Coronavirus COVID-19 - Guidance for Employers as at 30 March 2020


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Coronavirus COVID-19 Guidance for Employers as at 30 March 2020

The Ministry of Social Development has confirmed from the 27th of March 2020, the COVID-19 leave payment (leave payment) will be removed and has helpfully provided further clarification on the intended application of the COVID-19 wage subsidy payment (wage subsidy) for employers. We detail these changes below.

 

  • The leave payment has now been rolled into the wage subsidy and is no longer available as a stand-alone entitlement:
    • This means that employers are now unable to apply for the leave payment for employees who met the MSD guidelines;
    • The wage subsidy is now the only government payment to affected businesses, which can only be claimed once per employee (for a duration of 12 weeks);   
    • If an employer is already receiving the leave payment for an affected individual, they must continue to pay out that entitlement until it ends and may then pay the wage subsidy (as applicable);
    • Applications made prior to the 27th of March 2020 will continue to be processed and paid.
  • The declaration has changed – please read it carefully before applying:
    • If you obtain the wage subsidy, you are guaranteeing to keep all of those employees that you apply for, on the books for the total 12 weeks;
    • You will not make any changes to your obligations under any employment agreement, including to rates of pay, hours of work and leave entitlement, without the written agreement of the relevant employee;
    • You will not unlawfully compel or require any of the employees named in your application to use their leave entitlements for the period you receive the subsidy in respect of those employees;
    • You will tell your employees that they are able to request all information held about them under the Privacy Act and that your employees can do so by emailing privacyofficer@msd.govt.nz to make a request;  
    • You acknowledge if you have provided false or misleading information, or receive any subsidy or payment that you were not entitled to receive, you may be subject to an investigation including for offences under the Crimes Act 1961;
  • Employers can claim the wage subsidy for casual employees or employees with variable hours:
    • If there was an agreement and expectation that your casual employee was going to work during the period that is now a lock down period, that employee would be entitled to the wage subsidy (as calculated below).
    • If there was no agreement and expectation that the casual employee would have worked during this lock down period, you do not need to apply for the wage subsidy for that employee. 
    • The employer must use an average to calculate whether an employee is part-time or full-time for the purposes of which amount to apply for:
    • Use the average hours worked each week:
      • Over the past 12 months; or if less than 12 months
      • Over the period of time they have been employed.
    • If the average hours are 20 hours or more a week, apply for the full time amount, if the average hours are less than 20 hours a week, apply for the part time amount;
    • We advise employers to keep accurate records of their calculations in case called upon later in an audit of your application.
  • How to pay the wage subsidy:
    • The obligation to use best endeavours to keep paying your employees at least 80% of their weekly earnings remains. Best endeavours is a high threshold and requires more than confirming you have suffered a loss;
    • Many employers will find that the wage subsidy does not cover 80%-100% of an employee’s weekly earnings. Depending on what your agreement is with your employees, employers can use the wage subsidy as the base line and top up that amount to meet the 80% of the employee’s weekly income (or more as the case may be) from the business (such as cash reserves) or leave entitlements (if already agreed).
    • Ordinary wages or salary of an employee is:
      • As specified in the employee’s Individual Employment agreement as at 26 March 2020; or
      • If you ended your employment relationship with any employee named in your application as a result of your business being adversely affected by the COVID-19 outbreak and have re-employed that employee on or after 17 March 2020, then this is as specified in the employee’s employment agreement as at the date that employment relationship ended.
    • If your employee’s usual wages are less than the subsidy, you must continue to pay them their usual wages. Any difference between the usual wages and the subsidy must be used for other affected staff;
    • Ordinary deductions such as PAYE and Student Loan payments are still to apply.  

 

You can view each of the changes and further information on the Ministry of Social Development Website: https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html#null

We are available to assist with all employment related queries. Please call or email our employment team.

 

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