The government is offering a Wage Subsidy Scheme to all businesses in an attempt to support employers who are struggling with the financial repercussions of COVID-19. It is intended to support employers to keep paying their staff over the full subsidy period of 12 weeks, and also to ensure that affected employees are still able to receive some income during this period. This subsidy expires on 9 June 2020, however the government has recently announced an Extension of the Wage Subsidy Scheme which will become available to businesses from 10 June 2020.
Who can apply?
The government’s wage subsidy scheme can be applied for by all New Zealand businesses adversely affected by COVID-19, including those who are self-employed, contractors, or sole traders. The government had previously imposed a $150,000 cap on payments per business, however this cap has since been removed and businesses can now apply on a per-person basis with no limitation. This means the subsidy can now be accessed by all businesses regardless of size.
How much can I receive?
The subsidy scheme operates on a flat rate basis:
- Full-time employees (working 20 hours or more) receive $585.80 per week; and
- Part-time employees (working less than 20 hours) receive $350 per week
It is up to the employer to apply for the subsidy on behalf of each of its employees. The payment will be made as a lump sum to the employer, covering a period of 12 weeks. It is then the obligation of the employer to pass on these payments to their staff accordingly.
What are the criteria?
To be eligible for the subsidy, businesses must have experienced a 30% decline in revenue (actual or projected) in any month between January and June 2020, compared to the same month in 2019 as a result of COVID-19. They must be registered and operating in New Zealand, and have taken active steps to mitigate the financial implications of COVID-19 on their business activities, such as talking to their bank or utilising any internal cash reserves readily available to them.
For those who are self-employed and experience variable monthly incomes, they need to be able to demonstrate the 30% revenue loss assessment against the previous year’s monthly average.
What are the employer’s obligations?
As an employer, you must:
- Retain the employees which you have applied for the subsidy on behalf of for the duration of the 12-week subsidy period; and
- Use best endeavours to pay those employees at least 80% of their usual income for the duration of the subsidised period. If that isn’t possible, you must pass on at least the full amount of the subsidy ($585.80 for full-time employees, $350 for part-time employees). However, if an employee’s ordinary wages are less than the subsidy amount (ie. a part-time employee who only works 8 hours per week), you are only required to pay them their usual weekly income.
Wage Subsidy Extension
The current 12-week Wage Subsidy Scheme expires on 9 June 2020. However, a Wage Subsidy Extension has been announced and will be available to provide ongoing support to businesses from 10 June 2020.
This scheme is intended to provide further relief to employers who are still significantly impacted by COVID-19. It covers a period of 8 weeks, and operates similarly to the original 12-week scheme. To be eligible, businesses must have suffered (or be predicted to suffer) a 50% decline in revenue over the 30-day period prior to the application date, compared to the nearest comparable period last year.
As with the original Wage Subsidy Scheme, the payment will be made as a lump sum to employers. The amount each employee is entitled to remains the same – that is: $585.80 per full-time employee per week, and $380 per part-time employee per week. Employers will need to reapply for the Extension once their current 12-week subsidy has come to an end.
Applications for the Wage Subsidy Extension scheme will open from 10 June, and can be made till the closing date on 1 September 2020.
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