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Overview of wage subsidies and leave payments

1. Wage Subsidies

The Government has put together a COVID-19 Wage Subsidy for employers in all regions. It’s to support your business if you are impacted by COVID-19 and face laying off staff or reducing their hours because of COVID-19.

Who can get it

If you're an employer, contractor, sole trader or self-employed, you may qualify to get the COVID-19 wage subsidy.

To qualify as an employer:

• your business must be registered and operating in New Zealand
• your employees must be legally working in New Zealand
• the business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19
• your business must have taken active steps to mitigate the impact of COVID-19
• you must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.

Businesses operating for less than a year

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.

Sole traders

Sole traders are not required to be registered with the New Zealand Companies Office, but must have:

• a personal IRD number for paying income tax and GST, and
• government licences and permits for their business needs, and
• qualifications or registrations for their trade or profession.

Sole traders must still meet the requirements to be physically located and legally working in New Zealand.

How much you can get

The COVID-19 Wage Subsidy will be paid at a flat rate of:

• $585.80 for people working 20 hours or more per week
• $350.00 for people working less than 20 hours per week.

The subsidy is paid as a lump sum and covers 12 weeks per employee.

This subsidy is for wages only. It is to help you keep your staff employed while you consider changes that may be needed while the disruption continues, and to ensure the future viability of your business.

2. Leave Payment

Self-isolation is an important way to slow the spread of COVID-19. From 17 March 2020 the COVID-19 Leave Payment will be available to support people financially if they need to self-isolate, cannot work because they are sick with COVID-19 or cannot work because they are caring for dependents who are required to self-isolate or who are sick with COVID-19.

It will be paid to employers who have eligible employees and they must pass the payment onto their employees in full.

Who can get it

If you're an employer, contractor, sole trader or self-employed, you may qualify to get the COVID-19 Leave Payment.

COVID-19 Leave Payment covers full-time, part-time and casual employees, and contractors who are legally working in New Zealand and who:

• need to self isolate in line with Ministry of Health Guidelines and have registered as needing to self-isolate with Healthline, cannot work from home and their self-isolation is not because they left NZ since the travel restrictions on 16 March 2020 and have since returned or
• cannot work because the person has been diagnosed with COVID-19 or
• cannot work because they are caring for dependents who are required to self-isolate or who are sick with COVID-1

How much you can get

The COVID-19 leave payment will be paid at a flat rate of:

• $585.80 to a person working 20 hours or more per week
• $350.00 to a person working less than 20 hours per week

Employers receiving the payment for employees who are required to self-isolate can receive it for 14 days.

As people may be required to self-isolate more than once, employers will be able to apply for this on an ‘as needed’ basis. It can be paid for the entire period an employee is sick (or looking after a dependent person who is sick) with COVID-19 but the employer must apply every 14 days.

Eligible employers and employees

When applying for the Leave Payment the employer will consider whether:

• the employee was legally working for their employer at the time they decide to self-isolate; and
• they were expected to work for the period of self-isolation.

Self-employed people who are legally working in New Zealand are eligible for the payment if they:

• are usually earning the minimum wage when they decide to self-isolate; and
• were expecting to work for the period of self-isolation; and
• cannot draw an income for the period of self-isolation

• self-employed people not earning at least the minimum wage
• people not legally working in New Zealand

To apply for either payment

You apply online for either the COVID-19 Wage Subsidy or COVID-19 Leave Payment at https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html

When applying, employers will need to provide

• your IRD number
• your business name
• business address
• the names of your employees
• your employee IRD numbers
• contact details for your business and your employees

If self employed you will need to provide

• IRD number
• business name
• New Zealand Business Number (NZBN)
• business address.

Processing and approving applications will happen as quickly as possible. The aim is to make payments five working days after all your required information has been received – but this will depend on the volume of applications received.

The team at K3 Accounting can provide you with a quick and easy assessment of your eligibility for each element of the relief package and we encourage you to discuss this with us as soon as possible.