Back into lockdown for Auckland, and the announcement of an extension to the wage subsidy scheme, has led us to reflect on our advice to employers given in the first lockdown regarding the implications of the wage subsidy, in our new context of level 3. Below are the answers to some common questions from business.
What’s with the new subsidy?
This is a two week subsidy, called the Resurgence Wage Subsidy. If your business had, or predicts it will have, a 40% revenue drop of for at least 14 days within the period 12 August 2020 to 10 September 2020, then you can apply for the Resurgence Wage Subsidy.
Note though you will not be eligible for the Resurgence Wage Subsidy for an employee if you are already receiving the Wage Subsidy Extension or the Covid19 Leave Support payment for that employee.
The amounts of the subsidy are the same as with the initial wage subsidy and wage subsidy extension: $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.
The process for making application for the new subsidy is to be announced by the end of this week, 21 August 2020. Undoubtedly you will need to make another declaration, so review that very carefully to make sure that you can comply. Presumably it will include the same elements as last time, and so if your business is eligible for the Resurgence Wage Subsidy:
You can apply for the Resurgence Wage Subsidy from 1pm on 21 August until 3 September 2020.
Further details on the subsidy will be forthcoming so watch out for it. The best website for information is www.workandincome.govt.nz
What happens with employees whose average weekly wage is less than the wage subsidy, what do we pay them?
Assuming the same approach applies as with the initial wage subsidy and wage subsidy extension, then if an employee’s usual wages are less than the Resurgence Wage Subsidy, you must pay them their usual wages. Any difference can be used for the wages of other affected staff.
Can I change my employee’s wages to the wage subsidy amount?
You can only change an employee’s terms and conditions (including their hourly rate or working hours) by agreement. This has now been confirmed by a case in the Employment Relations Authority. The case may be under appeal, but it is a principle of employment law that should be solid.
What should happen with casual employees?
The expectation with the initial wage subsidy and wage subsidy extension was that you averaged the employees’ earnings over the last 12 months, and this gives you both the basis for application (part-time or full-time) and the amounts they should be paid at least. Employees do not have to be working to be paid the subsidy. Presumably the same principle will apply with the Resurgence Wage Subsidy.
What about employees who work variable hours but aren’t casual?
Again, use the averaging approach.
Is PAYE payable on the wage subsidy?
Yes – all deductions when the subsidy is passed onto staff (such as PAYE, KiwiSaver and child support) should be made as normal.
What happens with employees who have to self-isolate or go into quarantine because they are a close contact of a covid-19 case, but they can’t work from home?
For employees who can’t come into work because they must stay at home, and they can’t work from home, you should be able to access the COVID-19 Leave Support Scheme. Currently this is subject to a revenue test of a 30% decline in revenue, but applications after 21 August 2020 are not subject to a revenue test.
The criteria for and operation of the COVID-19 Leave Support Scheme is being reviewed, so keep alert for changes. The link for up to date guidance on the Leave Support Scheme is https://www.workandincome.govt.nz/covid-19/leave-support-scheme/index.html
What if I have to partially close the business (for instance a restaurant that can no longer offer on-site dining but takeaways and deliveries only) but we don’t qualify for the wage subsidy?
There is a recent Employment Relations Authority decision that says that if an employee is ready, willing and able to work (but for the lockdown) then they should be paid their regular wages (subject to any agreement reached with employees to vary regular hours or salary paid).
In the above scenario, can we move them into different types of work?
This will be a feature of a combination of your employment agreement, which may allow you to divert employees to different tasks, and agreement with your employees. So in a restaurant which can now only do takeaways or deliveries, staff may be moved to work at the front desk handing over takeaways, or even become, by agreement, your delivery drivers.
Also in the above scenario, what if we simply don’t have enough work for all of them?
Look at alternative arrangements such as encouraging employees to take annual leave, or engaging in discussions to see if agreement can be reached to vary employment agreements. You can require annual leave to be taken on two week’s notice – which unfortunately doesn’t help in a two-week lockdown scenario. Always act in good faith, and reasonably. If the lack of work is going to be ongoing, then there may be genuine reasons to make roles redundant – in which case a proper process must be followed.
Businesses can be inclined to think that the lockdown, at whatever level, has changed everything, including employment law obligations. This is not the case – employment law still applies, and there is no special dispensation in times of crisis. The overarching principles of good faith, reasonableness, and consultation, which underpin and run through our legislation and case law apply and in fact are crucial.
Having said this, we are in changeable times, and so advice given can date over time. Also, there is case law now emerging which is answering some of the unanswered questions, and providing guidance on what (and what not) to do –but also that case is law is being appealed in some instances. Get up to date advice and don’t rely on what seemed to be okay yesterday.
And finally, there is no “one size fits all” answer for every employee in every business. There needs to be an individualised and tailored approach as much as possible.
Stay well everyone.
This information was current as at 18 August 2020. It is a general overview and not a substitution for legal advice. If you would like assistance to deal with your particular situation, or current advice, please do not hesitate to be in contact.