Government support package

On 17 March 2020, the Government unveiled a support package valued at $12.1 billion to support the New Zealand economy and its response to the COVID-19 pandemic.

The positive news for employers is that almost half the value of the support package is to be spent on wage subsidies for those businesses that are affected by COVID-19. Part of the package also includes a sick leave scheme that will support workers financially while they self-isolate, or while ill, so they can limit the exposure without feeling compelled to work for financial reasons.

Wage Subsidy

Eligible employers can apply for the wage subsidy immediately. Employers need to apply online for the subsidy which will be paid in a lump sum provided they meet the eligibility criteria. See the link to the application on the Work and Income website at the bottom of the page.

Eligibility Criteria

To be eligible for the subsidy:

• Your business must be registered and operating in New Zealand with the employees based in New Zealand.
• Your business must suffer a 30% decline in its actual or predicted revenue compared with the same month last year. The decline must be related to COVID-19. You can use predictions or forecasts to show the decline if relevant.
• Your business must have taken active steps to mitigate the impact of COVID-19.
• Your business must use its best efforts to retain employees and to pay them a minimum 80% of their normal income for the duration of the subsidised period.

How much will be subsidised?

If your business is eligible for the subsidy, you will receive a flat rate depending on the number of employees you have in the business up to a maximum of $150,000.00.

Each:

• Full time employee (20 hours or more per week) qualifies for $585.80 per week; and
• Part time employee (less than 20 hours per week) qualifies for $350.00 per week.

The calculation will be based on a 12-week period (roughly March to June) and will only be paid once.

This subsidy covers wages only and is designed to assist the business while it considers changes that may be needed while the disruption continues.

Sick Leave payment

The Government has also announced leave payments to assist where employees need to self-isolate. These payments are designed to help employees who cannot work due to COVID-19 and to provide some assurance to further stop some employees going to work and therefore reducing the spread of COVID-19. Employers are eligible to apply for these payments (including self-employed people, contractors and sole traders) where they have eligible employees. There is no limit on how many times an employer can apply for these payments provided the eligibility criteria is met.

Eligibility Criteria

An employer can apply for employees working full time, part-time or under casual arrangements, and for contractors who are legally eligible to work in New Zealand and who:

• Need to self-isolate (in line with Ministry of Heath guidelines) and have registered as self-isolating with Healthline, and cannot work from home, and their self-isolation is not as a result of the employee having left the country after 16 March 2020 when the travel restrictions were imposed: OR
• Cannot work or return to work because they have been diagnosed with COVID-19; OR
• Cannot work or return to work because they are caring for dependents who are required to self-isolate or who are sick with COVID-19.

Leave Payments

The leave payments are the same figures for the subsidised wage payments and also paid at a flat rate. Employers can apply for up to:

• $585.80 per week for a full-time employee (20 hours or more per week) who qualifies; and
• $350.00 per week for a part-time employee (less than 20 hours per week) who qualifies.

If an employee is required to self-isolate, the employer will be able to apply for a maximum of 14 days. However, as an employee may be required to self-isolate more than once, the employer can reapply on as “as needed” basis. Where an employee is required to take sick leave to look after a dependent who has been diagnosed with COVID-19, this payment will cover the entire time the employee is off work, however, the employer will be required to reapply every 14 days.

If the application is successful, the employer will receive the payment on behalf of the employee. The employer must pass the full payment on to the employee without deduction. This payment can be made irrespective of whether the employer and employee had agreed for the employee to take other forms of leave (such as sick or annual leave).
Self-employed people can also access the leave payment provided:

• They were earning at least the minimum wage prior to self-isolation;
• Were expecting to work for the period of self-isolation; and
• Cannot draw an income for the period of self-isolation.

Useful Links
To see the Ministry of Social Development factsheet on the COVID-19 wage subsidy and leave payment Click Here.

For the Work and Income COVID-19 employer support webpage Click Here.

For the Ministry of Heath COVID-19 self-isolation guidelines Click Here.

For the Employer Application form for the wage subsidy and leave payment Click Here.

For the Self-Employed Application form for the wage subsidy and leave payment Click Here.