Wage Subsidy Changes from 27 March 2020

As per our previous FAQ blog we said that things were changing daily and we would let you know if anything changes with the Wages subsidy. Yes, here we are again with further changes. The below outlines the changes, as per the Work and Income website, if you applied prior to these changes any new obligations are not applicable to you. It is now for us to try and understand what is new, as some of the updates are part of the old obligations, it just wasn’t specific enough. From what we can see the only real new obligations are you must retain your staff. Changes:

  • Leave Payments - From 3pm on 27 March 2020, the COVID-19 Leave Payment is no longer available for employers. Applications already submitted will continue to be processed and paid.

  • Updated Declaration - This is the link to the updated declaration you will be signing – we highly recommend reading in detail: https://workandincome.govt.nz/online-services/covid-19/declaration-wage-subsidy.html

  • Updated Steps to Mitigate Your Risks - They have made a slight change in the wording of what is included in the steps to mitigate the risks to you business - before making your application for the subsidy, you have taken active steps to mitigate the impact of COVID-19 on your business activities (including, but not limited to: engaging with your bank, drawing on your cash reserves as appropriate, making an insurance claim). We assume this is saying that if you have lots of cash reserves (unless air marked for something else or needed in the future) and don’t need the leave subsidy as can get through it, then don’t apply. This is where a budget and cashflow forecast would be handy.

  • You Can’t Change Wages Without Permission – This was always applicable prior to 27th March, however, they have now made this clear. You acknowledge that the granting of your application and your receipt of the subsidy does not override your existing obligations under the Employment Relations Act 2000. You will not make any changes to your obligations under any employment agreement, including rates of pay, hours of work and leave entitlement, without the written agreement of the relevant employee. This means that our original FAQ stands where you can’t drop wages to 80% etc, without going through that fair and reasonable consultation with the staff and getting them to agree to and sign a variance. It would be expected, if your business can afford it, to pay the 100%.

  • You Must Retain Your Staff - You will retain the employees named in your application as your employees for the period you receive the subsidy in respect of those employees. It is no longer - best endeavors.