On March 17, the Government announced a wage subsidy to support businesses affected by the Covid-19 crisis, particularly those struggling to meet their obligations to their employees. Here’s what you need to know about the wage subsidy.
Who is entitled to the wage subsidy?
At present, the Covid-19 subsidy is available to all businesses, self-employed, contractors and sole traders, registered charities, and incorporated societies adversely affected by Covid-19.
On March 27, the Government announced a ‘modified wage subsidy scheme’. With much of the country now in lockdown, it was announced that the ‘sick leave payment scheme’ was no longer needed. Applications for leave payments made before 27 March will still be processed.
Qualifying for the wage subsidy scheme
To qualify for the modified scheme:
- the business must be registered in New Zealand;
- employees must be legally entitled to work in New Zealand;
- the business must have experienced at least a 30 percent reduction in actual or forecasted revenue over the period of a month when compared to the same month last year; and
- the business must have taken steps to reduce the financial impact of the virus in their workplace.
Most importantly, the employer must retain the employees named in the application for the period in which the subsidy is received, which at present is 12 weeks. That means an employer taking part in the scheme may not make their employee redundant for the 12-week period they are receiving the subsidy. Also, the employer must ‘try its hardest to pay the employee named in the application, at least 80% of their usual wages.’
If that’s not possible, the employer must pay at least the full-time or part-time subsidy rate. Considering the vast uncertainties at the moment, it’s possible the scheme may be extended beyond the 12-week period. But in any instance, it provides employers and employees with some much-needed security during a very challenging time.
There have been a few isolated issues with applying for the subsidy online but generally the feedback has been great. It’s a very straightforward process with prompt payment direct to your bank account. So if you haven’t applied already, jump online here for more information, click on the 'Apply for Wage Subsidy' link and fill out the Employer or Self-Employed application form.
The wage scheme and rehiring redundant employees
An important addition to the scheme is that employers who recently made employees redundant can now apply for the subsidy, provided they rehire those employees. This is a significant benefit to a number of employees who were made redundant in the wake of the announcement and economic downturn. In addition to maintaining the employment relationship, this enables businesses to scale up as the economy recovers.
Need to know more?
We all recognise these are very difficult times that can impact every facet of life. If you are an employee or an employer and have any questions, contact us at Aspiring Law and we’ll do our best to help.