Our team is reviewing the situation daily. We’ll keep updating this information as things change or we get lots of queries about an issue.
This information is correct as at 9am, 9 April 2020.
Information on this page:
- Employer’s responsibilities during Alert Level 4.
- The COVID-19 Wage Subsidy scheme.
- The COVID-19 Essential Workers Leave Support.
- Advice for businesses struggling to retain staff.
- Useful resources.
Making sure you’re set up to deal with the new employment landscape
You probably don’t need us to remind you that a whole lot has happened in a really short time.
New Zealand went to COVID-19 Alert Level 4 on 11:59pm, Wednesday 25 March, at which point all non-essential businesses had to close, and people were required to begin a period of self-isolation in their homes.
We will be at Alert Level 4 for four weeks, at least, so for now, this enforced period of inactivity is the new normal.
We know it’s been a hell of a time for businesses. We’ve been swamped with enquiries and calls for help and guidance.
Our message right now is this: stay steady and pause your restructures and redundancies if you can. Retain your team at home and pay them using the government wage subsidy or the essential workers leave support.
This will give you the breathing room to prepare your business for the next phase once we move out of Alert Level 4.
If you need to make changes to employment conditions to help you get through or you need to look at redundancies in the future, we’re here to assist you.
So let’s look at the issues and implications for employers (and employees) during COVID-19 Alert Level 4.
Employer’s responsibilities during Alert Level 4
- Only essential services are allowed to remain open.
- If you’re unsure if your business provides essential services, you should be closed.
- All people not working in essential services must stay at home and stop all physical interaction with others outside their household.
- Non-essential businesses and employees can still work, so long as this is from home.
- If you are unsure about whether your business is essential, visit the government’s COVID-19 website or contact MBIE at 0800 22 66 57 or email firstname.lastname@example.org .
- Essential businesses provide people with the necessities of life, things like food, medicine, healthcare, energy, fuel, financial support, waste-removal, internet, essential non-food goods, and any critical suppliers in the businesses’ supply chains.
- Essential businesses must operate in a way that minimises the risk of transmitting COVID-19, e.g. restricting activity to only what is essential, limiting or eliminating physical interaction between staff and customers, working from home as much as possible (or other alternative ways of working), ensuring appropriate workplace health and safety measures are in place.
- Usual sick leave entitlements apply for any employee who gets sick (or who has to care for a member of their immediate family or household who is sick) and would otherwise be expected to work remotely during Alert Level 4.
- Any employee who is sick with COVID-19, needs to self-isolate as per Ministry of Health guidelines, or is caring for dependents who are required to self-isolate as per the guidelines should stay home and is eligible for sick leave.
- Any employee, or someone they live with, who meets the definition of a vulnerable person should stay home and is eligible for sick leave.
- If an employee does not believe the workplace has adequate health and safety measures to minimise their risk of contracting COVID-19, they can choose to stay home.
The employer and employee should consider options to work from home or take accrued leave (e.g. annual leave). In some circumstances, e.g. there is no real risk of infection at work, the employer may place the employee on unpaid leave (unauthorised absence without pay). Refer to the terms of the employment agreement.
Employees may be eligible for the COVID-19 Essential Workers Leave Support.
As always, work with your employees to explore options and act in good faith.
COVID-19 wage subsidy scheme
The government’s wage subsidy scheme is to help businesses adversely affected by COVID-19 retain their staff and ensure an income for employees.
The wage subsidy is paid at a flat rate of:
- $585.80 for people working 20 hours or more per week (full-time rate)
- $350.00 for people working less than 20 hours per week (part-time rate).
The subsidy covers 12 weeks per employee and is paid as a lump sum ($7,029.60 for a full-time employee and $4,200 for a part-time employee).
There is no cap on the number of staff you can apply to support.
Contractors, sole traders, self-employed people, registered charities, non-governmental organisations, and incorporated societies are also eligible for the subsidy.
Note: You can’t apply for employees who are already receiving the previous COVID-19 wage subsidy or leave payment (which closed on 27 March 2020). Applications submitted for these subsidies before 3pm, 27 March 2020 will continue to be processed and paid.
- Be registered and operating in New Zealand and have employees that are legally working in NZ.
- Show COVID-19 has caused a 30% or more reduction in revenue (actual or predicted) for any month between January and June 2020 compared to the previous year.
If your business is less than 12 months old or you have had a significant increase in revenue over the past year, you will need to show a 30% decline in revenue compared to a similar time period (e.g. a 30% loss of income when comparing January 2020 to March 2020).
- Have taken active steps to mitigate the impact of COVID-19 (this could include activating your business continuity plan and seeking advice and support from your bank, a relevant industry association etc.).
Retaining employees to the best of your efforts
You must make your best efforts to retain employees and pay them a minimum of 80% of their current pay rates for the subsidised period.
If that isn’t possible, you must pay at least the subsidy rate.
If your employee's normal wages are less than the subsidy, you must pay them their usual wages. You should use any difference for the wages of other affected staff (the subsidy is for meeting your employees ordinary wages/salary and your obligations in relation to the subsidy, not other business costs).
Employers apply for and receive the subsidy, rather than the employee, and then pass the payment on to their team member(s) as part of their normal wages.
Businesses are responsible for paying their employees normally.
You can’t unlawfully require employees to use their leave entitlements for the subsidy period.
Obligations under the Employment Relations Act 2000
Applying for and receiving the subsidy does not override employer's and employee's obligations under the Act.
You can’t make any changes to obligations detailed in the employment agreement (e.g. rates of pay, hours of work, leave entitlement), without consulting with the employee and getting their written agreement.
If circumstances change
If anything changes that might affect your eligibility for the subsidy (e.g. an employee resigns), you must notify the Ministry of Social Development (MSD) within 5 working days.
Getting money you aren’t eligible for
By applying for the wage subsidy, you agree to repay all or any part of it, if you:
- Fail to meet any of the obligations about how you must use the subsidy.
- Were not or are no longer eligible for all or part of the subsidy.
- Provide false or misleading information in your application.
- Receive insurance (e.g. business interruption insurance) for any costs the subsidy covers.
Be aware that the MSD has audit powers, so any business found to have provided false or misleading information in their application may be investigated for fraud.
Calculating employees’ hours
If the employee works hours that are specified in their employment agreement, use those to calculate which rate they are eligible for.
If your employees work variable hours - e.g. casual employees who have no contracted hours - average their hours worked each week over the past 12 months or over the period of time they have been employed (if it's less than 12 months).
If the average hours worked is 20 or more, apply for the full-time rate. If it’s under 20 hours, apply for the part-time rate.
There are also different criteria for employees you may have made redundant as a result of the impacts of COVID-19 and have since re-employed (on or after 17 March 2020).
If you need help assessing any of your company's subsidy responsibilities, please contact the MyHR team on 0800 MYHR NZ (69 47 69).
Applying for the wage subsidy
Consult with your team members before applying. You will have to get consent from each employee to provide their details (name, date of birth, IRD number etc.) as part of the application.
COVID-19 Essential Workers Leave Support
The COVID-19 Essential Workers Leave Support is available for essential businesses to pay their employees who can’t work because of COVID-19.
The essential workers leave support is paid at the same rate as the wage subsidy:
- $585.80 for people working 20 hours or more per week (full-time rate)
- $350 for people working less than 20 hours per week (part-time rate).
Support is paid as a lump sum and covers 4 weeks per employee. You can apply for the same employee again in the 4th week to ensure there are no gaps in payment.
You can submit a new application at any time for any additional employees who need to stay at home because of COVID-19.
You must be an essential business (as defined in the official Government guidelines).
You must have essential service workers who are either:
- at higher risk if they get COVID-19 and Ministry of Health guidelines recommend they stay at home while we're in lockdown (and potentially longer);
- have come into contact with someone who has COVID-19 and must self-isolate for 14 days (as required by Ministry of Health guidelines);
- have tested positive for COVID-19 and are required to remain off work until they've been cleared by a health professional to be released from self-isolation; or
- have household members who are at higher risk if they get COVID-19 and Ministry of Health recommends the worker also remains at home to reduce the risk to them.
The business may have experienced a 30% decline in revenue or otherwise be unable to financially support the employee due to the COVID-19 public health restrictions, e.g. the cost of paying for employees' leave and replacement staff is 'significant'.
You must have had a conversation with the employee about how you can best support them, e.g. they may choose to use any sick or discretionary leave they have, instead of getting the leave support. If you can't pay the full amount of this leave, you can apply for the leave support to top it up.
You can't receive essential workers leave support and the wage subsidy (or any other government funding) for the same employee at the same time.
The obligations are the same as those for the COVID-19 wage subsidy, including doing your best to pay employees at least 80% of their usual income. If that isn’t possible, you need to pay them at least the full leave support rate (i.e. full-time or part-time).
If your employee's usual wages are less than the leave support, you must pay them their usual wages. Any difference should be used for the wages of other affected staff.
Businesses struggling to retain staff
The wage subsidy and leave support schemes are designed to keep your employees connected to the business and keep employment arrangements in place even if there's temporarily no work.
However, if a business currently has no income, the company will need to assess how long-lasting these effects may be and whether it will have money to pay wages in the future.
If there is no prospect of any income beyond the 12 weeks of the subsidy, or it’s hard to see how (or when) you can resume normal operations, then keeping employees could be hard.
If you assess the downturn to be short-term, the business could consider letting employees (with their agreement) use their accrued leave entitlements or take unpaid leave.
You could also explore options for reduced hours or other temporary restructures, or voluntary redundancies.
If the business has to close down or make changes on a more permanent basis, then a full restructure and redundancy process should be followed.
Consulting with employees
Employers must still adhere to legal requirements and act in good faith when proposing any changes to the conditions of employment, even if they seem minor.
An employer needs to provide all potentially-affected employees with information, time to review that information, and the chance to provide feedback that is considered by the business before any final decisions are made.
Normal time-frames probably won’t work in the current environment, so consultation could be condensed so the business can make any necessary changes quickly.
Employees should still be given time to review the proposal information, get advice, and if they request more time to prepare their response, we recommend you give it to them (within reason).
The specifics of the restructure process will depend on the potential changes, types of affected employees, their employment agreements, and the requirements of the business.
As with any restructure, you need to follow the step-by-step consultation process.
Getting the process wrong could open you up to legal challenges and personal grievances, so contact MyHR before you commence a restructure process.
- NZ Govt's Unite Against COVID-19 website
- Business.govt.nz's COVID-19: Latest news and updates
- COVID-19 and the workplace (Employment.govt.nz)
- Inland Revenue's COVID-19 tax relief information
- Ministry of Health's COVID-19 information
- Worksafe's COVID-19 health and safety information