Who can get the Wage Subsidy?
To qualify:
– your business must be registered and operating in New Zealand
– your employees must be legally working in New Zealand
– your business must have taken active steps to mitigate the impact of COVID-19
– you must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.
– the business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19.
Is the Wage Subsidy taxable?
Wage subsidies should be passed onto the employee by the employer and processed as part of the employee’s normal wages. All deductions (such as PAYE, KiwiSaver and child support) should be made as normal and can be processed through SmartPayroll.
Can I continue to use the Wage Subsidy to pay my employees once they go back to work during Alert Level 3 and Alert Level 2?
If your employees can go back to work during Alert Level 3 and Alert Level 2, you can continue to use the Wage Subsidy to pay your employees.
If you can only afford to pay your employees the Wage Subsidy amount, then your employee is only expected to work the number of hours that the subsidy would cover based on their hourly rate.
For example: If your employee has an hourly rate of $30, and you can only afford to pay them $585.80, you can only have your employee work 19.53 hours per week maximum.
What if I have already received the COVID-19 Leave Payment? How should I apply this in SmartPayroll?
Refer to the Wage Subsidy instructions, as the guidelines for paying out the Leave Payment are now the same as if you were paying them a Wage Subsidy. If paying the employee using the Leave Payment Scheme, we recommend entering an Admin Note on the Pay Details screen to indicate which subsidy you have used.
How much can I get?
The COVID-19 Wage Subsidy will be paid at a flat rate of:
– $585.80 for people working 20 hours or more per week
– $350.00 for people working less than 20 hours per week
The subsidy is paid as a lump sum and covers 12 weeks per employee.
Do I have to pass on the Wage Subsidy to my employees?
Yes, you are required to pass on the Wage Subsidy to your employees. And if you can, it is expected that you top this up to 80% of your employee’s standard wages/salary.
My employee normally receives less than the Wage Subsidy amount each week. Do I have to pay them all of it anyway?
Work and Income NZ advises that the wage subsidy is designed to keep your employees connected to you. Any difference should be used for the wages of other affected staff.
Can an employee use their other leave entitlements during the lockdown period?
Employers and employees can agree to use any form of paid leave (e.g. annual leave) to cover their period of self-isolation. However, employees aren’t required to have used any or all their paid leave entitlements before they can receive the Wage Subsidy support paid to an Employer. Refer to Scenarios 3 and 7 in the Wage
Subsidy Guide.
What if my employee worked some hours, but not as much as their standard weekly hours?
Refer to Scenarios 2 and 8 in the Wage Subsidy Guide.
Can I receive the Wage Subsidy for my employees if they’re working from home?
Yes. The payment is available to those who can work from home during the lockdown period, if your business meets the eligibility criteria. Refer to the FAQ regarding who can get the Wage Subsidy.
Am I required to track my employees’ hours if they are working from home?
As your employees are still working their normal hours and being paid accordingly, there is no requirement to track this information separately in any way. Just record their hours the same as if they were at work.
What are the modifications to the Wage Subsidy scheme that I need to know?
On March 27, modifications to the Wage Subsidy were made. Employers are now required to agree that, for the duration of the subsidy, they will make best efforts to
retain the employees the subsidy was paid for.
If you are receiving the COVID-19 Wage Subsidy, you must:
– Try your hardest to pay staff at least 80% of their usual wages;
– If that isn’t possible, pay at least the rate of the subsidy (i.e. full-time or part-time) that applies to that employee.
If your employee’s usual wages are less than the subsidy, you must pay them their usual wages. Any difference should be used for the wages of other affected staff.
I have employees that work variable hours. How do I work out whether they qualify for the full-time or part-time rate?
If your employee works variable hours, you can use an average to work out what rate to apply for. Use the average hours worked each week (use the average hours report to help you with this):
– over the last 52 weeks, or
– over the period of time you (or they) have been employed (if it’s less than 12 months).
If the average hours are:
– 20 or more, apply for the full-time rate
– less than 20, apply for the part-time rate.
Who can get the Wage Subsidy Extension?
What you need to know:
– You must have had, or expect to have, a revenue loss of at least 50% for the 30 days before you apply, compared to the closest period last year.
– It will cover 8 weeks per employee from the date you submit your application.
– It will be paid to you as a lump sum at the same weekly rate as the Wage Subsidy of $585.80 per full time employee.
You’ll need to agree to some obligations, such as to:
– pass the subsidy on to your employees.
– retain your employees for the duration of the subsidy
– do your best to pay your employees at least 80% of their normal pay.
– take active steps to mitigate the impact of COVID-19 on your business.
For more information visit Work and Income NZ.
I processed my payroll on a Public Holiday, when will my employees receive their pay?
Your employees will receive their pay when the banks re-open, i.e. the next working day after the Public Holiday.
My employees are usually paid on Monday, as it is a Public Holiday, when should I pay them?
Employment legislation does not state when a regular ‘pay day’ should be, or how often these should occur. Often, an employment agreement will cover when payments will be made. Many employers have arrangements in place to ensure payments are made prior to the public holiday. If there is nothing in the employment agreement MBIE have advised that the payment should be made prior to the public holiday so the employees are not disadvantaged.
Does the employee continue to accrue annual leave while they receive the wage subsidy?
Short answer, yes they do. One of the obligations Work and Income states for receiving the Wage Subsidy is that 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. No changes to leave entitlement should be made while receiving the subsidy. If we consider that annual leave accrual is the periodical accrual of annual leave which contributes to the employee’s annual leave entitlement, then we must continue to accrue annual leave for the hours that the employee was expected to work during the time they are receiving the subsidy. Anything less would indicate that the employer is not giving the employee their full leave entitlement.
What are my obligations regarding public holidays during COVID-19?
Employees are entitled to a paid day off on a public holiday if they otherwise would have worked that day. It is paid at their relevant daily pay (RDP) or where applicable, average daily pay (ADP) as defined under the Holidays Act 2003. If an employee works on a public holiday (including working from home), then they must be paid at least time-and-a-half for the time worked. And if the public holiday falls on a day they would normally work, then the employee is also entitled to an alternative paid holiday to be taken at another time.
If my employees were working 8 hours (pre COVID-19 lockdown) on a day where a Public Holiday occurs, but now have reduced hours due to COVID-19, how many hours should any public holiday related entitlements be based on?
If you and your employee have agreed on a permanent change to the employee agreement, then public holiday entitlements will be based on their new agreed hours. If there has been no formal agreement, then the previous pre-covid working arrangement must still apply.
How should this be paid if there have been no changes to the employment agreement?
How an employee should be paid, including the rate of payment, for the public holiday is largely dependent on the employment arrangement that has been agreed between you and your employee. Where your employee’s standard hours haven’t changed, and prior to the lockdown, the public holiday is on a day they would normally have worked, you should continue to report and pay them for the public holiday based on their agreed hours of work using their RDP rate (or ADP if applicable). For employees working variable hours and days, you should continue to apply the same rules you determined for paying public holidays prior to the lockdown.
How should this be paid if there have been changes to the employment agreement?
Where you have consulted and reached agreement with your employee to vary their pay or their days and hours of work during this time, you need to ensure both you
and your employee understand what this means in terms of their public holiday entitlements.
For example, if you have agreed to pay your employee 80% of their wages by reducing their days of work from 5 days to 4 days per week (Monday – Thursday), then Good Friday would no longer be an otherwise day of work for them. This means that they would not be entitled to be paid for Good Friday but would be entitled to be paid for Easter Monday.
In terms of payment, if you have agreed with your employee how the hours and days of work are to be paid during the lockdown period, your employee should be paid at their RDP (relevant daily pay) rate based on the new arrangement because it is clear what they would have earned on the day concerned.
For example, if you have agreed to pay your employee 80% of their wages by reducing their hours of work each day by 20%, and they normally worked 8 hours per day (Monday – Friday), then the payment for Good Friday and Easter Monday would be their RDP based on 6.4 hours of work.
My business has shut because of the lockdown and my employees cannot work from home. Am I required to pay them for the public holidays during this time?
Given the wage subsidy scheme makes clear that receiving it does not change your
legal and contractual obligations, it is advisable that you continue to pay your employees the public holiday if, prior to the lockdown, the day would have been an otherwise working day for them.
What if you can only afford to pass on the Wage Subsidy to your employees?
If you have discussed with your employees in good faith that you can only afford to pass on the full amount of the wage subsidy to cover their normal hours and days of work, and their normal days of work have remained as 5 days per week, then their RDP will be based on their new wages, divided by 5 days e.g. $585.80/5 is
$117.16. If this has not been officially updated in the employment agreement, pay them their pre-COVID hours for the public holiday, and top up their wages using the remainder of the subsidy. Refer to Scenario 5 in the Public Holiday Guide.
If my employee is taking Annual Leave during a Public Holiday, legally do I need to pay them early, or can I pay them after?
Unless the employer and employee agree otherwise, the employee is entitled to receive their pay for annual holidays before they start their holiday. Note that an employee cannot be paid Annual Leave on a public holiday.
Why can't I enter Stat Days in the SmartPayroll App?
Currently, the SmartPayroll app is for worked hours only.
