Coronavirus - Details of Economic Support Package
Finance Minister, Grant Robertson announced that the Government has made available $12.1billion COVID-19 economic support package which includes sick leave support, immediate wage subsidies and tax relief for businesses affected by the Coronavirus pandemic. At the center of this package, is a $5.1b wage subsidy which will see the Government pay employers up to $150,000, per business, over the next 12 weeks.
The purpose is to provide financial assistance for employees (including sole traders and self-employed) who are self-isolated or sick with COVID-19, or caring for others with COVID-19 and are unable to work.
Immediately relevant to our clients as Employers are the 2 major important points follow.
1. Wage Subsidies
The purpose is to provide financial assistance for employees (including sole traders and self-employed) who are self-isolated or sick with COVID-19, or caring for others with COVID-19 and are unable to work. To qualify you must be a business which can demonstrate at least a 30% decline in revenue for any month between January and June 2020 compared to the year before (including projected revenue).
If your business has been running less than 1 year if you can demonstrate a decline from a previous month you may still be eligible. You may be an employer, contractor, sole trader or self-employed. This is designed to cover a 12 week subsidy period.
You need to be able to demonstrate steps you have taken to minimise the impact of covid-19 (Coronavirus) and sign a declaration form (example of this may be engaging a bank/financial advisor).
The COVID-19 Wage Subsidy will be paid at a flat rate of:
$585.80 for people working 20 hours or more per week (full time staff)
$350.00 for people working less than 20 hours per week (part time staff).
The subsidy is paid as a lump sum of $7,029.60 (for a full time employee) or $4,200 (for a part time employee), to cover 12 weeks
This subsidy is for wages only. It is designed to help you keep your staff employed while you consider changes that may be needed while the disruption continues, and to ensure the future viability of your business ongoing.
You must make up staff wages to 80% of their normal pay (including the subsidy) in cases where the alternative would otherwise be redundancy, and the employer must be able to demonstrate steps taken to minimise and avoid a redundancy scenario. You will need to declare that, on your best endeavours, you will continue to employ the affected employees at a minimum of 80% of their income for the duration of the subsidy period (note: this is equivalent of keeping people working 4 out of 5 days per week)
The maximum subsidy that can be paid to a business is $150,000. This is the equivalent of 21 full time staff. Businesses can only get this subsidy once.
2. Leave payment scheme
The scheme is open to all workers in all firms, sectors, and regions, sole-traders and the self-employed where the need to self-isolate or recover from COVID-19 which prevents a person from working. This scheme is intended to provide financial assistance for employees (including sole traders and self-employed) who are self-isolated or sick with COVID-19, or caring for others with COVID-19 and are unable to work.
Payments will be up to $585.50 per worker per week for full-time workers and $350 per worker per week for part-time worker.
Employers should apply on behalf of employees to the Ministry of Social Development(MSD) - see link below, and are required to pass on the full weekly amount. You should pay your employee(s) their normal wages for this period. The payments will be paid to the business (which must then be passed on to the affected employee) on a fortnightly basis once MSD receives an application.
Anyone who leaves NZ to travel overseas after 16 March, 2020 will not be eligible for this payment for self-isolation on their return.
Workers do not have to have used any of their own leave entitlements to claim this.
You can apply multiple times per staff member if they have to self-isolate multiple times.
This whole package is based on a 'high trust' basis with business. Any over-payments or false claims will have to be repaid and chased by the authorities in the future, we strongly recommend to be as accurate as possible in an claims you make.
For more information and making claims please see the Government factsheet released yesterday here:
Finally, a note on Privacy...
To apply for the COVID-19 leave payment or wage subsidy, you will be required to provide MSD with the following information about your employee(s):
First and Last name
Inland Revenue number
Date of Birth
Number of hours you work per week/fortnight
Please remember that any employee must consent to you providing the above information with the application (should an employee not consent, MSD will decline the application).
Please feel free to contact me on 0508 924 357 if you would like confidential advice, or should you be requiring a provide a template Privacy Consent form to be given to employees.
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.