In light of New Zealand being placed back into level 2 lockdown on 11 August 2020 and Auckland into level 3 lockdown, many businesses are beginning to prepare and plan for the ‘new normal’ reality of COVID-19. We appreciate that this can create a lot of uncertainty for businesses, so we have put together a brief summary of resources that are still available to support employers at this time.
New ‘Resurgence’ Wage Subsidy Scheme
On 17 August 2020 Finance Minister Grant Robertson announced a new nationwide ‘resurgence’ Wage Subsidy for employers who are financially impacted by the resurgence of COVID-19 and resulting change in alert levels.
To qualify for the new subsidy, employers must have had, or expect to have, at least a 40% drop in revenue for a consecutive period of 14 days between 12 August and 10 September, compared to the same period last year. The drop in revenue must be due to the change in alert levels.
Employers will need to sign a declaration on the same or similar terms to the most recent subsidy declaration and will need to obtain employee consent to the release of personal information.
The Ministry of Social Development has advised that the new ‘resurgence’ Wage Subsidy Scheme will be open for applications from 1pm on Friday 21 August 2020 through to 3 September 2020.
It is important to note that employers cannot apply for the ‘resurgence’ Wage Subsidy Scheme for an employee at the same time as they are receiving other COVID-19 related wage subsidy payments for that same employee. Accordingly, employers currently receiving the wage subsidy extension (below) may have a short window to apply for the ‘resurgence’ Wage Subsidy Scheme, after the conclusion of the 8 weeks of the Wage Subsidy extension, but prior to 3 September 2020.
Wage Subsidy extension
Along with the new ‘resurgence’ Wage Subsidy, the extension to the original Wage Subsidy is still available.
The Wage Subsidy Extension payment is available to support employers, including sole traders, who are all significantly impacted by COVID-19 after the original Wage Subsidy Scheme ends.
To be eligible, similar to the new ‘resurgence’ wage subsidy scheme, your business must have had a revenue loss of at least 40% for a continuous 30 day period. This period needs to be in the 40 days before you apply, but no earlier than 10 May 2020, and must be compared to the closest period last year.
Employers have until 1 September 2020 to apply for the Wage Subsidy extension. On a practical level, if an employer meets the criteria for the extended wage subsidy, it will be preferable to the new ‘resurgence’ Wage Subsidy Scheme, as it covers a period of 8 weeks.
Leave Support Scheme
The COVID-19 leave support scheme is available for employers, including sole traders, to pay their employees who cannot work. This is only to pay employees who can’t come into work because Ministry of Health guidelines recommend they stay at home, and they cannot work from home. On 17 April 2020 Finance Minister Grant Robertson announced that in order to make the Leave Support Scheme more flexible the requirement for businesses to have dropped 30% in revenue due to COVID-19 has been abandoned. It is intended that this scheme will be used, to ensure that people who are required stay home and do not spread the virus.
The Leave Support Scheme is paid out at a flat rate of $585.80 for people who were working 20 hours or more per week (full time rate) and $350 for people who were working less than 20 hours per week (part time rate).
The payment will be made to employers as a lump sum to cover 4 weeks of the employees pay and employees agree that by accepting the payment they will use their best endeavours to pay at least 80% of the employees’ usual wages or salary for the duration of the 4 week period. Applications for the Leave Support Scheme are to be made through the work and income website.
Business Finance Guarantee Scheme
Small and medium-sized business may be eligible for Business Finance Guarantee Scheme. The Scheme supports banks to take on lending by the Government taking on the default risk of up to 80% of the loan. Lending decisions are made by banks, and borrowers must still pay the loan back, with interest – as they would normally.
Small Business Cashflow Loan Scheme
Inland Revenue are providing interest-free loans for a year to small businesses as they recover from the impacts of COVID-19. This will provide assistance of up to $10,000 to firms employing 50 or fewer full-time equivalent employees. The loan will be interest-free if it is paid back within a year, after that the interest rate will be 3%.
Apprenticeship Boost
Your business may consider taking on a first or second year apprentice through a New Zealand Apprenticeship or Managed Apprentice programme. If so, Employers can claim $1,000 a month for eligible apprentices in the first 12 months of their training programme or $500 a month in the second 12 months of their training programme. This Boost will be available from August 2020 until April 2022.
Workplace Law team
Employment: Andrew Shaw, Fiona McMillan, Gwen Drewitt, Maria Green, Hannah Martin, Joseph Harrop, Holly Struckman, Alex Beal, Giuliana Petronelli, Ana Fruean, Elise Wilson, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia Strickett, Ken Huang, Mary Zhou, Shi Sheng Cai (Shoosh), Sarah Kirkwood, Janeske Schutte, Sati Ravichandiren, Lingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew Shaw, Fiona McMillan
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