With many clients applying for the wage subsidy, Karl (our Tauranga partner) has developed some Q&A’s for our clients as part of a presentation to business owners.
What are the Governments Expectations?
There is a requirement to pay staff 80% of their wages if the business is in a financial position to do so. If it is not, the minimum requirement is to pass on the subsidy in full where employees’ wages are equal to or exceed the subsidy. If wages are less than the subsidy you should pay staff their ordinary pay. The balance of subsidy can be applied to other staff members that are not fully covered by the subsidy.
What happens if my employees don't work standard hours?
You must work out average pay. If the employee has been with you for 12 months or more the average pay is calculated over the last 52 weeks of work; if the employee has been with you less than 12 months, then the average pay is calculated over the time they have been with you.
THE SUBSIDY MUST BE USED FOR WAGES, NOT GENERAL BUSINESSES BILLS. DOING SO IS FRAUDULENT AND YOU WILL BE PROSECUTED IF FOUND.
Can I use Annual Leave?
No, you cannot compel or require a staff member to use their leave entitlements for the period they receive the wage subsidy. However, they can agree to allow you to use Annual Leave to top up the wages to the full pay. You cannot make any changes to an employment agreement without the written agreement of the staff member.
What are my other Obligations?
Employers must retain the employees named in the application for the period that the subsidy is received and the subsidy can only be used for the employee’s named in the application.
What happens if I applied for it and it wasn’t needed?
The government will commence Audits at the completion of the lockdown phase, this will take time, but they will be done;
If you have received a business interruption payout, you must repay the subsidy in full.
If you have now realised that you do not fit the criteria for the subsidy you will need to pay the subsidy back; keeping the subsidy could be considered Fraudulent;
If you applied for the sick leave subsidy for staff prior to the lockdown then applied for the wage subsidy you will need to pay the sick leave subsidy back. You need to contact MSD and tell them how much to you need to refund and why you need to refund the funds.
You can email MSD at COVID19subsidy_overpayment@msd.govt.nz