Covid-19 Wage Subsidy & HR FAQs

Amendment - only applicable to those that applied for the subsidy prior to Friday, 27th March 2020. New blog coming for after that date.

We have had so many interesting HR questions or wage subsidy questions, as you can imagine, over the last couple of days. The government have not given detailed information; therefore, we have to make decisions on what information they are providing us using current HR legislation and guidelines. What we do know is that there have been no changes in this and that you have to be ‘fair & reasonable’, ‘act in good faith’ and no changes can be made to employee’s contract without going through that consultation process with them first.

We have put together some FAQs below. Remember, things are changing daily as information is being released from the government. If any of the below changes, we will release a further information. The key message is to start talking to your staff about the effect on your business and what changes you may have to make. Plus, you need to start thinking about what happens if the lockdown is longer than four weeks.

I hear that we can pay our staff only 80% of their current wages – is this correct?

The covid-19 website states that you must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period. A lot of people are assuming this means you can instantly drop to 80%. For this to happen you need to have a viable reason, such as your business can’t afford this hit and you need to consult with your staff and get their agreeance. As per our video we released this week, start having those conversations with your staff now as we need to also think that this lock down could be longer than four weeks. If your staff are more than happy to drop down to 80% to ensure the survival of the company, then get this in writing and drop down to 80%.

What happens if we can’t even afford to pay the 80%?

If you have updated your cashflow or at least predicted your cashflow cannot withstand this, then again ensure you are talking with your staff. When you get the 12 week subsidy, the declaration you sign says you have done everything to mitigate your risk (i.e. talked to your bank, accountant or anyone else to get advice on how to get your business through this) and that you agree you will, using your best endeavours to retain your employees in employment and pay them at least 80% of their regular income for the subsidised period. I think the key words here are ‘using your best endeavours’. Our advice here is as long as you have done that, and your business really can’t afford it (if you have lots of money in the bank and can easily afford to pay them the 80% or 100%, then you could not do this), then you could potentially pay them no less that the weekly subsidy. However, your staff must agree, and you need to get that in writing. The $585 and $350 is gross and not what they get in the hand (tax, KiwiSaver etc will come off that figure).

What happens if we can’t afford the 100% but staff won’t agree to 80%?

If you truly can’t afford the 100%, then you will have to go through a restructure and force changes to jobs/contracts using that process. As per below next question, you still need to do this properly.

What happens if we have to make staff redundant?

As per above, as long as you have done everything to mitigate the risk to your business and have used your best endeavours to retain your employees, and in despite of this, your business will not survive if you retain all employees, then you can still go through a restructure. Standard restructure rules and guidelines apply where you have a genuine reason and can prove that. At this stage, there is no indication that you will have to pay that subsidy back, however, further information could be released about that. Also, remember the entire subsidy received must be paid to wages during this period, so if you do restructure and people lose their jobs and the entire subsidy is more than wages, then I would contact Work and Income to ask them about repaying the difference. Be prepared for your entitlements to be reviewed if you terminate an employee’s employment. Terminations within a short time of application for the wage subsidy may be reviewed closely.

Can we pay 80% and top them up to 100% with annual leave?

Again, it is about sitting down with your staff and discussing this with them and getting them to happily agree. If they agree, then yes you could, but again get that in writing.

Our contracts say we can give them 14 days’ notice of a shut down and make them take annual leave. Can we do this?

No, the declaration states: You will not unlawfully compel or require any of the employees named in your application to use their leave entitlements for the period you receive the subsidy in respect of those employees. This means you can't.

One of my staff is a subcontractor, do I apply for them?

No, they are self-employed and need to apply for themselves using the self-employed form.

I have claimed the $350 for a part-timer, but on average they only earn $100 per week, what do I pay them?

You just pay them their contracted hours or average hours – whatever is greatest. You just need to ensure that the $350 is only spent on wages, which no doubt it will be to top up full-timers.

I have casual staff; can I apply for them?

Yes. You can apply for the wage subsidy for any casual employee(s) that are employed by you at the time you apply and who would have been expected to work during the time you will receive the wage subsidy.

Note: Ensure you get permission from your staff to get the subsidy – if you have applied and didn’t get permission, just have a quick chat with them now.

Disclaimer: Whilst all reasonable care has been taken to ensure these answers are correct, with information changing daily, we accept no liability whatsoever for reliance on these questions and answers. Ensure you speak with an HR consultation about your unique situation.

Access fully funded one-on-one advice!!

The Regional Business Partners Network has been allocated funding to support businesses through Covid-19. This covers HR advice, business continuity planning and cashflow management. If you require any of these services, we can help you with this. If you are interested, talk with Lisa (DDI 928 477) about what we can do. Details to apply for the funding are kathryn@mcoc.org.nz or 021 330 923

Access free and confidential mental health counselling and resources

If you have a Xero subscription, you, your employees and families can access free and confidential mental health counselling and resources through the Xero Assistance Programme.

Thanks, Sass Team