The Government’s “Go Hard, Go Early, Contain COVID-19” Strategy introduces leave payments to support employees, self-employed and contractors who are unable to work due to self-isolation or who are sick with COVID-19 or caring for dependents (either due to self-isolation or contracting COVID-19). The strategy also provides support, in terms of wage subsidies, for businesses whose revenue is affected by COVID-19.
A wage subsidy has been introduced to support businesses (and their employees) impacted by COVID-19, which may face making employees redundant and/or reducing their hours because of COVID-19.
- Your business must be registered and operating in New Zealand. This means that the business is registered with the New Zealand Companies Office, is physically located in New Zealand and your employees legally work in New Zealand;
- Sole traders are not required to be registered with the New Zealand Companies Office, however sole traders must have a personal IRD number for paying income tax and GST, government licences and permits for their business needs, and qualifications or registrations for their trade or profession in New Zealand. A sole trader must be physically located and legally working in New Zealand.
Eligible firms (including sole traders and self-employed) will be provided a lump sum payment equivalent to $585.80 per week per full time employee (20 hours or more per week) and $350 per week per part time employee (less than 20 hours per week) for 12 weeks up to a cap of $150,000 per employer and $7,029.60 per employee.
To qualify, businesses must declare they have suffered, or are projected to suffer, at least a 30 per cent decline in revenue due to COVID-19 month on month for any month between January and June this year compared to last year.
In order to qualify for the wage subsidy, the employer must provide the following undertakings:
- Employers must declare that, on their best endeavours, they will continue to employ the affected employees at a minimum of 80 per cent of their income for the duration of the subsidy period.
- Employers must also have taken active steps to mitigate the impact of COVID-19, such as seeking advice from their bank/financial advisor, and sign a declaration form to that effect.
Employers can apply to the Ministry of Social Development through Work and Income’s online portal for the wage subsidy www.workandincome.govt.nz.
Sick Leave Scheme
The COVID-19 Leave Payment will be available for eight weeks from 17 March 2020. Employers can apply for this more than once on behalf of employees. It will be paid to employers who have eligible employees and the payment must be passed on in full to the employee.
Who can get it?
Employers, contractors, sole traders or self-employed may qualify for the COVID-19 Leave Payment. The payment covers employees (including full-time, part-time and casual) and contractors who are legally working in New Zealand and who:
- need to self-isolate in line with the Ministry of Health Guidelines and have registered as needing to self-isolate with Healthline, (2) cannot work from home and (3) their self-isolation is not because they left New Zealand since the travel restrictions announced on 16 March 2020 and have since returned; or
- cannot work because the person has been diagnosed with COVID-19; or
- cannot work because they are caring for dependents who are required to self-isolate or who are sick with COVID-19.
The COVID-19 Leave Payment is paid at a flat rate of:
- $585.80 to a person working 20 hours or more per week.
- $350.00 to a person working less than 20 hours per week.
Employers receiving the payment for employees who are required to self-isolate can receive it for 14 days (the duration of the self-isolation period). It can be paid for the entire period the employee is sick (or looking after a dependent who is sick) with COVID-19, but the employer must apply every 14 days.
Workers taking sick leave before 17 March 2020 can only access the scheme for time spent on sick leave from 17 March 2020. It will not be accessible for those who have travelled overseas since 16 March 2020. The Ministry of Social Development will pay the employer on a fortnightly basis once it receives and approves the application.
Impact on existing leave entitlements
An employer and employee can agree to use any form of paid leave (such as sick leave or annual leave) to cover their period of self-isolation. Work and Income has advised that employees are not required to have exhausted their sick leave entitlements before receiving the COVID-19 Leave Payment. Obviously any payment of the COVID-19 Leave Payment could be topped up by an employee’s leave entitlements.
This advice is based on information available on Work and Income (www.workandincome.govt.nz) and the Beehive (www.beehive.govt.nz).
If you have any queries about this, please do not hesitate to contact us to discuss it.