COVID-19 – Government Stimulus Package – Guidance and Comment
Important update 31 March 2020.
Thanks again to the team at Avid.legal for pulling this together.
On Friday 27 March 2020 the government announced:
1. significant changes to the Wage Subsidy, and
2. that it has ended new applications under the Leave Payment Scheme.
On Saturday 28 March 2020, the government published a further clarification to the changes it introduced to the Wage Subsidy.
These changes render some of the information in our 24 March 2020 update (further below) void for new applications.
Most significantly, a revised declaration now applies to the Wage Subsidy for applications made after 4pm on Friday 27 March 2020. You can review the revised declaration here: https://workandincome.govt.nz/online-services/covid-19/declaration-wage-subsidy.html
These changes will have a significant impact on how some businesses may use the Wage Subsidy and how it fits in with wider coping strategies compared to businesses who applied before the cut-off. Changes include (but are not limited to) applicants agreeing to:
- not make any changes to any obligations under an employment agreement (e.g., remuneration, hours of work and leave entitlement) without the written agreement of the employee;
- retain the employees named in the application as employees for the period the employer receives the subsidy in respect to those employees;
- not unlawfully compel or require any of the employees named in an application to use their leave entitlements for the period the applicant receives the subsidy in respect of those employees;
- only use the subsidy for the purposes of meeting the named employees’ ordinary wages and salary (and the employer’s obligations in relation to the subsidy);
- remain responsible for paying named employees’ ordinary wages and salary for the period the employer receives the subsidy;
- for the period the subsidy is received:
- use best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary; and
- pay at least the full amount of the subsidy to the named employee; but
- where the named employee’s pre COVID-19 remuneration was ordinarily less than the subsidy (i.e. less than $585.80 or $350), pay the named employee that amount.
Other new aspects of the declaration include some strict requirements about:
- needing to discuss the application with named employees before making the application;
- obtaining named employees’ consent to including their details in the application for MSD to use and share (ideally in writing); and
- advising named employees that they have the right to request access to all information held about them under the Privacy Act, and that they can contact [email protected] to make a request.
Maintaining good processes and record keeping will be critical. The increased requirements in the declaration must be carefully worked through before submitting an application. Businesses should pause and ensure they can established that they comply. Businesses may be subsequently audited. If a business cannot establish that it was eligible, or that it adhered to the conditions set out in the declaration, the business risks being required to repay the subsidy and potentially criminal sanctions.
Lastly, payment-processing times have reportedly slowed. If your claimed amount has not been paid within a week, it is worth calling MSD.