The government updated the rules around the Covid-19 Leave and Wage subsidies as from 3 pm on Friday 27 March and then again on Saturday 28 March.
Below is a summary of the changes;
As from 3pm on 27 March 2020 the Covid-19 Leave payment is no longer available for employers. Applications submitted prior to this time will be processed and paid in accordance with the earlier guidelines.
The wage subsidy is still available to employers, however applications for the wage subsidy now require a declaration by the employer that they agree to certain undertakings and processes. These are summarised below.
Employer Must Dos
· Acknowledge that receiving the subsidy does not override their employer obligations under the Employment Relations Act 2000.
· Retain staff named in the wage subsidy application for the period that the employer receives the subsidy (12 weeks at present).
· Use the entire subsidy towards the fulfilment of wage obligations under employment agreements for employees named in the wage subsidy application for the period that the employer receives the subsidy.
· Use their best endeavours to pay at least 80% of each employee’s wage entitlements for the period that the employer receives the subsidy.
· Use any “surplus” wage subsidy from some employees to pay the “shortfall” of other employees.
· Advise of any change in eligibility for entitlement to the subsidy including if any employees named in the application cease their employment with the employer.
· Provide information to support the application and to allow the authorities to obtain and share information between agencies.
· Gain employee consent (in writing where practicable) to the application information being provided to relevant agencies and to allow the authorities to obtain and share information between agencies.
· Consent to publication of information about their business along with the level and duration of any subsidy received on a publicly available register.
· Repay the subsidy if they fail to meet their obligations, become no longer eligible or receive insurance to cover costs.
Employer Must Not’s
· Not make changes to employee’s terms and conditions under employment agreements without the written agreement of the employee.
· Not unlawfully require employees named in the wage subsidy application to use their leave entitlements for the period that the employer receives the subsidy.
Whilst most of the above are common sense measures and would come as no surprise, a few are worth further mention.
Employers are now required to retain staff. Previously the employer was only required to make “best efforts” to retain employees and pay them a minimum of 80% of their normal wage. Now the employer MUST retain the employees for the 12-week subsidy period AND MUST pay them at least the entire wage subsidy received in respect of the employees. Whilst every effort must be made to pay the employee at least 80% of their normal wage, the minimum payment must be the wage subsidy received in respect of that employee. Where employers make staff redundant prior to the end of the 12 week wage subsidy period they will be required to partially repay the subsidy.
Employers still have obligations under employment legislation and employment agreements. Where employees continue to work but are paid 80% of their normal wage, their normal weekly hours must also be reduced to 80% to match 80% of their normal pay. For example, say an employee previously worked a 40 hour week and received $1,000. The employer applies for and receives the full time wage subsidy of $585.80 per week for the employee. The employer reduces the weekly pay to $800 but must also reduce the number of hours worked by the employee to 32 (80% of 40 hours).
There has been a lot of confusion around the payment of the wage subsidy in particular to part-timers. The latest position is that 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 on-pay at least the subsidy received on behalf of that employee (full-time or part-time).
If your employee’s usual wages are less than the subsidy, you must pay them their usual wages (i.e. 100% of their normal wage). Any surplus should be used for the wages of other affected staff – the wage subsidy is designed to keep your employees connected to you.
Taking a disciplined, reasoned approach to administering the subsidy in the absence of clear guidelines ensures that employers can justify their actions in hindsight. Employers we have dealt with have taken a common sense approach to both obtaining and paying the subsidy, especially where the rules have not been clear. This is not a criticism of the authorities, in fact quite the opposite. Developing policy, setting up procedures and processing payments in such a short time-frame is very impressive. However, such an exercise requires the development of some policy on the hoof to ensure support is provided to those that need it in a timely manner. The exercise also requires a great deal of trust to be placed in employers.
Businesses we have spoken to do not see the wage subsidy as a windfall gain but for what it actually is, a mechanism designed to support staff and keep the economy going during a state of national emergency. Rather than seeing anyone trying to take advantage of the subsidy, we have seen employers focusing on looking after their staff. No doubt once the dust settles some employers will, quite rightly, be held to public account for their action (or inaction) in attempting to profit from the exercise. In the interim, it is heartening to see employers doing the right thing by their staff.
These are unprecedented and trying times. Even those of us old enough to have experienced earlier significant world events such as the 87 Crash have no frame of reference for guidance. We realise that businesses (and their owners) are under a great deal of stress trying to navigate their way through uncharted waters, all whilst trying to help their staff.
If you need help, or just need someone to chat with in order to help keep your cheese on your cracker, please do not hesitate to contact us.
Tiakina tātou i a tātou – Look after each other