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Frequently asked questions – COVID-19

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We’ve compiled some of the most frequently asked questions regarding the wage subsidy. Members are also advised to read the FaQ’s on the Work and Income website here.

We have a separate page dedicated to Level 2 faq’s: here.

The FaQ’s on this page are in the following sections:


Wage Subsidy Extension

Q. Peter noted that for Wage Subsidy #2 if our restaurant was down around 40%, which is a severe restriction on our business but not at the 50% level, there may still be a chance we can be covered. If our restaurant is down 47% and we are just over, is there support still available?

Read full answer

Absolutely, apply and send an email and it will be looked at.  You need to be acting in good faith and best endeavours. There are situations that will be looked at as case by case.

Q. Is the extension of wage subsidy applicable to new businesses? what do we compare the 50% loss to?

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We are checking the eligibility on this as more information is released. There were arrangements for new businesses to be able to access the initial wage subsidy (when criteria were: “To determine whether these businesses meet the 30% decline in revenue assessment, they must compare their revenue against a previous month, or 30 days, that gives the best estimation of the revenue decline related to COVID-19).” We would be hopeful that the same will apply in the wage subsidy extension.

Q. Wage subsidy question – Can we apply on the 10th of June, given our subsidy finishes on the 19th? If we can apply on the 10th is the revenue decline taken from “30 days” back from 10th or the closest period which for us would be May? If we are only eligible to apply on the 19th is the closest period still May?

Read full answer

Yes it would be the closest period (May) we don’t want to have a break in between we want it to be seamless. Can apply on the 10th and it will be picked up by the processing people.

Commercial Closure of Business

Q: I have decided to close my business. How long can I continue to use the wage subsidy for?

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The business owner should make best efforts to retain and prolong the closing of their business for the 12- week period.  If this is not possible and the business closes prior to the end of the 12 week period, then this amounts to a change of circumstances. Therefore, the subsidy ceases when the business closes. If there is a remainder of funds at the date of closure the employer may be required to pay back the amount to MSD. This is because the subsidy is designed to keep the business operational, the intent is not to use it so shut the business.

Q. Where an employer needs to close their business, has made their declaration (post 27 March 2020 at 4:00pm), that it will retain all staff for the duration of the wage subsidy – where does this leave the employer that needs to permanently close their business?

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When the business decides to permanently close due to Covid-19, then an employer has flexibility within the Employment Relations Act 2000 to vary the contract and in their best endeavours give the staff a final pay out that is within their financial means and the subsidy ceases. As the business is closing the conditions of the subsidy no longer apply, because the employer is no longer retaining its employees. 

Best practice would be to contact MSD to advise on the change of circumstances.

Q. My partner and I have two companies locked in a Trust which is GST registered and is effectively trading by paying GST on a monthly basis. Can the Trust claim the current COVID-19 wage subsidy?

Yes, if you draw a shareholder income or annual salary from the trust, you can apply for the subsidy.


Wage Subsidy

Questions following on from webinar with MSD in attendance:

Q. How does the subsidy work if part time staff have found full time employment somewhere else? Do we contact to pay the subsidy?

That falls under the responsibility of the other employer to apply for the subsidy on their behalf because it is now their main job. MSD Suggest bringing it up with the new employer.

We have a staff member who has gone from full time to part time during lock down, can I now only pay them on the reduced number of hours moving forward and use balance of their subsidy to pay others?

Read full answer

Yes, you can pay this employee at the reduced number of hours if you have reached a mutual agreement to this variation with them in writing. If there is a remainder you can inject that into other employees’ wages for the purpose of retaining them in employment for the 12-week subsidy period.

Click on the following link for more information:
Payments Guide

Q. We’ve received the Wage Subsidy and passed on to staff (topped up to 80%). Staff have been rostered on, staggered shifts etc. Staff are insisting they work for 100% wages or not at all.  Is this acceptable?

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The wage subsidy is to run for the remainder of the 12 week period at the rate of 80% (as already agreed with your employees), or if after “best endeavours” at least the entire amount of the subsidy must be paid, whether employees are required to work or not. If the employee’s actual hours of work onsite exceed the agreed subsidy amount, those additional hours must be paid at the usual rate. 

In terms of the request for wages to be paid at 100% during the remainder of the 12-week period, advise your employees the rate of 80% is what has been agreed to be paid. If the employees do not accept to work onsite under this same arrangement, you will need to make all reasonable attempts in good faith to reach an agreeable new arrangement in writing. You may want to capture any temporary variation to the terms and conditions of their current pre-lockdown employment agreement for the purposes of operating at Levels 3 and/or 2:         

Click on the following links for more information: 
Temporary Variation to Employment Agreement Guide and Template
Payments Guide and Template
Guidance – Requirement to Work

Q. Regarding the wage subsidy, 2 of the staff that I applied for as part time staff are actually full time. How can I change their status or apply for the difference?

You can either put another two part time applications or two new full time applications and the original application can be reconciled.

Q. Now we are open and trading my 2 part timers who are uni students have cut down their hours. This was to happen right at the beginning of lockdown but i paid them for 2 shifts each during Level 3 and 4 as they had averaged higher hours during uni holidays. Now they are working, am I required to pay them the one shift they are voluntarily working or the amount I was paying during lockdown. The balance can be used by my full timer.

Read full answer

What would happen there is the subsidy has been applied on their behalf. You can pay the subsidy for the end of the period or use it to reallocate to other staff members, you have the freedom as to what you would like to do and what is best for business.

Q. I thought the subsidy would start from when the business turnover drops by more than 30%. For example, if my turnover dropped in February would it not start then and run for 12 weeks. So the subsidy end would be May?

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The subsidy starts on or around 16 March 2020 approximately. It has nothing to do with the 30% decline in business. It is difficult to measure a 30% decline in business. Therefore, it is just an approximation to help businesses where their revenue has dropped due to the impact of Covid-19.

The subsidy will finish on or around 18 June 2020.

Q. Will an employee be eligible for the COVID-19 Wage Subsidy if they are rostered to work (after and during Lockdown) and do not turn up to work?

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Yes, if the business has applied and is in receipt of a wage subsidy for this employee then it must continue to pay the employee while the employer investigates why the employee is absent without notification, authorisation, and/or legitimate reason. 

On investigation of the absence the employer may decide to address the alleged conduct this by way of a formal disciplinary process. 

If the employee is authorised to take sick or annual leave the business must treat the employee as it usually would and continue to pay the agreed wage subsidy amount.


Parental leave & the subsidy

Q. Where an employee is on a period of paid parental leave via the IRD entitlement, is that employee entitled to be paid the wage subsidy as well?

No. When an employee is on paid parental leave they are not entitled to the subsidy in addition to the funds they receive from IRD.

Q. What happens when staff do return to work, call in sick, have no sick leave left, do we have to pay the wage subsidy? Would the employees still be entitled to the wage subsidy at a minimum regardless of the failure to come to work for whatever reason?

The employer does not have to pay the wage subsidy to cover sick leave if the employee’s entitlement is exhausted. However, the employer can use the wage subsidy to pay other staff to retain them. The employer and employee both need to act in good faith. 

Q. Can an employer who has taken the 12 week subsidy start a restructuring process at 9 or 10 weeks, giving two weeks’ notice, or do they have to wait until the 12 weeks are up and then start it?

Read full answer

If you applied for the wage subsidy before 4pm 27th March 2020 – you may be able to go through a correctly run process as per normal as per the declaration which you agreed to when applying. ( you can read this declaration here https://www.workandincome.govt.nz/online-services/covid-19/wage-subsidy-declaration.html )

If you applied for the wage subsidy on or after 4pm 27th March 2020 – As per the declaration, you must retain employees for the duration of the 12 week period, in which case you cannot make employees redundant during this period (you can read this declaration here https://www.workandincome.govt.nz/online-services/covid-19/declaration-wage-subsidy.html )

Even in this distressing environment of significant financial pressure and uncertainty, a restructure is still a last resort measure with a complex process to undertake. It all requires careful handling.

 

Q: Part-time/Casual staff- If my staff member needs the money, Is it ok to pay them the whole subsidy amount even though it is more than they would normally get?

No – 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 – the wage subsidy is designed to keep your employees connected to you.

Q. What happens when staff do return to work, call in sick, have no sick leave left, do we have to pay the wage subsidy? Would the employees still be entitled to wage subsidy at a minimum regardless of the failure to come to work for whatever reason?

The employer does not have to pay the wage subsidy to cover sick leave if the employee’s entitlement is exhausted. However, the employer can use the wage subsidy to pay other staff to retain them. The employer and employee both need to act in good faith.

Q. An employee with whom agreed (before the lockdown) that they could take one month’s paid annual leave. They still wish to take this leave and emailed the business owner that they believe they’re entitled to receive the wage subsidy on top of her annual leave entitlements, is this accurate?

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The agreement that employee take annual leave still stands. The way it’s paid depends on agreement between the employer and employee. If a lump sum payment is agreed to, the employer must deduct PAYE on lump sum payments and how the employer calculates PAYE depends on the employees tax code (depending on the employees tax code, there are various steps the employer needs to take and also file this with IRD; the employer can call IRD for further info if the employer is not clear). This also needs to be communicated with the employee so they understand how this affects their lump sum payment (this is standard practice and not dependent on COVID-19).

The wage subsidy is not to be paid instead or on top of Annual Leave; had the employee been on holiday, they would have only received their Annual Leave entitlements and nothing extra, therefore the Wage Subsidy should not be added.

The wage subsidy is a subsidy designed to help employers retain staff and employees to be connected to their workplace and employer – This doesn’t affect how Annual Leave is treated or paid.

Q. What exactly in our contract or general employment law allows employers to just start paying less than contracted hours? Are business’ that are choosing to pay only the subsidy amount opening themselves up to action later on?   The term “Your obligations under employment law haven’t changed” is used a lot, what does this mean?

Read full answer

Nothing in the contract specifically allows for this. It is only with the current lockdown situation and the directives of the Government that there has been a change in how Employees may be paid currently.

Employers who applied for the subsidy before 4.00pm March 27 must make “Best efforts” to retain and pay 80% of the normal income of an Employee; if they are unable to do this, after having made best efforts to pay employees up to 80% of their normal wage, they may only pass the wage subsidy to the Employees, after consultation with the employees.

Your obligations to act in good faith and keep an open line of communication while making sure that the Guidance from the Government is also taken into consideration is key to this process.

Following your employees return to work, in the event that you wish to pay the employees less by way of a reduction to their normal and contracted hours of work, this will require you to undertake a restructure to their role.

Q. Can an employer who has taken the 12 week subsidy start a restructuring process at 9 or 10 weeks, giving two weeks’ notice, or do they have to wait until the 12 weeks are up and then start it?

Read full answer

If you applied for the wage subsidy before 4pm 27th March 2020 – you may be able to go through a correctly run process as per normal as per the declaration which you agreed to when applying. ( you can read this declaration here https://www.workandincome.govt.nz/online-services/covid-19/wage-subsidy-declaration.html )

If you applied for the wage subsidy on or after 4pm 27th March 2020 – As per the declaration, you must retain employees for the duration of the 12 week period, in which case you cannot make employees redundant during this period (you can read this declaration here https://www.workandincome.govt.nz/online-services/covid-19/declaration-wage-subsidy.html )

Even in this distressing environment of significant financial pressure and uncertainty, a restructure is still a last resort measure with a complex process to undertake. It all requires careful handling.

 

Q: Part-time/Casual staff- If my staff member needs the money, Is it ok to pay them the whole subsidy amount even though it is more than they would normally get?

No – 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 – the wage subsidy is designed to keep your employees connected to you.

Q. If the business is struggling to top up the subsidy (or just cannot pay despite making best efforts and endeavours) to achieve 80% of the teams’ normal pay, are they able to just pay the subsidy after discussion with their team?

Read full answer

If the business is struggling to top up the subsidy then they can just pay the subsidy following a consultation process by way of proposal with the affected employees including confirmation in writing of what is agreed as between the parties to the employment relationship. Discussion and consulting is part of the requirement for both the employer and employee to treat each other in good faith, and more so than ever in the current climate of Covid-19 and the lock down.

The principle of good faith includes the employer actively communicating and consulting with employees about any variation proposed to be made to the payment of wages. The consultation process includes the employee providing their feedback and thoughts about any proposed change to the payment of wages.

This practice applies to any other potential change to employment. The employer then makes a confirmed decision, taking into consideration all the factors that are driving the change, including the employee feedback. Ideally the employer will get acceptance and mutual agreement from the employee about any change and for that to be in writing.

It is vital to record any mutually agreed change to employment in writing as well and to have email correspondence between employer and employee to rely on, in the event issues arise later.

Q. An employer’s payroll company has just advised them they had recently received advice directly from MBIE to change the calculation used to work out normal weekly income, from the average hours worked over the past 12 months, to the average hours worked over the past 4 weeks. Has the preferred calculation changed?

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No, it has not changed, the calculation is to look at a 4 week period over the last 12 months that is representative of the average hours a staff member has worked. It is a calculation in good faith by the employer that fairly represents an accurate snapshot of 4 weeks. 

If they are a regular employee and a four-week average is an accurate reflection then this may be used. 

However, if the employee usually works, for example 40 hours per week and for the last two months has worked 60 to 65 hours per week calculate the average hours over the last 52 weeks of employment. Likewise, if the hours of work are so erratic and at different intervals over the past year, calculate the average hours based on 52 weeks. More commonly, in the lead up to the lock down employees may have worked less hours than their usual hours due to the downturn associated with Covid-19. The “52 week” calculation applies to this scenario as well.

Calculate the average hours over the last 52 weeks of employment, given the erratic nature of hours worked over the last year. This mode of calculation will capture the most accurate figure to pay when the number of hours worked at different intervals during the course of the year fluctuate. 

In good faith, ensure you consult with the affected employees about how you will be calculating their weekly wage payment. If an employee raises issues about how the average is being calculated you will have to work through this with the employee and iron out any creases, to ideally reach acceptance of calculating the average this way and for this to be evidenced in writing/email.

Sample Calculation Where Hours fluctuate

If you work variable hours (or your employee does), you can use an average to work out what rate to apply for.

Use the average hours worked each week:

  • over the last 12 months, 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.

Q. What should happen where an employer has already applied for, and received, the wage subsidy for an employee. However, that employee has now managed to find temporary alternative work with a different employer (e.g. Healthline) during the lockdown? Does the employer still pay the wage subsidy to the employee that is undertaking temporary work?

Read full answer

If an employee has found alternative temporary full-time employment with another Company, then the employer does not have to keep paying their subsidy. However, if the alternative employment is not full time and does not adequately substitute the employees previous wage at your business, given this employee’s employment is still alive, then it will be best practice to consult in good faith with this employee to reach a mutual agreement in writing about the amount of the subsidy to be paid to the employee while they are working under an alternative temporary arrangement. 

Furthermore, if this employee is employed by your business as a casual employee, regardless of whether they have an alternative job or not, either temporary or permanent, then they must be paid the wage subsidy based on the average hours worked and calculated over the last 52 weeks or alternatively, a mutually agreed weekly subsidy amount.  

Any remainder in all scenarios covered above, can be reallocated to other affected employees for the purpose of retaining them.

Q. What should happen in the event an employer has already applied for, and received, the wage subsidy for an employee, however that employee resigns? Or voluntarily leaves during the twelve week period for another job opportunity or because of caring responsibilities, do I need to pay the money back to MSD?

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The employer will need to return those funds for the subsidy at a later date,

Where your employee voluntarily leaves their employment you must advise MSD within 5 working days where you made your declaration after 4:00pm, 27 March 2020, and as soon as possible where you made it prior to this time, and you cannot claim any more subsidy for that person. However, you do not have to return the subsidy already paid. You can use it to make best endeavours to retain your remaining staff and pay a minimum of 80% of their usual income. 

Where after all best efforts have been made, and you are not in a position to pay more than the wage subsidy, you must at a minimum pass on the wage subsidy to the employee, and where the employee earns less than the wage subsidy received, pay that employee for their normal hours. You must advise MSD and upon receiving confirmation from MSD, you may use the leftover amount to make best endeavours to retain your remaining staff and pay a minimum of 80% of their usual income.

Q. What should happen in the event an employer has already applied for, and received, the wage subsidy for an employee, however that employee has since become eligible for the Covid-19 leave payment?

The COVIDI-19 Leave payment is no longer available.

Q. What should happen in the event an employer mistakenly applies for the Covid-19 leave payment for their employees, instead of the wage subsidy, but then also applies for the wage subsidy for all of their employees?

The two applications would be matched by the processing team and they would be reconciled by them. The COVID-19 leave payment is no longer in place, as above.

https://www.workandincome.govt.nz/products/a-z-benefits/covid19-wage-subsidy.html#null refer to the “repaying the wage subsidy” heading.

Q. Keep in separate bank account as will need to repay?

“Yes”, correct. The employer will need to keep the money because the processing team will marry the two applications and some reconciliation payment from the employer will be required. As above.

Q. What do we do with the excess if the subsidy is higher than what I usually pay my employee?

The wage subsidy is designed to keep your employees connected to you. Any difference should be used for the wages of other affected staff.

Q. Easter is coming up – do I have to pay my employees for public holidays (Good Friday & Easter Monday) during the lock down?

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Unless the government announces a different direction, “Yes”, payment of these public holidays are to be processed as per usual, if the position of employment is still alive with the business during the lock down, the employee is in receipt of the wage subsidy, or on agreed terms, and Friday and/or Monday would be an otherwise working day for the employee, bar the lock down.  Members can login here to see our Easter update article. https://www.restaurantnz.co.nz/resource/the-easter-holidays-and-the-current-covid-19-lockdown/

Q. Now we are not open over Easter, how do we manage public holiday requirements and what do Employee’s need to get paid, taking into account the wage subsidy?  

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Employers are still required to comply with minimum employment legislation, including payment of employee public holiday statutory entitlements on both Good Friday, 10 April and Easter Monday, 13 April 2020. Payment of these public holidays is to be processed via the wage subsidy and as per normal practice in the usual pay run.

However, because employees are not effectively working over Easter because of the lock down, unless an essential service, the employee may just get the subsidy.

If Good Friday and/or Easter Monday is not an otherwise working day for the affected employee, then you will not be required to pay it as a public holiday.

If Friday and/or Monday is an otherwise working day for the employee, they will be paid it as a public holiday. This will be recorded in your pay roll system as per normal and to ensure compliance with minimum standards are met.

You will continue to pay the subsidy regardless of whether Friday or Monday is an otherwise working day or not. The amount of the wage subsidy to be paid will be dictated by whether Friday and/or Monday is an otherwise working day for the employee.  For further information see here: https://www.restaurantnz.co.nz/resource/the-easter-holidays-and-the-current-covid-19-lockdown/

Q. My employees have agreed to a 20% pay cut. Do I pay them at 80% or 100% for the public holidays over Easter?

Read full answer

If an agreed pay cut has been reached with the employee (in writing) and implemented for the period of the wage subsidy, then the amount agreed to be paid will continue to be paid for the duration of the lock down and/or 12 weeks, unless a new agreement is made during this time.

If Friday and/or Monday is an otherwise working day for the employee, bar the lock down, any reduced weekly wage will be the employees relevant daily pay and they will be paid for it as a public holiday. 

If it is not an otherwise working day, the employee will not be required to be paid for that day. In both cases the wage subsidy must still be paid based on the agreed relevant daily rate. Whether you are required “to pay” or “not pay” for Friday and/or Monday, will dictate the weekly wage subsidy amount to be paid.

The wage subsidy amount to pay will either remain the same, “to pay”, or reduce “not pay” by 1 day, the equivalent of the relevant daily pay.

Application process

Do businesses receive an email from MSD when they apply to say the submission has been received?

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No.

I should have applied for other employees, is there any way I can add them on to our package now?

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The employer should just through another application for a wage subsidy and the processing team will marry up the data from both applications.

I have received the subsidy at my company. However, the list of employees applied has changed slightly from when the application was made. There are 2 people who have left the company and 2 people who should be on the list. is it crucial that the actual people being applied for is 100% accurate even if the amount doesn’t change?

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No, this fine, you can just pay the new staff and reconcile it later.


Tax & deductions

A substantial number of tax-related faq’s are answered through this document by IRD. Click here to access this document. In addition, it may be useful to check the IRD website for their regular updates and information: https://www.ird.govt.nz/roles/tax-agents/covid-19

Is the exact amount to be paid to staff for 20+  hours = $585.80 and for less than 20 hours =$350 or do we put through PAYE?

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The subsidies attract the PAYE tax, kiwisaver etc for employees but not classified as income for employers.

How does Holiday Pay Accrual work during the lock down period?

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Holiday pay accrual works as normal, accumulating for permanent part time or full- time employees, and on “a pay as you go” basis for casual and fixed term employees, as per the usual pay run over the lockdown period.

Please note all wage payments are to be processed as per usual via the subsidy (up to 80%) with 8% holiday pay generating off that payment. Nothing has changed in how weekly wages, deductions and mandatory statutory entitlements are to be processed, paid, deducted and accumulated as per normal, including all deductions of PAYE, Kiwisaver, Student Loans and child support payments. Employers are required to continue to pay the employer contribution during lock down.

Do we unclick Kiwisaver and annual leave and Paye? 

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The normal deductions still apply. The wage subsidy is to help employers pay wages; it does not change anything else.  

We got the wage subsidy for our employee and thought we would pay it out as a weekly wage through Xero payroll. But then is that taxed? What should we do?

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The wage subsidy should be passed on to the employee by the employer and processed as part of the employee’s normal wages.  All deductions of PAYE, Kiwisaver, Student Loans, child support etc are made as normal.

My biggest concern is not being able to pay gst and unable to repay especially if it is spread over only a short period.

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More details on filing and debt will be provided as soon as possible.  If you can file, please do so.

Any information on business finance packages, is it talk to your bank only or are there any govt schemes available?

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At this stage Inland Revenue Policy initiatives include

  • Reintroduction of depreciation on commercial buildings
  • Up-front deduction of low value assets threshold increase
  • Increase in the provisional tax threshold
  • Use of Money Interest relief
  • In Work Tax Credit eligibility criteria

Can employees put student loans on hold?

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If you’re struggling to make your student loans payments, we might be able to reduce your repayment obligations. Alternatively, you can propose an instalment arrangement to suit your situation.  You can also apply for a student loan repayment deduction exemption if you’re New Zealand based and:

  • are studying full-time, or about to start studying
  • will reasonably expect to earn under the annual repayment threshold.

Find more information on the IRD website:

  • https://www.ird.govt.nz/student-loans/managing-my-student-loan/hardship-and-defaulting-on-my-student-loan
  • https://www.ird.govt.nz/student-loans/repaying-my-student-loan/repaying-my-student-loan-when-i-earn-salary-or-wages/student-loan-repayment-deduction-exemption

Can an employee request to have their Kiwisaver contributions suspended?

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Yes, an employee can apply for a savings suspension through MyIR: Select the Kiwisaver account tile; Select the Go to My Kiwisaver: at the top left of the page; Select Savings Suspension and complete the required information and submit the request

Are there any tax consequences if an employer pays the 12-week wage subsidy as a single lump-sum to their employees?

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Paying the 12-week subsidy to an employee as a lump sum brings up to 12 weeks of income, that would normally be earned in the next tax year, into this tax year (which ends on 31 March 2020). The additional income could move them into a higher marginal tax bracket for the year and result in them receiving a tax bill when Inland Revenue completes the automatic assessment process; if, as a result of receiving the additional income, their total gross income for the year exceeds $48,000 they will no longer qualify for the Independent Earner Tax Credit;It may also impact their entitlement to Working for Families Tax Credits, or mean they have a higher Student Loan bill this year

What are the Income Tax obligations for the employer receiving the wage subsidy?

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The receipt of the subsidy is exempt income for the employer. The employer will not be entitled to an income tax deduction for wages paid out of the wage subsidy. The amount of wages paid in excess of the wage subsidy (amounts funded by the employer) are deductible as normal.


Who can apply for wage subsidy

Are self-employed, shareholders and directors entitled to get the wage subsidy for themselves even if they don’t pay themself wages?

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If you work for the business and you are paid a wage, salary or draw an income for the work you do for the business, you can apply for the wage subsidy.

Do casuals qualify for wage subsidy?

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Yes all employee types including casuals qualify for wage subsidy.

What if staff work for multiple businesses will they be claimed as a subsidy on multiple businesses eg full and a back up part time job? Or do they need to clarify which business they can claim the subsidy? How will we know if the other business has already claimed the subsidy?

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The employer would make the claim for the employee, the employee may work full time at one job and part time at another job the employer would apply for the subsidy that suits the hours that staff member works – 2 different employers could apply for a subsidy for the same employee.

“I was due to open the day after lockdown, and my staff had not yet started work. Do we qualify for the wage subsidy?”

Read full answer

This employee is a person intending to be employed, if an employment relationship has already been entered into by way of an employment agreement. Therefore, they must be treated like any other employee who has commenced employment. If the business is planning to continue operating when the lock down is lifted, and the employer signed the employee up to start work, then “Yes” the employer can apply for the subsidy for the employee intending to be employed.

Questions re payment of subsidy

What if 80% of their “normal pay” is less than the subsidy we are claiming for them, do we have to pay 100% of their normal pay if this is still under the subsidy?

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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.

When an Employees wage calculation is under the $585 or $350 weekly do we pay the full subsidy or the calculated wage?

Read full answer

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 – the wage subsidy is designed to keep your employees connected to you.

Can we use surplus from some staff member’s subsidy to top up other staff member’s pay?

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Yes, any difference can be used for the wages of other affected staff. This subsidy can be used at the employers discretion.

Can we pay them just 80% of average weekly wages? What is “normal” wages when it varies from week to week? Calculated over past 4 weeks, or longer?

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Yes you can average the weekly wage. Use the average hours worked each week:

  • over the last 12 months, or
  • over the period of time you (or they) have been employed (if it’s less than 12 months).

We have received the Government wage subsidy and we are committed to pay our staff 80% of their wage. However, we pay hourly rate for all our staff and as we are a seasonal business, their weekly average based over 52 weeks is actually quite different to their average for the past 4 weeks. For holiday pay its usually the higher of the 2 but wanted to check that as an industry, which figure should we be running with?

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The employer should use the average over 52 weeks based on the seasonality of the business. 4 weeks is not an accurate reflection in this instance.

If a part timer only works 3 hours per week, what do they pay them – the full subsidy amount of $350?  

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No, they only get paid their “normal income”, so 3 hours. This would be paid in full (not 80% of their normal income).

If we are not in the financial position that we can top up to 80% due to a lack of cashflow, can we utilise some of the subsidy money from later weeks ie. pay the staff 80% for this first four weeks of the lockout and hope like heck we get re-open quickly to get some turnover and just have less weeks of the subsidy? Or, are we better off trying to negotiate with the team by pointing out that their contracts signed actually have the pandemic clause in them & that we have applied for the subsidy but are not in a position to pay any more? 

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Businesses accessing the scheme must still undertake best endeavours to pay employees 80% of their PreCOVID income. Where that is not possible, where a business has no activity whatsoever due to the shutdown and workers are not working any hours, they must pass on at least the whole value of the wage subsidy to each affected worker. Businesses must undertake to keep their employees in employment for the period of the subsidy. MSD have folded the previous sick leave scheme into this scheme to prevent double dipping. The original sick leave scheme was designed when few people were in self isolation, and it is no longer fit for purpose. MSD are working on arrangements for those in essential work who require sick leave due to COVID-19. 

Q. Fixed Term Employment Agreement – do you pay an employee employed under a fixed term agreement up to the end date, or do you pay the employee for the entire 12 weeks?

The employer is required to pay the subsidy up until the end of the fixed term period consistent with the terms and conditions of the agreement. The employer can then reallocate the remainder of those funds to other staff.


Other questions

Q. If we have staff that ‘don’t feel comfortable’ coming in to work, can we ask them to take a COVID test or visit their doctor (i.e. refusing to come to work on the basis of being nervous about Covid-19 with no previous condition)?

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No, unless the employee has suffered or has symptoms of Covid-19 and wants to return to work onsite you would not ask for them to be tested or for proof of fitness to return. 

Not coming to work because an employee does not “feel comfortable” does not mean they are unwell and require testing or otherwise.  It means they do not want to return for Health and Safety reasons. 

Ideally, you will reassure your employees rigorous Health and Safety measures in compliance with the requirements of Alert Level 3 will be strictly followed at the workplace. 

Click on the following links for further information about operating at Level 3:

Contactless Delivery Programme
Health & Safety Policy

You will remind the employee their employment at the Company is well and truly alive. They are in receipt of the wage subsidy. They are being retained for the purpose of returning to work. Therefore, it is their contractual obligation to return to work as requested. A failure to do so is potentially a failure to follow a reasonable instruction and is a potential breach of the terms and conditions of their employment agreement. 

Click on the following link for further information on how best to manage your employees who are refusing to return to work

Guidance on Requirement to Work

Q. Is there an update on workers with a work visa that are awaiting a change to the employer so they can commence employment with a new employer and receive subsidy and paid work? At the moment they sit in limbo unable to receive income.

There will be a number of people who are awaiting a decision on their application and Immigration have limited processing capacity at this stage. They will update their website as we process a great number of categories, including work visas.

Q. If a staff member refuses to return to work during level 3 (despite our assurances to keep us safe) do we have to pay them their same subsidy, or can we give work and subsidy money to others?

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Regardless of whether an employee returns to work or not at Level 3 the employer is required to continue to pay them the subsidy for the 12-week period (as agreed) unless a new arrangement in regard to payment of the subsidy is mutually agreed between employer and employee. 

You will remind the employee their employment at the Company is well and truly alive. They are in receipt of the wage subsidy. They are being retained for the purpose of returning to work. Therefore, it is their contractual obligation to return to work as requested. A failure to do so is potentially a failure to follow a reasonable instruction and is a potential breach of the terms and conditions of their employment agreement. 

Click on the following link for further information on how best to manage your employees who are refusing to return to work

Guidance on Requirement to Work

Ideally, you will reassure your employees rigorous Health and Safety measures in compliance with the requirements of Alert Level 3 will be strictly followed at the workplace. 

Click on the following links for further information about operating at Level 3:

Contactless Delivery Programme
Health & Safety Policy

Q. What is the status for people who are here on visitor VISA, but then applied for Work visa prior to level 4?

If you lodged a visa application before lockdown and before your visitor visa expired you would have received an interim visa, some interim visas have work rights whereas others are just visitor rights.

Q. What happens if cannot employ all the staff when we reopen in level 3 and level 2?

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Firstly, unless employment ends all employees are required to be continued to be paid at least the subsidy for the 12-week period regardless of whether you can give them rostered hours to work onsite or not during Level 3 and/or 2. 

Secondly, you will need to consider the following options if you are unable to retain all employees at Levels 3 and/or 2:

Covid-19 – Level 3 Temporary Variation & Permanent Restructure Options

Temporary Variation
To operate at Level 3 and/or 2 and to continue to retain your employees and sustain the viability of the business you may require your current employees to undertake a temporary variation to the terms and conditions of their current employment agreement – beyond the scope of additional duties and with reduced hours for example. 

Click on the following link for more information about this process:

Temporary Variation to Employment Agreement Guide

and/or

Permanent Restructure & Redundancy of Company Positions:

Please refer to the following link for information about this process:

Restructure Pack

Q. We sponsored a staff member, she’s currently on an interim visa as needed skills match report which WINZ are now not doing. Is it accurate that she cannot legally work so I cannot receive the subsidy for her?

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Depends on if they have work rights or not included in their interim visa. MSD are still working through the process for reports. If an application was already submitted before lockdown they will get to it, otherwise continue to lodge an application and it will be prioritised.

Q. If landlords have offered us a one month reduction of 50% of rent, is the email offer all we need legally to alter our lease agreement / rental payment for that month?

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Yes, any variation to a Heads of Lease Agreement and a rent reduction recorded in writing via email is sufficient. The email correspondence between you and the Landlord should show evidence of the offer and mutual acceptance of the terms and conditions of the reduction, as between the parties. 

Click on the following link for our general advisory on this area:

https://www.restaurantnz.co.nz/wp-content/uploads/2020/03/Letter-for-landloord-template_general-lease-advice-for-COVID19.pdf

NB: This is a specialist commercial area of law. We are not commercial law specialists and our advice should not be interpreted as such. We can only give general advice about this subject and suggest you seek legal advice from a commercial lawyer if you require specialist advice & assistance.

Do we have to keep all staff employed? (Best efforts on those the subsidy was applied for)?

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No, the company doesn’t have to keep all staff employed, they can make certain positions redundant if required. Please note however, as from 4.00pm Friday 27 March all employers making Wage Subsidy applications need to undertake to keep employees in employment for the period of the subsidy. You need to try your best to retain your employees you are currently receiving the COVID-19 Wage Subsidy for. 

Can an employee receive both the special paid leave and the wage subsidy?

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The Government announced on 27th March that the leave subsidy has now been folded into the wage subsidy.

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