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Covid-19 Government Wage Subsidy for Businesses – Criteria, Access, Employer Obligations
23 March, 2020 | Alana Kalinowski
Wage subsidy for businesses
The coronavirus (COVID-19) is impacting the national and global economy. Classification of essential services, changes in consumer spending and government requirements are impacting businesses, employers and employees alike.
In an effort to keep businesses afloat, the government is offering a COVID-19 Wage Subsidy package to support businesses who may otherwise be considering redundancies or reducing employee’s hours .
The subsidy applies to all New Zealand employers, contractors, sole traders, self-employed people, registered charities and incorporated societies.
If you are an employer, contractor, sole trader or self-employed you may apply for the COVID-19 wage subsidy.
If a business, you must be a registered company with employees legally entitled to work in the country.
To qualify, your business must have experienced a 30% decline in actual or predicted revenue for one month in 2020, from January 2020, when compared with the same month in 2019 (e.g. March 2020 compared with March 2019). Importantly, this decline must be COVID-19 related. As a business, you must take active steps to mitigate the spread of COVID-19.
If your business receives the wage subsidy, it must be used for wages only. You must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.
Determining subsidy amount
How much a business may receive depends on whether employees work 19 hours or more per week.
For employees who work 20 hours or more per week, employers will receive $585.80 per employee.
For employees who work less than 20 hours per week, employers will receive $350 per employee.
The subsidy is paid as a lump sum and covers 12 weeks per employee.
Maximum subsidy amounts
Previously, the maximum subsidy was capped at $150,000 per business. This cap has now been removed.
If you have already applied and received the subsidy, but claimed only enough to meet the cap, you can reapply after you have used the subsidy. If you did not specify a limit an additional payment will be made to you automatically.
The government is taking swift steps to administer the subsidy, which means verification may not be required before the subsidy is approved. However, the Ministry of Social Development may check and verify later.
If employers provide false or misleading information, they may be investigated for fraud. Note that employers must notify of any change in circumstances that affect eligibility for the subsidy, and repay any amount to which they are not entitled.
Details of each employee must be given to the Ministry. Privacy obligations remain in force and employers must discuss the application with their employees and obtain specific employee consent (in writing if possible) to provide their information to the Ministry and other agencies. Employees must also consent to how the information will be used.
If your application is declined
If an employer’s application is declined, they can request to have this decision reviewed.
The application will be reconsidered to determine whether the decision to decline was an “informed” decision, including:
- whether all relevant information obtained;
- whether options and implications were considered;
- whether the appropriate decision maker was involved in the decision.
The COVID-19 crisis is unprecedented and confusing. However, the government have acted swiftly to put assistance in place. To avoid a personal grievance or a breach of privacy complaint it is important to follow the correct process. If you have any concerns you should seek legal advice from an experienced employer lawyer before implementing any changes to the terms of your employee’s employment, including applying for the COVID-19 Wage Subsidy on their behalf.