Below is information from the government's business.govt.nz website about the wage subsidy scheme which may be able to help during the current pandemic.
The wage subsidy helps businesses affected by COVID-19, and supports businesses and their staff to maintain an employment connection. It:
· supports employers adversely affected by COVID-19, so that they can continue to pay their employees
· supports workers to ensure they continue to receive income, even if they are unable to work.
Who can apply for the wage subsidy
The wage subsidy is available to all businesses adversely affected by COVID-19 including:
· sole traders
· registered charities
· incorporated societies
· post-settlement governance entities.
The subsidy is not available to state sector organisations.
Businesses will be eligible for the subsidy where they have experienced a 30% decline in actual or predicted revenue related to COVID-19.
Before receiving a subsidy, you must take active steps to manage the implications of COVID-19 on your business. This might include talking with your bank, making an insurance claim, or activating your business continuity plan.
To see if you are eligible for the subsidy, follow these steps.
1. Use the Wage subsidy eligibility tool to assess your eligibility
2. Apply for the Wage subsidy scheme on the Work and Income website. They will verify the information you provide in your application with Inland Revenue.
Tip: We recommend that you ensure your IR details are up to date before applying for the subsidy – you can check online at the Inland Revenue website.
Work and Income are experiencing heavy demand for its services Please be patient. Applications will be processed and approved as quickly as possible.
How much you can get
The COVID-19 wage subsidy is paid at a flat rate of:
· $585.80 per week for full-time employees (20 hours or more per week)
· $350 per week for part-time employees (less than 20 hours per week).
The subsidy will be paid as a lump sum and covers 12 weeks per employee.
Paying your employees
If you are receiving the COVID-19 Wage Subsidy, you must try your hardest to pay the employee named in your application at least 80% of their usual wages. If that isn’t possible, you need to pay at least the subsidy rate, ie full time or part-time.
If your employee's usual wages are less than the subsidy, pay them their usual wages. Any difference should be used for the wages of other affected staff — the wage subsidy is designed to keep your employees connected to you.
For examples of calculating wages for employees in different circumstances, please see the case studies at the end of this page.
When to pay the subsidy
You can pass on the subsidy and additional wages to your employees through their usual pay cycles, or at other intervals.
It is recommended that you discuss any changes to the frequency of salary and wage payments from usual practice with your employees as this may have adverse tax implications for them.
Keep in mind that regular employment law applies to all employment relationships.
Visit the Employment NZ website for information about New Zealand employment law.
How tax is applied to the subsidy
The wage subsidy is considered excluded income and is GST exempt. When passed on as wages, businesses don’t get a deduction for income tax purposes.
Subsidy payments to employees are wages and subject to standard deductions like PAYE, ACC levies, KiwiSaver contributions and student loan repayments.
Visit the Inland Revenue website to find out more about taxes related to the wage subsidy.
If you are an essential business you can apply for the wage subsidy scheme if your business has had a 30% drop in revenue.
Essential businesses can also access leave support for essential workers, to pay employees who:
· can't work because Ministry of Health guidelines recommend they stay at home, and
· can’t work at home.
You can apply for both subsidies, but you can’t receive both for the same employee at the same time.
If you are an essential business, find out more about the wage subsidy and leave support on the Work and Income website (external link).
A list and guidance about essential businesses are available at COVID-19.govt.nz.
Businesses who have already applied for a subsidy under the original wage subsidy scheme
If you received a subsidy under the original wage subsidy scheme sum you need to continue to use that funding to pay employees for the full 12-week duration as agreed in your application.
The Work and Income website has answers to questions about the original and modified wage subsidy scheme.
Impact on Work and Income benefits
Most employees are likely to be better off under the wage subsidy than they would be on Work and Income benefits, however, this depends on their personal circumstances.
You and your staff can use the Check what you might get calculator from the Ministry of Social Development to check what additional assistance may be available, including the accommodation supplement, temporary additional support, and other one-off assistance payments.
Non-essential business + Minimum waged worker
James is a barista at a Wellington café. James earns the minimum wage. The café is closed for the lockdown and has had a 30% loss in revenue. James’ employer cannot afford to pay any wage to James but wants to keep him on. James does not want to use his annual leave entitlements.
James’ employer can access the wage subsidy and pay $585.80 per week to James, without James being required to do any work. James retains his annual leave entitlements to use at a different time.
Able to do some work from home + Full-time worker
Sam is a civil engineer. He usually works 40 hours per week at $30 per hour, with a usual gross income of $1200 per week. The business is non-essential and closed for the lockdown and has had a 30% loss of revenue. Sam can do some work from home over this period. He works 30 hours per week for the duration of the Alert Level 4 lockdown period.
Sam’s employer can access the wage subsidy and pays Sam his usual salary at the agreed reduced hours, which is $900. Sam’s employer can use the $585.80 per week to subsidise Sam’s wages, this means Sam’s employer will top up the wage subsidy with $314.20 to compensate the hours' Sam worked.
Non-essential business + part-time worker
Phil is an HR advisor in a medium-sized business and works part-time. His hourly rate is $25 per hour, and he usually works eight hours a week. The business is non-essential and closed for the lockdown and has experienced a near-total loss of revenue.
Phil’s employer can access the wage subsidy. Their revenue has dropped so much that they are worried they will be unable to retain their staff. Under the subsidy scheme requirements, Phil must receive his normal pay of $200 per week, which will be paid from the wage subsidy. His employer can use the remaining money from the subsidy for other affected employees.
Non-essential business + Unable to work
Craig is a waiter at a successful restaurant chain that also needs to close during the lockdown. Craig was getting paid $1,000 per week. Craig’s employer has committed to paying full wages to their staff as they know that such workers will be in demand as the lockdown ends. The restaurant has suffered a 30% loss in revenue due to COVID-19.
Craig’s employer can access the wage subsidy scheme to pay Craig $585.80 per week, and the employer can then top that up with $414.20 per week to ensure Craig receives his full income.
Essential business + Able to work
Steve is an essential services worker, ensuring certainty of electricity supply. Steve is really busy, working his normal hours and getting paid at his normal rate, and his business has not been affected by COVID and does not require support to pay or retain its staff.
Steve’s employer does not need to apply to the wage subsidy scheme.