COVID-19: employment alert

The COVID-19 pandemic is evolving rapidly, and so too are the clarifications and corrections from the Government, as to employers’ obligations and administration of the Wage Subsidy.

As at 30 March 2020, here are the latest updates that you need to know:

Part-time employees on less than Wage Subsidy

The Government has announced that the entire Wage Subsidy must be passed onto the employee for which it was applied for. This, however, raises practical issues for employers with employees who normally earn less than the part time wage subsidy payment of $350 per week.

In these instances, it has been clarified that the correct way forward is to:

  • Pay any employees who are earning less than the part time government subsidy of $350 100% of their usual part time wages; and
  • Use the ‘left over’ money to top up any other employees’ wages to 80%.

For example – a part-time employee usually earns $100 per week. The employer will apply for the Wage Subsidy for them. The employee will then get paid their usual $100 from the Wage Subsidy, and the employer will then use the remainder $250 to top up any other employees’ wages to 80%. The employer must not use this extra Wage Subsidy for other business expenses.

The 80% ‘Top Up’ requirement

The Wage Subsidy requires that businesses must ‘try their hardest’ to pay the employees named in the Wage Subsidy application at least 80% of their usual wages. This requires the employer to ‘top up’ the amount given by the Government under the Wage Subsidy.

However, it has now been clarified that, where a business is unable to ‘top up’ this amount to 80%, due to for example – having no business trading during the lockdown period, then it is satisfactory for the employer to simply just pass on the Wage Subsidy payment to the employees through their payroll, without having to top it up.

Please note, that good employers will top up the payment if they can, however, if it is unmanageable for your business to make this ‘top up’ payment at present, the requirement has been relaxed.

Retaining employees

The requirements for the Wage Subsidy have been changed from the business undertaking their “best efforts” to retain employees, to the requirement that the business must retain the employees named in the application for the period of the subsidy (12 weeks). You may arguably commence a restructuring process during the 12 weeks, but the employee subject to the Wage Subsidy can not be made redundant until the 12 weeks is up (with the notice period expiring on the 12 weeks).

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.

We are here to help

We understand that this is a challenging and complex time for both employers and employees, so please contact the Lane Neave Employment Law team if you require any assistance.

Employment Law team

Employment: Andrew Shaw, Fiona McMillan, Gwen DrewittMaria Green,  Hannah Martin, Joseph HarropHolly StruckmanAlex Beal, Giuliana PetronelliAna Fruean, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia StrickettKen Huang, Mary Zhou, Shi Sheng Cai (Shoosh)Sarah Kirkwood, Janeske SchutteLingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew ShawFiona McMillan

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