The Wage Subsidy Scheme – Latest Update for Employers

Significant changes to the Wage Subsidy Scheme (“the Scheme”) were announced on 27 and 28 March 2020 relevant to any employer that has not yet applied for wage subsidy relief.
 
The new rules to the Scheme do not apply retrospectively, the rules only apply to new applications made after 4pm on 27 March 2020.
 
The new changes emphasise the Scheme is about job retention and a level of income for all New Zealanders, even if they can’t perform work.


Best Endeavours

There is a requirement for employers to exercise their “best endeavours” to pay at least 80% of an employee’s regular pay during the wage subsidy period.

It is understood that the test for exercising “best endeavours” is generally a high legal test. However, some guidance suggests there may be some flexibility to just pay the wage subsidy in circumstances where a business is not operating and/or the employee is not performing any work.

If you intend paying your employees less than 80% of their regular pay, we suggest you record your reasons for doing so, as audits of the payments made may be being undertaken at a later date.


Termination for Redundancy

If employers are considering terminating employment for redundancy during the 12 weeks of the subsidy, employees should be retained, or else employers may risk being treated as breaching the Scheme’s rules.

It is acknowledged that there may be situations where redundancy is impossible to avoid, such as when a business closes during the subsidy period. In such situations employers should undertake consultation in the ordinary way, but one of the alternatives to termination for consideration would be that the employee is retained and continues to receive the wage subsidy.

On 28 March 2020 the Scheme was further updated to clarify the situation where the Subsidy is “more” than an employee’s normal pay. In such circumstances the employee should receive their normal pay, and not the full amount of the subsidy. The difference between the employee’s normal pay and the subsidy should be used for the wages of other affected staff.
We suggest employers keep a clear record of how they manage such situations


Declaration

The employer declaration now requires employers to acknowledge that they may be subject to:

  • Civil proceedings for recovery of any amount that they receive that they were not entitled to, and/or
  • Prosecution for offences under the Crimes Act

if employers provide false information, fail to meet their obligations regarding use of the subsidy, or receive any subsidy to which they are not entitled.
 
Employers are required to tell their employees that they are applying for the wage subsidy on their behalf, and are required to obtain consent from employees for disclosing their information to the Ministry Of Social Development.
 
Employers who applied for the wage subsidy prior to 3pm on 27 March 2020 are subject to the previous rules.


Wellbeing is Paramount

Our mental health is at risk during the lockdown. Many employers and employees will be experiencing financial stress, and fear about the health of those close to them.
 
These are unprecedented times.
Times when leaders are made.
 
As an employer, your employees will be looking for guidance and especially for reassurance.

  • Keeping in contact is imperative. There are many ways to do this. Try touching base with all staff at the start and the end of each day. These communications need only be brief, but help people feel valued and connected.
  • Keeping calm and focussed. Drafting a plan for a way through this is imperative.
  • Transparency about payments to staff is key. People need to know how much money they are getting so they can budget accordingly.
  • Remind your staff that opportunities arise out of disruption.
  • Brainstorm collaboratively to identify opportunities.

Your staff will remember how you acted and how they have been treated during this period.


We Can Help:

I will post daily positive psychology tips on my website
for you to pass on to your staff should you choose.
Perhaps the tips may help them feel more connected during these uncharted times.

Keep Safe

Please contact us if you require assistance in respect of your obligation as Employers

wendy@accordservices.co.nz
027 202 3921


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

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