COVID Wage Subsidy – What You Need to Know

We are getting a lot of questions about this subsidy and how to pay workers. Some key points:

  • Receiving the subsidy does not change your employment agreement with your staff in any way!
  • The subsidy is like a grant for wages: it can’t be used for anything else, but it does not change how you manage your employee.
  • This means you cannot cut their hours without consultation and without a business reason.
  • You also cannot cut their pay to the subsidy amount only. You must try to pay them at least 80% of their normal wage.
  • If the subsidy exceeds what a worker is paid normally, you can use the difference for another worker. If there is no other worker, you can extend the time you are using the subsidy for this worker. You are not meant to increase their pay, as this would change your employment agreement and would likely have to be permanent.
  • There is no GST on this subsidy.
  • If you are laying off staff for which you receive the subsidy, you have to pay the balance back. You are not prohibited from making people redundant or partially redundant during this time, if you think the work will no longer be there in future. Normal employment law applies.

Some more information can be found here:

https://www.stuff.co.nz/business/better-business/120666823/employers-unilaterally-cutting-pay-are-acting-illegally

https://www.stuff.co.nz/national/health/coronavirus/120718939/coronavirus-workers-rights-and-wage-subsidy-questions-answered

Keep it clean out there!