By now, many businesses that have been affected by COVID-19 have applied for support through the wage subsidy.
If you are one of them, keep in mind that the subsidy comes with specific conditions. We want to help you keep your business afloat and keep your team together. If anything changes that may affect your eligibility or entitlement to the subsidy, you must notify the Ministry of Social Development (MSD) within 5 working days.
Applications have now closed for the wage subsidy. However, if you’re still significantly affected by COVID-19, you may be able to get the wage subsidy extension. The new eight-week scheme is available from 10 June 2020.
No double dipping
You can apply for the extension even if you didn’t apply for the original wage subsidy. However, you can’t receive more than one COVID-19 payment for the same employee at the same time. This includes the:
- Wage Subsidy
- Leave Support Scheme, and
- Wage Subsidy Extension.
You can’t apply for the wage subsidy extension for an employee until their 12-week wage subsidy has finished.
Main requirements of the wage subsidy extension
You are entitled to the subsidy extension if:
- your business has experienced a 40% drop in revenue because of COVID-19 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. If you are a pre-revenue research and development start-up business, you can include a drop in projected capital income when determining the 40% decrease in revenue.
- you have taken active steps to mitigate the impact of COVID-19 on your business. This includes talking to your bank, drawing on cash reserves, making an insurance claim. You need to be able to provide evidence of the impact on your business and the steps you have taken.
As an employer, you:
- must retain employees for the period of the subsidy.
- do your best to pay your employees 80% of their pre COVID-19 income for the period of the subsidy. If this is not possible then you pass the entire wage subsidy extension on to employees. This applies to all employees, and they all must at least receive the full value of the subsidy. Where the ordinary wages or salary of an employee was lawfully below the amount of the subsidy extension before the impact of COVID-19, you can pay the employee that amount.
- can’t apply for the wage subsidy extension for employees if you’ve already made them redundant. If you want to apply for them, you must cancel their redundancy notice and re-hire them. You can then apply for that employee and you must retain them for the period of the wage subsidy extension.
Your declaration and obligations
When you apply for the subsidy extension you make a declaration about your business and how you will use the subsidy, including that you meet the requirements listed above and operate a business employing the people named in your application; and those employees are legally employed (in New Zealand).
You’ll need to acknowledge your existing obligations as an employer and you:
- will discuss the application with employees and obtain their consent (preferably in writing) to information sharing, and advise them they can request access to information provided in the application under the Privacy Act.
- won’t make any changes to pay rates, working hours or leave entitlement, without written agreement from the relevant employee.
- won’t make employees take their leave for the period you receive the subsidy.
You will need to provide information to MSD about you, your business and (with their consent) the employees named in your application and provide the following:
- consent to information sharing between MSD and other agencies (including non-government agencies).
- consent to MSD publishing information about your business and the level and duration of any subsidy provided to you on a publicly available register.
The terms require that you agree to repay the subsidy or part of subsidy if you:
- fail to meet any obligations.
- were not or stop being eligible for the subsidy or any part of the subsidy.
- provided false or misleading information.
- receive insurance such as business interruption insurance for any costs covered by the subsidy.
And, finally you will need to confirm that you will notify the Ministry of Social Development within 5 working days if anything changes that may affect your eligibility or entitlement to the subsidy, including if any of the employees named in your application end their employment relationship with you.
You may be subject to civil proceedings to recover any amount received that you are not entitled to and/or to prosecution for offences under the Crimes Act 1961.
Talk to us about your eligibility for the wage subsidy extension. We can advise you on the best way forward.