COVID 19 FREQUENTLY ASKED QUESTIONS FOR EMPLOYERS

+ What should I pay my staff?

If the wage subsidy is equal to, or greater than, the employees normal wage, you should pay their normal wage in its entirety.

If the wage subsidy is less than the employees normal wage, your options are:

• Pay the employee their normal earnings, covering the difference between the subsidy and their normal earnings if required.
• Pay the employee 80% of their normal earnings (or the wage subsidy amount – whichever is the higher) covering the difference between the subsidy and the 80% of normal earnings if required. You must consult with them about a temporary change to their employment conditions.
• Pay the employee only the wage subsidy amount. You must have a robust business case as to why you cannot pay them at least 80% of their earnings. You must also consult with them about a temporary change to their employment conditions.

It is important to note that whilst the wage subsidy eligibility requirements is to use your best efforts to pay staff at least 80% of their earnings, you cannot just reduce their earnings to 80% (or lower) without consultation with each affected staff member.

+ My staff are working, what happens?

If your staff are still working their normal hours, you should pay them the hours that they work. If they are working less than they normally would and you will be paying them less than normal, you should consult with them as above.

+ My staff earn less than the subsidy amount, what happens?

If your staff earn less than the subsidy, you should pay them their normal earnings. You can use the balance of the subsidy to pay them over a longer period of time, or use the balance to supplement the difference in earning for another employee.

+ Do I need to deduct PAYE etc from the payment to the employee?

Yes, the subsidy should be paid to the employee as part of their normal wages. This means it is subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc.

+ How should I process this is in my Payroll System?

We recommend creating a new pay code in your payroll system for the wage subsidy and a general ledger code in your accounting system. This means you can recieve the money correctly and creates a clear audit trail of how the money you have received is being spent.
Having a separate pay code for the wage subsidy will also help to clearly identify how pay is being processed for any staff member who you are ‘topping up’ or have consulted with.

+ Can I make my staff take leave?

You can only make your staff take entitled leave (not ‘accrued’ leave or holiday pay) with 14 days notice. You can discuss with the employee the option to take leave earlier with their agreement. You can also discuss with the employee to take any accrued (but not yet entitled) leave by agreement.

+ Can I still claim the subsidy if I make staff take leave?

If you receive the subsidy, you should pay this to the employee without deduction from their leave balances. Any leave is already owned by the employee (this is why it is a leave liability owed by the employer). You may make up the difference between the subsidy and the amount paid to them by agreeing the difference is their leave.

+ How much do I have to pay if I am paying 100% of their normal earnings?

You must pay at their normal earnings. You should take the average earnings over the last twelve (12) months. If the employee has been working less than twelve (12) months then take the average earnings since they started.

+ Do I have to tell my staff I am paying 100% of their normal earnings?

It is best practice to keep up communication in this time. Staff will appreciate any certainty you can provide. If you are requiring staff to take leave you must communicate with them.

+ My employee earns more than the wage subsidy, do I have to pay them 100%?

If the wage subsidy is less than the employees normal wage, your options are:

• Pay the employee their normal earnings, covering the difference between the subsidy and their normal earnings if required.
• Pay the employee 80% of their normal earnings (or the wage subsidy amount – whichever is the higher) covering the difference between the subsidy and the 80% of normal earnings if required. You must consult with them about a temporary change to their employment conditions.
• Pay the employee only the wage subsidy amount. You must have a robust business case as to why you cannot pay them at least 80% of their earnings. You must also consult with them about a temporary change to their employment conditions.

It is important to note that whilst the wage subsidy eligibility requirements is to use your best efforts to pay staff at least 80% of their earnings, you cannot just reduce their earnings to 80% (or lower) without consultation with each affected staff member.

+ How much do I have to pay if I am paying 80% of their normal earnings?

You must pay at least 80% of their earnings or if the subsidy amount is higher, you should pay the full subsidy amount (up to the value of 100% of their normal earnings). You should take the average earnings over the last twelve (12) months. If the employee has been working less than twelve (12) months’ then take the average earnings since they started.

+ Do I have to tell my staff that I will only be paying them at 80% of their normal earnings?

Yes, you MUST consult with your staff before changing their terms. You can either consult with them on a temporary change to their conditions and / or offer the ability to top up their wage using their annual leave

+ What do I have to do before reducing them to 80% of their normal earnings?

While reducing them to 80% means you meet the criteria of the wage subsidy eligibility ('best efforts') it doesnt mean you will be compliant with employment legislation and the terms of their contracts if you reduce their earnings. You MUST consult with your staff before changing their terms and attempt to negotiate. Options may include staff topping up their earnings with leave entitlements.

+ How much do I have to pay if I am paying lesss than 80% of their normal earnings?

You must pay at least the subsidy amount (up to 100% of their normal earnings). You should take the average earnings over the last twelve (12) months. If the employee has been working less than twelve (12) months’ then take the average earnings since they started.

+ Do I have to tell my staff that I will only be paying them less than 80% of their normal earnings?

Yes, you MUST consult with your staff before changing their terms. You can either consult with them on a temporary change to their conditions and / or offer the ability to top up their wage using their annual leave

+ What do I have to do before reducing them to less than 80% of their normal earnings?

The wage subsidy eligibility requires you to use your best efforts to meet 80% of their normal earnings (and this may include using leave balances). If you cannot pay 80% of their normal earnings (either topping up yourself, or by negotiating the use of leave) you should have a robust business case as to why your business cannot afford this.
Additionally you must be compliant with employment legislation and the terms of their contract toreduce their earnings. You MUST consult with your staff before changing their terms and attempt to negotiate. Options may include staff topping up their earnings with leave entitlements.

+ My staff will not agree to reduced hours but I cannot afford to pay the difference – what should I do?

Provided you have undertaken a clear consultation process for a genuine business reason (impacts of COVID-19) then you can make the decision and enact the change. If the employee doesn’t agree in good faith then you may need to consider whether you can continue employment and this should be clearly identified as possible outcome in your consultation communications. We strongly recommend you obtain advice if you are concerned about a dispute.

+ What happens if I do not (or have not) consulted with my employeess about reducing their earnings to 80% or lower?

Failing to consult on changes will not only grossly disengage your staff, but also a failure to follow consultation processes will leave you open to employment claims regarding disadvantage and procedural fairness.

Most employees will be understanding of the unique situation COVID has presented and will likely understand the impact on the business (and the viability of their employment) if you clearly communicate with them. Everyone is in the same boat! Even if you havent followed a typical consultation, you will be less likely to recieve a claim if you have ommunicated in good faith.

In addition to breaches of employmennt legislation, if you do not meet the 80% criteria (as you cannot afford to), you are highly likely to face extreme scruitiny about why you were unable use your best efforts and your consultations will also be looked at. (Remeber that you specifically made an understaking to try to pay 80% so make sure if you cant - you have clear documentation about why)

+ What happens if I cannot continue to employ those for whom I applied for the subsidy?

We strongly recommend you obtain advice regarding individual employment agreements and other entitlements and more specifically if you are concerned you are likely to be unable to continue to employ those for whom you have applied for the subsidy.

In applying for and accepting the subsidy you have committed to making your best efforts to continue to employ those named employees for a period of 12 weeks without reducing your workforce or hours / pay more than 80% of the normal levels. That does not mean you cannot make redundancies but, dependant on the redundancies or changes made you may, at a later stage be asked to refund or repay the subsidy if relevant – but you may be able to apply the relevant subsidy amount to other employees. This is a yet untested scenario.

Certainly you would need to undergo a consultation process before terminating any employees on the grounds of redundancy. However, if you have undertaken a fair and just consultation process with staff and they still do not accept and agree to reducing their hours or using their leave, you will be able to show that you acted in good faith and made your best efforts to pay them at least 80% or even less. This may mean you will have no other option but to start a redundancy consultation process.

It is worth noting that any terminations undertaken within a short period of time from when the application for the wage subsidy was filed are likely to be reviewed closely and come under increased scrutiny. We anticipate employers who flout the rules of the wage subsidy or use this situation as an excuse to make non necessary redundancies or changes will not be viewed favourably.

As above we strongly suggest seeking advice before making changes to your workforce, beginning a consultation process or changing terms and conditions for employees.

+ I have a new staff member that was due to start next week, what happens?

You cannot withdraw the contract if they have already accepted.You must either have them 'start' and pursue the wage subsidy or contact them to agree to defer their commencement date. The governement has lifted restrictions on wait times to apply for benefits so they be able to pursue support directly in the interim.

+ Do I have to wait until I can prove a 30% decline in revenue?

No, if you are expecting a drop (even if it hasn’t happened yet) then you can apply. You will have to notify MSD if you don't experience the expected drop in revenue.

+ How do I evidence a 30% drop in revenue?

This is a 30% drop in revenue by comparing one month of sales (from between January to June 2020) to the equivalent month last year.

+ I wasn't really making any money last year, but recently it's been really consistent until COVID19, will I still be eligible?

Yes. Businesses in their first year or who have experienced significant growth in a year are eligible to apply. You must be able to show how your revenue has reduced by 30% when comparing one month of sales to a similar or recent month. For example, comparing revenue in April 2020 to revenue from February 2020.

+ What does it mean to ‘take active steps to mitigate the impact of COVID-19’?

Your business must have taken active steps to mitigate the impact of COVID-19. This includes activating any business continuity plan and seeking advice and support from your bank, accountant, Regional Business Partner programme, business advisors, mentor or consultants.

+ If I am a shareholder or director in a business, can I apply for the wage subsidy?

If you work for the business and you are paid a wage, salary or draw an income (drawings) for the work you do for the business, you can apply for the wage subsidy as a listed employee of the business.### + I have two businesses and work under 20 hours in each but over 20 hours combined. How do I apply for the subsidy? If each business has its own NZBN, make an employer application under each entity and name yourself for the number of hours you work in each.

+ If I have my own business but am also employed by someone else, can I claim for my business and they also claim the wage subsidy for me?

Provided you are a PAYE employee (i.e. aren’t invoicing them as a contractor) then you can submit your own application and they can also claim for you as an employee, provided you both meet the criteria (i.e. a decline in revenue).

+ I work multiple part-time jobs. Can I get the wage subsidy from all of my different employers?t

Yes. As an employee who is employed by two or more different businesses, you can receive the wage subsidy from multiple employers, as long as you meet the usual criteria.

+ Can I apply for the wage subsidy on behalf of my casual employee(s)?

Yes. You can apply for the wage subsidy for any casuals who would have been expected to work during the time you will receive the wage subsidy.

+ How do I assess whether my casual employee(s) qualifies for the full-time or part-time wage subsidy rate?

You should average the hours worked by the casual over the last year. If they have worked less than a year, you should average the hours worked since they started.If this average is 20 hours or more, use the 20 or more rate. If the average is 20 hours or less then you should use the under 20 hour rate.

+ Do I have to tell my employees that I am applying for the wage subsidy?

Yes, as you are providing their personal information in your application (Name, DOB, IRD Number and Employment Status) you MUST seek their permission before you apply.