On 4pm Friday 27 March 2020, modifications to the wage subsidy scheme were announced by the government.
If an employer or business applied for the wage subsidy before this announcement then they are under the original obligations. But if the employer or business is yet to apply, new obligations apply.
The new obligations still require employers and businesses to take “best efforts” to keep employees and pay them 80% of their normal wage, however they now at a minimum require them to pass on the full amount of the subsidy (less tax) to the employee for the 12 weeks (unless the employee is ordinarily paid less than these amounts).
The Employer must also retain the employees for the duration of the subsidy. It is therefore important to keep a record of the date of application so businesses know which obligations apply.
The receipt of the subsidy to the employer is not taxable, but when used to pay wages, the wage portion to the extent of the subsidy is not tax-deductible.
Please note normal employment rules and laws apply, you can’t just drop employee’s pay without consultation.
Names of those employers and businesses who receive the subsidy will be published by the Ministry of Social Development. The Leave Payment Scheme has now been absorbed in the Wage Subsidy Scheme.
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