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Many of our clients have asked us whether employers who access the government COVID-19 wage subsidy must then pay their employees 80% of their full wages/salary?

The answer is no, however employers do need to use ‘best endeavours’ to retain those employees they receive a wage subsidy for in employment on at least 80% of their regular income for the period of the subsidy. This is the commitment the employer makes when they sign the declaration part of the wage subsidy application. An employer must pass on the full amount of the wage subsidy to the employee it is claimed for.

Therefore, employers should not be discouraged from applying for the wage subsidy because they are concerned they may not at some point be able to top up the difference between the wage subsidy and 80% of the employees regular pay. An employer will not be in breach, or ineligible for the subsidy, if they can’t meet the 80% mark.

However, in the event an employer is in the position of not being able to top up the difference, it will need to be able to show it has used ‘best endeavours’ to do so before proposing any change in terms of employment (i.e. payment of less than 80% of wages, forced leave, or redundancies). In an employment law context we suggest this will include being able to clearly show the current and forecasted financial position of the business cannot sustain the top up, and having explored all other options first. Consultation would then need to occur with affected employees before a decision is made.

Our experts

Please contact one of our employment team members if you have any questions or concerns relating to employment or the measures introduced by the Government to combat the outbreak of COVID-19.

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