COVID-19 – wage subsidy FAQs

The Government’s wage subsidy scheme has evolved over time in response to unanticipated issues and uncertainties. This rapidly shifting policy has understandably left many employers feeling confused about whether they can apply for the subsidy and what their obligations are if they do.

In this article we answer common employer questions on the wage subsidy.

How much is the wage subsidy?

The wage subsidy is $585.80 per week for employees working 20 or more hours per week and $350 per week for employees working less than 20 hours per week. It is paid in one lump sum for a 12 week period. Only one application can be made per employee.

Can a subsidy be claimed for casual employees?

Yes, provided that the employee would have expected to work during the period of the wage subsidy. Where an employee has (or had) variable hours, an employer should use an average of hours worked per week over the last 12 months to determine whether they should be applied for on the basis of 20 hours or more or less than 20 hours.

What employers are eligible for for the subsidy?

To apply for the subsidy an employer must show:
• A 30% drop in revenue from the same month last year, related to COVID-19; or
• Grounds to predict that its revenue will experience a 30% drop. But if you do not experience a 30 drop in revenue you must pay the subsidy back; and
• That it has taken active steps to mitigate the impact of COVID-19 on its business. This includes engaging with its bank, drawing down on cash reserves and/or making an insurance claim.

What are the conditions of the wage subsidy?

For applications made after 27 March 2020, employers must declare that:

• They meet the eligibility criteria;
• They understand that receipt of the subsidy does not change any employment law obligations.
• They will not make any changes to any employment agreement (including to rates of pay, hours of work and leave entitlement) without the written agreement of the relevant employee;
• They will retain the employees named in their application for the period of the subsidy;
• They will not unlawfully compel or require any of the employees named in their application to use their leave entitlements for the period of the subsidy;
• They will only use the subsidy for payment of wages and salary;
• For the period an employer receives the subsidy it will:
  • Use its best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary; and
    Pay at least the full amount of the subsidy to the employee; but
  • Where the ordinary wages or salary of an employee named in the application are lawfully below the amount of the subsidy before the impact of COVID-19, pay the employee that amount. The employees named in the declaration have consented to their information being shared with the Ministry of Social Development.

Employers who submit a misleading or fraudulent application will commit a criminal offence. It’s therefore important that employers are aware of their obligations and seek further legal advice if necessary.  Please contact Hayley at hayley.coles@gazeburt.co.nz if you need advice on applying the wage subsidy