Wage Subsidy Requirements Tightened

21 August 2021

Applications for the Wage Subsidy can now be made through Work and Income. Applications for the Resurgence Support Payment through Inland Revenue will open on Tuesday, 24 August.

This time the requirements for the wage subsidy are more onerous. The key points to note are:

Your business must have an actual or projected reduction in revenue of at least 40% over the period 17 August 2021 to 30 August 2021 (inclusive) (revenue test period), when compared to a typical 14-day consecutive period of revenue in the six weeks immediately prior to the move to Alert Level 4 on 17 August 2021 (default comparator period);
You must retain the named employees for the period you receive the subsidy (ie not make them redundant);
For the period you receive the subsidy, you will use your best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary;
You must not make any changes to your obligations under any employment agreement, including to rates of pay, hours of work and leave entitlements, without the written agreement of the relevant employee;
You must not unlawfully compel or require any of the named employees to use their leave entitlements for the period you receive the subsidy in respect of those employees;
The named employees in your application must have been consulted about your application; and must have consented (in writing if practicable) to their information being shared with MSD and other agencies.

If you can continue to pay your employees at 100% that is great. If you can’t, obtaining their written agreement to proposed changes is not straight forward for obvious reasons:

Employees may not agree to have their pay cut to 80% (or less).
Employees may not be easily contactable during Level 4 conditions.
Employees may not have the facilities to sign and return documents electronically.

What to do?

While employees may be “ready and willing” to work, they are “not able” to do so because they are required to remain at home by Government decree, and can’t work.
In that case there is no entitlement to payment.
However, you could propose to pay at 80% provided employees agree to your applying for the subsidy in their name, they accept the fact their information will be shared, and they agree to be paid at 80% of their usual wages (you could allow use of annual leave to top up to 100% if the employee so requests).
You will need a document for the employee to sign agreeing to the above.

Similar arrangements could apply to employees who can work from home at a reduced level because the usual volume of work is not available. However, employees should be paid no less than their usual rate of wages for any work they are required to perform.

Here is the link to the declaration you have to sign to get the wage subsidy. https://www.workandincome.govt.nz/online-services/covid-19/declaration-wage-subsidy.html

If you have any questions, please call 021 920 323.