COVID-19 – Basics of the COVID-19 Wage and Leave Subsidies

Business owners are understandably concerned as to the implications that COVID-19 will have on their business and employees, and how to navigate through the uncertainty.  In response, the government have issued the Wage and Leave Subsidies to support the economy and business community through difficult times. 

We recommend referring directly to the Ministry of Social Development website for the details of the subsidies given they change often and it is up to employers to ensure that any declaration provided in applying for the subsidies is accurate.

The basics

Employers can only access one subsidy at a time for each employee – so look closely at what you need the subsidy for. 

Either way, to access the subsidies, employers need to show a 30% decline in actual or predicted revenue month on month, between January and June 2020, due to COVID-19.  This is a minimum requirement in order to access the Government COVID-19 subsidies.

For both subsidies, employers must declare:

• They have taken active steps to mitigate the impact of COVID-19 on their business;
• They will continue (on their best endeavours) to retain and employ employees at least 80% of their income for the subsidy period;
• If an employer is not in a financial position to pay the relevant employees at least 80% of their normal income, the employer must at the very least pass on to their employees the full subsidy; and
• They have discussed the application with the named employees, and those employees have consented to the information provided about them in the application.

The subsidies are paid out for each applicable employee at either:

• $585.80 per week for each fulltime employee (working more than 20 hours per week); and/or
• $350.00 per week for each part-time employee (working less than 20 hours per week).

Employers must notify the Ministry of Social Development if their situation changes during the period that a subsidy has been received for and will be required to pay back any amounts which they are no longer entitled to.

So which subsidy do you apply for?

For non-essential services, employers may need to access Government support to keep the business going and keep staff employed.  These businesses should consider applying for the Wage Subsidy if they are based in New Zealand with employees legally working here.  

The Wage Subsidy is a one-off lump sum payment for employers (including sole traders and self-employed) to enable them to retain their employees for the next 12 weeks.  That is the underlying purpose of the Wage Subsidy – to help people remain in their jobs, while helping businesses stay afloat.

If you have essential workers who cannot work from home and, due to Ministry of Health guidelines, must stay home (e.g. at risk employees), the Essential Workers Leave Support payment may be available.  This is a one-off lump sum payment to enable essential businesses to cover employee wages for 4 weeks.  A further 4 weeks’ cover can be sought by separate application in the fourth week, if needed.

This is designed to help at risk employees keep themselves and others safe, despite the fact that their business may still be operating as an essential service.  Particularly where there are no other viable options for other support (e.g. the employee could elect to take sick or discretionary leave instead of receiving the leave support payment). 

Employment law assistance

If you need assistance on applying for or managing the subsidies, please contact Renika Siciliano or Jerome Burgess.

Renika is a Director and leads our Workplace Law Team. She can be contacted on 07 958 7429.

Jerome is an Associate in our Workplace Law Team and can be contacted on 07 958 7427.