It can be tricky navigating the rules around the Wage Subsidy scheme and the extension. Restaurant Association New Zealand has started collating frequently asked questions and answered them to help you and your business:
When do the applications open for the wage subsidy extension?
Applications are now open, click here to check your eligibility.
When can I apply for the wage subsidy extension for my employee(s)?
You can apply to cover the wages of your employees over an 8-week period from 10 June 2020. If you have applied for the previous Wage Subsidy for your employee(s), you need to wait until just prior to those payments finishing before you can apply for the Wage Subsidy Extension. You can’t receive more than one COVID-19 payment for the same employee at the same time.
In general, the Ministry of Social Development (MSD) will email employers before their current 12-week Wage Subsidy ends. The email will let them know when and how to apply for the 8-week COVID-19 Wage Subsidy Extension and will list the staff who were paid the 12-week COVID Wage Subsidy, and give details about when the employer can apply for the Wage Subsidy Extension for them and any other staff. However, it is not confirmed yet whether this will occur in all instances, so it is best to keep an eye on the applications page, work out roughly when your current Wage Subsidy period expires, and if you meet the criteria look to apply prior to the expiry of receipt of the 12 week period from when you received your last payment.
I have a new employee, so hadn’t applied for the wage subsidy before for them. Can I apply for the wage subsidy extension?
Yes, you can apply for the Wage Subsidy Extension for your employee, even if you haven’t applied for the Wage Subsidy for them before.
My business has been open for less than a year. Can I still apply for the Wage Subsidy Extension?
Yes, new businesses which have been operating less than a year can apply for the Wage Subsidy Extension.
To determine whether your business meets the 40 percent decline in revenue assessment, you need to demonstrate revenue loss against a comparable 30-day period in another comparable month within the last 12 months, as opposed to a year on year comparison. For example, 40 percent loss of revenue attributable to COVID-19 comparing the 30 days before you apply to the closest period in 2019.
What does it mean when it says a decline in revenue for a continuous 30-day period, over a 40 days before I apply?
Your business must have experienced a minimum 40 percent decline in revenue 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. The decline must also be related to COVID-19.
For example, you apply on 29 June 2020. Your 40 percent decline in revenue must be for a continuous 30-day period between 19 May and 28 June 2020.
Revenue means the total amount of money a business has earned from its normal business activities before expenses are deducted.
Can I make someone redundant when they are receiving the Wage Subsidy Extension?
When you apply for the Wage Subsidy Extension, you will be required to declare that you agree to meet certain obligations. Like the first Wage Subsidy, these obligations will include:
That you pass the subsidy on to your employees.
That the employees are legally employed by your business and have not been given notice of redundancy at the date you apply.
That you retain your employees for the duration you are receiving the subsidy for them.
That you make best endeavours to pay your employees at least 80% of their normal pay. However, please note, that employment law still applies requiring there to be a valid contractual variation signed by all parties to the employment relationship for the employer to pay the employee less than what is agreed in their employment agreement. Also, the MSD declaration requires this, so in the absence of a valid contractual variation, you would be in a breach of both your employment AND MSD obligations.
That you have taken active steps to mitigate the impact of COVID-19 on your business.
Click here to read the full list of obligations.
I have received the wage subsidy for my employee, and this is more than they would ordinarily be paid, what do I need to pay them?
As with the original Wage Subsidy, if the employees’ ordinary wages are less than the subsidy, pay them their usual wages in accordance with their Employment Agreement unless there is a valid signed contractual variation. If this is the case, any excess can be used for the wages of other affected staff. If there are no other employees to use the subsidy for, then the remaining Wage Subsidy Extension should be paid back to MSD.
How long will it take for the Wage Subsidy Extension application to be processed?
MSD is working to pay the COVID-19 Wage Subsidy Extension as quickly as they can. They will need to check the information you have provided is the same as what’s held by Inland Revenue. If it isn’t, there could be a delay. Otherwise, if your application is approved, payment should be made within 2 business days of processing.
I have an employee who usually earns more than the Wage Subsidy amount, but can I just pay them the Wage Subsidy now?
Underemployment law, employees must be paid for each and every hour that they work at their agreed wage rate. Employers and employees can temporarily or permanently agree to vary the agreed wage rate. Any change requires good faith consultation and written agreement.
The Restaurant Association can provide further guidance on this and it is strongly recommended that you contact our Helpline on 0800 737 827.
For more COVID-19 news and advice visit restaurantnz.co.nz
