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Feeling extended? What you need to know about the wage subsidy extension

22 May 2020

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By Lucy Conway and John Mezger

With New Zealand now at Alert Level 2, many businesses will be back to work, although we know there will be many more still struggling with the ongoing effects of COVID-19. Particularly those businesses in the tourism, hospitality, and retail sectors, which make up a huge part of the economy in the Wanaka and Queenstown region.

On 14 May, the government announced the Wage Subsidy Extension payment. This will be available from 10 June 2020 until 1 September 2020 to employers still significantly impacted by COVID-19 after the initial 12-week wage subsidy ends.

The extension has been introduced so employers can keep paying their employees and help prevent unemployment figures from climbing even higher. The government has been clear from the start that keeping New Zealanders in jobs and employed, is the goal for the Wage Subsidy.

Employers will need to reapply through Work and Income once their current 12-week subsidy has come to an end. Employers must name the employees in their application and, once the extension is accepted, they will be paid a further 8-week lump sum payment for each named employee.

The weekly rates will be the same as under the current scheme, with $585.80 available per week for full-time employees and $350.00 available per week for part-time employees. The extension MUST be paid to named employees. Businesses, contractors, self-employed people, and sole traders are all eligible to apply for the extension.

In order to be eligible, you must meet the current wage subsidy requirements and have experienced, or expect a revenue loss of at least 50% for the period prior to the application date, compared to the same period in 2019.

When applying for the extension you will be required to sign a declaration stating you will:

  • pass the subsidy onto named employees;
  • retain those employees for the duration of the 8-week subsidy;
  • do your best to pay your employee at least 80% of their normal pay;
  • take active steps to mitigate the impacts of COVID-19 on your business.

Again, it is important to remember that receiving the extension does not change existing employment law obligations. Employers must still act in good faith towards their employees and be open and transparent about wage payments.

If you have any business questions, either on the wage subsidy or if you are looking for guidance on how to structure your business going forward in the current climate, please do not hesitate to reach out to the team at Aspiring Law.