Extended Subsidy or Restructuring – What are your options at the expiry of the Wage Subsidy?
By: Amanda Douglas
Published: 21/05/2020
Wage Subsidy Extension

On 14 March 2020, as part of its budget announcement, the Government outlined that the COVID-19 Wage Subsidy would be extended.  Prior to this announcement, businesses who had obtained the Wage Subsidy were entitled to the subsidy for 12 weeks, which meant businesses were able to pay the subsidy to their named employees for a period of 12 weeks.  As part of the Government’s recent announcement, eligible businesses can now apply for an extension which (if accepted) will provide them with an additional 8-week payment per named employee. 

In order to be eligible for the extension, businesses will need to be able to show that they have had, or expect to have, a revenue loss of at least 50% for the 30 days before they apply, compared to the closest period last year.  Businesses will not be able to apply until their 12-week Wage Subsidy period has come to an end, and applications will only become open from 10 June 2020.  This extension will be available from 10 June 2020 until 1 September 2020, with its primary purpose being to ensure that employers can keep paying their employees.
 
For all eligible applications, a lump sum amount will be paid, as was the case with the Wage Subsidy.  The rates of payment are also the same as the Wage Subsidy, being $585.80 (gross) per week for full time employees and $350.00 (gross) per week for part-time employees. 

The same declaration will need to be made to receive the Wage Subsidy extension, including that you will pass the subsidy on to your employees; you will retain your employees receiving the subsidy for the duration of the subsidy; you will do your best to top-up your employees pay to at least 80% of their normal pay; and you will take active steps to mitigate the impact of COVID-19 on your business. 

It is also important to note that businesses will not be able to receive more than one COVID-19 subsidy payment from the Government for the same employee at the same time.  For example, they could not receive the Wage Subsidy Extension and the Leave Support Scheme payment for one employee at the same time.

What are your options moving forward?

It is a good time, now, to consider your future staffing needs. If you qualify for the wage subsidy extension, it is worth considering your ongoing staffing needs before making an application, given the obligations in the declaration.  You should carefully consider whether you will need to make any changes to staffing levels. 
 
If you do not qualify for the wage subsidy extension, we recommend considering the right size for your business before the wage subsidy expires. This could include less roles, reduced hours, or other different ways of working.

A process is really important when making any of these changes.  So, you will need to allow time to run a process and for the notice period for any affected employee to run, prior to the date by which you need changes to take effect.  For example, if you have employees who have a one month notice period (which is fairly standard), you would need to factor the time to start and complete a restructure process, and then allow the notice period to run.  If you are very dependent on the wage subsidy, you will need to take steps as soon as possible.

We are happy to discuss the options with you and to work through what your employee structure may look like, as well as assist you with the necessary process to bring that into effect.

Please feel free to get in touch.

This article was also published by Legalwise: https://legalwiseseminars.com.au/nz/extended-subsidy-or-restructuring-what-are-your-options-at-the-expiry-of-the-wage-subsidy/ 
 
Download article in PDF format



Enter security code:
 Security code

Wynn Williams Christchurch
Level 5, Wynn Williams House, 47 Hereford Street, Christchurch 8013, New Zealand.
PO Box 4341, DX WX11179, Christchurch 8140.
+64 3 379 7622
+64 3 379 2467
Wynn Williams Auckland
Level 25, Vero Centre, 48 Shortland Street, Auckland 1010, New Zealand.
PO Box 2401, Shortland Street, Auckland 1140.
+64 9 300 2600
+64 9 300 2609
Top

This page is best viewed in an up-to-date web browser with stylesheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so. The latest version of Firefox, Safari or Google Chrome will work best if you're after a new browser.