Navigating COVID-19 HR Issues.
FREQUENTLY ASKED QUESTIONS (AND ANSWERS)
UPDATED ON 20 MAY 2020
FAQ: Wage Subsidy
I applied for the wage subsidy a long time ago and need to know if I am going to be approved & when payment will be made. I can’t get through on the MSD 0800 number – what can I do?
MSD are responding more quickly to emails at the moment. They have also just increased their resource. You can email any of the following: COVID19_Employer_Support@ msd.govt.nz or firstname.lastname@example.org for Auckland based businesses.
As an employer, if one of my employees who I have made an application for, voluntarily leaves during the twelve-week period for another job opportunity or because of caring responsibilities, do I need to pay the money back to MSD?
No. When your employee voluntarily leaves their employment you must advise MSD, and you cannot claim any more subsidy for that person.
Is there an amount of time I need to employ someone for after using the twelve-week employee wage subsidy?
There are no specific conditions in place about this, however the point of the subsidy is to retain employment. So, you must at least keep your employee until the end of the twelfth week.
Should staff who cannot work from home during this time, but are continuing to get paid, still be accruing leave normally?
Yes, your obligations as an employer under employment law haven’t changed.
If I have received the wage subsidy, but it is more than the amount that an employee normally receives, can I use those funds to go towards other employees’ wages?
Yes. Please see information on this on Work and Income’s website.
What if the 80% is below minimum wage? Is it legal to be paying this?
The Scheme is to retain workers and it is not based on an hourly rate. So, yes.
How do I pay my staff who are essential skills workers who are high risk and therefore are not working or do not want to come into work because of the risk work (they feel unsafe leaving their home)? We do not have 30% reduction in revenue.
You will need to see whether they can work from home or discuss with them about taking their leave.
I’m a large employer, do I need to fill in an application form manually with all my employee’s details?
Can I receive a Wage subsidy for casual workers?
Yes. The subsidy is available for employees ‘legally working in New Zealand’, including casual workers.
How do I assess whether my casual employee(s) qualifies for the full-time or part-time wage subsidy rate?
Casual employees may have variable hours, so to assess their subsidy rate, the employer should average their hours over the last year. If this average is 20 hours or more, they can apply for the full-time rate, and if it’s under 20 hours they can apply for the part-time rate. If they have worked for less than a year, the employer should average the hours worked during their total employment period.
Can employers use sick leave to top up the subsidy, or do we have to have staff permission first?
You have to ask employees first. You and your employee can agree to use any form of paid leave (e.g. annual leave) to cover their period of self-isolation. Employees aren’t required to have used any or all their paid leave entitlements before they can receive the subsidy.
Can you get the Wage & Salary Payment as a business who may be classed as an essential service but for whatever reason they’ve decided they can’t operate right now (or that staff member can’t work)?
As long as there is a decline of 30% in revenue as per wage subsidy requirement you can apply for wage subsidy.
When it says “Pay a minimum of 80% of normal income” – does this include shift allowances, overtime, commissions and Employer KiwiSaver Contributions?
Yes. The wage subsidy is to help employers pay wages; it does not change anything else.
If my business cannot afford to pay up to 80%, can I pay the subsidy rate only?
Yes, but you need to be able to prove that you are doing your best to reach 80%. The point of the subsidy is to maintain employment.
Should I receive email confirmation when applying for the government subsidy?
No, you will receive an email about the outcome/ details of your application once it has been processed.
Are those at risk, but under 70 with health conditions, covered by the subsidy?
The Wage Subsidy is to support employers to keep their staff employed while they consider changes that may be needed while the disruption continues, and to ensure the future viability of their business.
Are Wage Subsidy (and Leave Payment) payments subject to tax?
Advice from IRD is that The COVID-19 Wage Subsidy is not subject to GST and is not taxable. However, the payment of a person’s normal wages through the use of the Subsidy is subject to the usual PAYE, Student Loan, Kiwisaver deductions.
The COVID-19 Leave Payment for self-isolation is not subject to GST, but is paid to replace taxable income, so is subject to tax.
Can you do multiple applications for the same employee as the situation changes for the Wage Subsidy?
Each business can only apply once for the Wage Subsidy for the same employee.
If an employee has sufficient annual or sick leave entitlements to cover the time off, can they also receive the subsidy on top of receiving that entitlement?
You and your employee can agree to use any form of paid leave (e.g. annual leave) to cover their period of self-isolation. However, employees aren’t required to have used any or all their paid leave entitlements before they can receive this payment.
How does the Wage Subsidy work with contractors?
Contractors can apply as self-employed and are required to meet the criteria. Businesses should not be seeking the wage subsidy for contractors.
Receiving the government subsidy on top of leave entitlements?
The subsidy is for business to use towards paying their staff. Staff leave accrues or is used as normal.
We are a small high growth company, how does the revenue reduction based on last year impact our year’s growth and ability to apply now?
If you can demonstrate some change in income due COVID-19, you can apply. When in doubt, apply and MSD will assess your situation.
Can Non-profits/incorporated societies can claim the Wage and Leave Subsidy?
Charities and not for profits can apply for the scheme if they are an employer, are registered in New Zealand (business IRD number, GST registered, NZBN, or Companies office).
When will subsidy payments be made?
The government endeavours to pay within 5 days of application, however it depends on the evidence provided.
What does a 30% decline in revenue mean?
This means a business has experienced a 30% decline in: actual revenue or predicted revenue and that decline is related to COVID-19. The business must experience this decline between January 2020 and 9 June 2020.
Revenue means the total amount of money a business has earned from its normal business activities, before expenses are deducted.
To determine a decline in revenue, the business must compare one month’s revenue against the same month the previous year (e.g. February 2020 compared with February 2019). The revenue of the month in the affected period must be at least 30% less than it was in the month it was compared against.
Where a business has been operating for less than a year, they must compare their revenue against a previous month that gives the best estimation of the revenue decline related to COVID-19.
At a minimum, in most cases, businesses must pass on the full subsidy to their employees. Can I assume this is the gross amount and still needs to be taxed?
Yes, it’s the gross amount and still all normal tax/KiwiSaver etc. payments are made.
I already applied for the COVID-19 Wage Subsidy, but only for some of my employees. Can I make another application for my remaining employees?
Yes. You can make an additional application for any of your employees whom you haven’t already applied for.
As an employer I’ve already received the Leave Payment for an employee. Am I now able to apply for the COVID 19-Wage Subsidy for this employee?
The Leave Payment only covers 14 days for self-isolation. After the 14 days, you can apply for the COVID-19 Wage Subsidy for that employee, as long as you meet the criteria for the payment.
My employee is working from home, can I just pay them 80% of their wages?
Employers need to remember that while using ‘best efforts’ to pay an employer 80% of their wages may meet the terms of the Wage Subsidy, if the employee is working in an Essential Business or Working From Home (WFH), 80% is unlikely to comply with the terms of the employee’s employment agreement. If they are unable to pay 100% of the employee’s wages, employers need to deal with the shortfall – either by seeking the employee’s agreement to reduce hours or pay, or by using some form of leave.
I am an essential service and have received a wage subsidy, but my employee is refusing to work due to Covid 19 risks – do I have to pay the top up to 80%?
Although this may seem unfair, if you have applied for and received the wage subsidy then you must meet the obligation to pay 80% of wages.
FAQ: Employer Obligations
As an employer, what are my obligations under employment law at this time?
Your obligations under employment law haven’t changed. You still need to comply with your employment agreements, act in good faith and consult with employees.
Can I make the decision to change my employee’s terms and conditions of employment e.g. their hours of work?
In the employment agreement, employers and employees have agreed on a set of terms. Changing these terms will require the agreement of both parties. There may be some flexibility ‘built in’ to the agreement (e.g. around hours, duties or things like discretionary payments), but any other changes will require agreement. Unilaterally changing someone’s employment agreement is very unlikely to meet the requirements of s103A of the ER Act, even in a pandemic situation.
If at Level 3 we are allowed to attend work and an employee says don’t feel comfortable coming in where do we stand, and what do we say?
Managing worried employees will start with showing them your detailed Health & Safety Plan for a safe work place at Level 3. If they can do their work from home, they should be working from home. If they cannot work from home, and still are not comfortable coming to work when you have a site that is safe to work in, you may need to discuss your employee taking leave. Please call Adviceline on 0800 300 362 to discuss your specific situation.
Under Level 3, are you required to bring back your employees at 100% (or even 80%) of pay?
You will need to consider the relevant terms of employment, your work requirements and any agreements reached with your employees. Any changes to their employment agreement must be done through a process which consults with the employee and gains their agreement. Please contact CHQ to discuss your specific situation.
I have high risk employees, sick employees with no leave, and employees who choose to stay home as they don’t feel safe. What and how do I pay them?
Please your CHQ contact person for advice specific to the individual situation.
Can I ask my staff to return to work at 80%?
For any variation to their employment agreement, consultation and agreement with your staff are required. It needs to not breach minimum standards. Please called Adviceline on 0800 300 362 to discuss your specific situation.
As an employer, if I have already received a COVID-19 Wage Subsidy for an employee, do the new obligations of the COVID 19 Wage Subsidy (after it was modified on March 27 2020) now apply?
No. The obligations for the COVID-19 Wage Subsidy remain the same as at the time you applied. You need to comply with the declaration you made at the time of submitting your application.
What do I do if the subsidy is higher than what I usually pay my employee?
The wage subsidy is designed to keep your employees connected to you. Any difference should be used for the wages of other affected staff.
As an employer I had to let some of my employees go because of COVID-19. Can I rehire them and get the COVID-19 Wage Subsidy to help pay them?
You can apply for the COVID-19 Wage Subsidy if you re-employ your employees before you apply and if your employees were:
- employed by you as of 17 March 2020; and
- you had to let them go because of COVID-19; and
- you have not already applied for the COVID-19 Wage Subsidy for the employees.
It is expected that employers and employees would operate in ‘good faith’ and employers would look to re-hire on at least the same terms and conditions.
Can a business use employees’ annual leave to top up the wage subsidy to 80%?
When you apply for the wage subsidy for an employee you provide a declaration that you will pay 80% of wages. Annual leave is an entitlement which an employee has already earned by working in the past, it is not ordinary time wages. Essentially, you would be using the employee’s own money to meet your obligations. However, an employee could agree to take annual leave to increase their wages from 80% to 100% but it is their option to do that.
How do I manage workers who don’t want to come to work (scared of the risk)?
You will need to see whether they can work from home or discuss with them about taking their leave. You should also have a Health and Safety Plan to show them how the workplace is safe to return to.
What do we pay a staff member who is not equipped to work from home? We won’t suffer a 30% loss in income so will not qualify for the wage subsidy.
You need to have a discussion with your staff to see if they approve of using their leave. Alternatively you can ask them whether they would like to stay on your payroll at an agreed salary and go to work and income to see whether they are entitled to any sort of benefit or accommodation supplement. Please direct employees to https://workandincome.govt.nz/eligibility/index.html to see if they are entitled to any kind of help.
Do I need to pay the new minimum wage to someone who is not working but being paid?
If your business cannot afford to pay the minimum wage due to covid, you do not have to. However you may be required to backdate minimum wage requirements post lock down.
What if I can’t process the new minimum wage as I can’t access my payroll due to the Level 4 COVID-19 Lockdown?
Employers should process the increase as soon as they are able to do so safely and in compliance with any COVID-19 restrictions in place. Employers will need to pay employees back for any hours that were worked, but for which the required pay rate could not be processed at the time.
Do the requirements of the Holidays Act 2003 still apply?
A few things to note about leave:
- If a person is taking annual holidays, they cannot be working at the same time. Annual leave cannot be used to top up the pay of an employee who is actually working.
- Annual holidays can only be ‘cashed up’ in the normal way – i.e. only entitled leave, only one week per year, and only at the employee’s request.
- Annual holidays should be taken by agreement – the employer and employee need to agree on when annual holidays will be taken. If agreement cannot be reached, the employer can direct the employee to take annual holidays, the employer must still give 14 days’ notice and the direction must be in good faith, fair and reasonable.
- Remember that while the employer and employee can agree to the employee taking annual holidays in advance of entitlement, the employer cannot direct it.
- Sick leave can only be taken when the employee is sick or injured, their spouse is sick or injured, or someone who depends on the employee for care is sick or injured. There is a real risk in employers/employees ‘agreeing’ to use sick leave in other circumstances, as this does not meet the requirements of the Holidays Act. It may mean that sick leave ‘taken’ during the pandemic is actually still available for the employee at a later date.
Does a current Trial Period still apply during the Lockdown?
Yes, trial periods still apply. Employers may use a valid trial period to terminate employment. To be valid, the clause must contain all the statutory requirements.
- the employee must have signed the agreement containing the trial period before starting work;
- the employer cannot have had 20 or more employees at the time the trial period was signed;
- the termination must take place within the 90 days, and notice must be given.
Trial periods are tricky so we strongly recommend you seek advice before using a trial period to terminate employment.
What if I have offered employment to someone but they haven’t been able to start?
If you have offered employment to someone (which they have accepted) but they haven’t started work, then you will need to consider whether to commence employment. These prospective employees are still governed by the duty of good faith and where there has been an acceptance of an offer, there is an employment relationship. Hence, consider first whether suspending the commencement date is an option – this will give you time to consider whether to go ahead with the employment. If that is not an option, then redundancy is the next step. Most employment agreements do not have ‘force majeure’ clauses (clauses that allow you to cancel the agreement due to circumstances outside of the reasonable control of both parties) and force majeure is not a term commonly used in the employment context. The recommendation is therefore to stick to a redundancy process because whether you rely on redundancy or force majeure, you must still comply with the duty of good faith. If you have offered employment to someone who hasn’t yet accepted that offer, then you can withdraw the offer, but discuss it with them first as part of the duty of good faith. A verbal acceptance of an offer is still an acceptance.
Can I make an employee redundant?
If an employer applied for a Wage Subsidy post 4pm 27 March 2020, the employer must undertake to retain employees for the period of the subsidy – i.e. they cannot terminate the employee’s employment. If the employer terminates for redundancy in this period, not only would this be a breach of the terms of the Wage Subsidy (and require the employer to pay it back) but the employer will need to justify the redundancy under the normal test.
If an employer has not applied for a Wage Subsidy, and wants to terminate an employee’s employment for redundancy, it will need to explain, as part of its proposal for consultation, why it did not apply for the available Government assistance. Redundancy is about the position, not the person and the employer needs to justify why that particular role may no longer be required, rather than ‘targeting’ specific employees, particularly if there is more than one person doing the same job.
Can a business place staff on leave without pay rather than making them redundant? If so, can they access unemployment benefits?
If the employer and employee agree, then yes. The Wage Subsidy means that employers can place a worker ‘on leave with pay’. If the employee remains employed, then they cannot access Job Seeker Allowance. There may be other allowances that the employee can access (such as accommodation or hardship).
If you are seriously considering a redundancy process, CHQ has consultancy services that can help with this process.
Given the situation changing so fast what is now considered appropriate consultation?
The employment relationship is built around the principle of good faith. If you are anticipating structural changes to your business (even if it could be a while away yet) you should start consultation now about possible change and then keep consultation going until we move out of the crisis. Creating an open channel of communication now with your employees allows for ongoing feedback and enables you to make quick decisions as circumstances change. Employees will understand the need to make change, so you just need to demonstrate that you are being thoughtful in your decision-making and taking your employees’ views into account. It is likely that some employees will make their own decisions about employment based on changes they need to make to their personal lives. It is important that everyone understands each other’s position so good decisions can be made and that requires an open and continuous channel of communication.
Alternatives to Redundancy
1. Reduced hours – for many working reduced hours (with reduced pay) will be a better option than redundancy.
2. Job Share – If too many roles are cut, you may find it difficult to gear up again when things change or not able to keep up when employees get sick. Two people doing 20 hours each may be better then one person working 40 hours, giving you flexibility to quickly scale up as things improve.
3. Alternative pay arrangements – Can you reduce pay to retain employees (bearing in mind you are subject to minimum wage requirements). An agreed temporary reduction in pay may work for some employees.
4. Leave without pay – consider whether you can suspend their employment, which is effectively leave without pay. This would need to be done with agreement of the employee. Consider relaxing restrictions on secondary employment in these instances.
5. Government support: While you may not meet the subsidy criteria today, that may change at any time as government support changes. Consider other options to keep your business afloat a bit longer where other alternatives may present themselves.
FAQ: Immigration & Visa
What about my staff who are on Work Visas or Holiday Visas?
Visas of this kind have been automatically extended to September. Information on this is on the Immigration website.
What if I cannot afford to pay the minimum of 30 hours to my migrant workers as pet their visa conditions?
From an employment relationship perspective, Covid19 is a ‘frustration event’ which is preventing the employer complying with a term of the IEA (to provide for 30 hours work). You could go down the redundancy route because you cannot comply with the term of the agreement or you could mitigate the effect of the frustrating event and retain and pay subsidy. Whilst this is technically a breach, frustration should provide a shield against remedies. This is true for Personal Grievances providing you act in good faith). This is a grey area though and we advise you contact us to discuss further.
I have a supermarket, can my migrant workers with temporary visas continue to work and do other roles that specified on their visas?
Yes, effective 25 March, Immigration NZ have made changes to immigration instructions to relax visa restrictions for two groups of current supermarket employees for a period of 30 days:
- work visa holders to allow them to work in roles other than specified on their visa;
- student visa holders to allow them to work more than 20 hours per week
These changes have been made in response to supermarkets experiencing immediate labour supply issues, particularly to meet the increased demand for shelf re-stocking, and their subsequent request to relax visa restrictions for migrant workers.
NB: The definition of ‘supermarket’ is tightly defined, limited to retailers selling primarily food and groceries, who are affiliated with Woolworths New Zealand or Foodstuffs Limited.
Is there any support available for those on working holiday visas?
The Wage subsidy is available for employees ‘legally working in New Zealand’. This includes people who have a New Zealand work visa or a condition on their New Zealand temporary visa that allows them to work in New Zealand.
This information has been sourced from one or more of the following official governing bodies for employers in NZ:
- EMA (Employers & Manufacturers Association)
- Worksafe NZ
- NZ Ministry of Health
- COVID-19 NZ Official Site
- Immigration NZ
- Employment NZ