hunt
Ramses is a member of our Litigation Team and assists with employment law matters and disputes.