Wage Subsidy FAQs
Last modified 1 April 2020
• Are we obligated to top up the subsidy to the 80% of employee’s normal wage?
Businesses accessing the scheme must still undertake best endeavours to pay employees 80% of their pre-COVID income. Where that is not possible – in particular 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.
• If a company is unable to make up the wage from the $585 a week to be 80% of your income, are they still eligible to qualify for the subsidy?
• If an employer’s best endeavour to keep staff on the payroll is only the $585 per week per employee, is that okay? e.g. Cashflow is tight and if a person originally earned $1000 per week and employers don't have $215 (diff from 80% of $1000) to top up.
• Are we able to just pay the $585 during the 4-week lock down period? And then 80% when we get back to work?
• Does the wage subsidy apply to our casual contract staff who have been working more than 20h per week?
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.
• If you are applying for the wage subsidy for part-time staff, is parttime defined by average hours worked per week, above or below 20 hours or does it work off the individual employment contract?
Some employees may have variable hours, so to assess their subsidy rate, you should average their hours over the last year. If this average is 20 hours or more, they can apply for the full-time rate, and if it’s under 20 hours they can apply for the part-time rate.
• The wage subsidy is for fixed amounts. What happens for staff whose average weekly wage is less than those fixed amounts? Pay them the full amount?
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.
• Is it possible to make multiple subsidy requests if we missed staff?
Yes. Each business can only apply once for each employee, but the employer can make multiple applications.
• In terms of the capped wage subsidy (when it was at $150,000) - we have received our money, but how do we apply for the additional amount we need now that it’s not capped?
If you have already applied for and been granted the wage subsidy for your employees and MSD has capped the amount paid, you don’t need to do anything because MSD will top up the difference. If you have applied for the wage subsidy for your staff, and claimed only enough to meet the cap, once you have used this subsidy, you can reapply.
Pay to directors:
• If a business owner isn't paying themselves as an 'employee' i.e. not wages, but instead taking drawings etc. Are they able to receive the wage subsidy?
Yes – they will need to list themselves as a staff member with their own IRD number attached.
• Can we have a better definition of “Normal Income”?
Normal income would be what the person’s regular income is. Is the person paid weekly, fortnightly, monthly? Are they on an annual salary? If they have variable income, what is the average amount?
• Is PAYE payable on the wage subsidy? Do employers still have to pay Kiwisaver contribution?
Yes – the wage subsidy is included as excluded income and is exempt from GST. However, all deductions when the subsidy is passed onto staff (such as PAYE, KiwiSaver and child support) should be made as normal.
• Can we use the wage subsidy to contribute towards annual leave?
The intention of the subsidy is to keep staff in work and primarily should be used to meet Wage commitments.
• With the minimum pay increasing from 1 April, can we then apply for wage subsidy to that new level from that date?
The Wage Subsidy is a flat rate so no adjustment will be made.
• We have some staff who are maternity leave and are due to return within 2 weeks’ time. Can we apply for these staff as well?
Yes – once the staff member returns. See responses under Multiple Applications.
• Are people on working visas eligible for the subsidy? Is there financial support that they can seek from Work and Income?
Legally working in New Zealand means a person is both working in New Zealand and is legally entitled to work in New Zealand. A person is legally entitled to work in New Zealand if they:
-are a New Zealand or Australian citizen (including a person born in the Cook Islands, Niue or Tokelau), or
-have a New Zealand residence class visa, or
-have a New Zealand work visa or a condition on their New Zealand temporary visa that allows them to work in New Zealand.
• Are employers able to submit their wages subsidy applications by file rather than typing them in?
If you're a large employer (e.g. 100 employees), we know the application form may be hard for you to use due to the number of employees you have. Follow the instructions on the link to make your application.
• As things evolve, we may need to make employees redundant during the 12-week period. How does that effect entitlement?
As of 4pm on 27th March 2020, if you submit an application for the Wage Subsidy you need to meet the eligibility criteria and obligations. Part of those obligations is the following: “You will retain the employees named in your application as your employees for the period you receive the subsidy in respect of those employees.”
• What will the post-reconciliation/audit involve? (so we can make sure we keep accurate/complete records)
MSD is still working through this detail you should however be keeping accurate records of subsidy payments received and distributed as a matter of best practice.
Previously redundant employees
As an employer, if you had to let some of your employees go because of COVID-19, you can now rehire them and get the COVID-19 Wage Subsidy to help pay them, so long as:
- The employee was employed by you as of 17 March 2020;
- You let them go because of COVID-19; and
- You did not previously apply for the COVID-19 Wage Subsidy for the employee.
In these instances, the obligation of ‘good faith’ will apply and you must rehire the employee on at least the same terms and conditions.
Re-employment will need to be on a fixed term basis, subject to the 12 Week Subsidy.
Employees who work variable hours
If your employees work variable hours, you may use an ‘average’ approach to work out what rate to apply for. To find this calculation, use the average hours worked over the last 12 month period or over the time period they have been employed (if it is less than 12 months). Using this average number of hours, if it is 20 hours or more you apply at the full-time rate and if it is less than 20, you apply for the part-time rate.