19 August 2021 • 5 minute read
Alert Level 4, Round 2: The COVID-19 Wage Subsidy in 2021
On Tuesday 17 August, New Zealand went into a sudden Alert Level 4 lockdown after a case of the COVID-19 ‘Delta’ strain was discovered in the community. As a result, the Government has reinstated the COVID-19 Wage Subsidy Scheme (the Subsidy), first seen last year.
The 2021 Wage Subsidy
From Friday 20 August 2021, employers can apply for the Subsidy to assist with two weeks of employee wages, if their businesses has had or expects to have a 40% loss in revenue as a result of Alert Level 4.
The rates of subsidy have been increased to reflect the increase in the cost of wages since last year and will be:
- $600 a week for each full-time employee retained (a full-time employee being defined as one working 20 hours a week or more)
- $359 a week for each part-time employee retained (less than 20 hours a week).
The Subsidy is paid as a lump sum, and covers businesses, sole traders, self-employed individuals, registered charities, incorporated societies and NGOs.
Employers must have taken active steps to mitigate the impact of Alert Level 4 before making an application including (but not limited to) engaging with their bank, drawing on cash reserves as appropriate, or making an insurance claim.
The Declaration
When making the Subsidy claim, employers complete a declaration they must abide by for the duration of the Subsidy period. This is similar to the declaration required in 2020, and includes obligations to:
- not make any changes to obligations under any employment agreement, including to rates of pay, hours of work and leave entitlements, without the employee’s written agreement;
- not unlawfully compel or require the named employees to use their leave entitlements for the Subsidy period;
- retain each named employee for the entire Subsidy period;
- use the Subsidy to pay ordinary wages and salary, and repay any amount that is not required for the purposes and cannot be used to support paying and retaining other affected employees; and
- use best endeavours to pay at least 80% of each named employee’s ordinary wages or salary (and at the very least pay the full amount of the subsidy to each named employee, unless their ordinary wages or salary is below the Subsidy amount).
Compliance
The Ministry of Social Development has spent much of 2021 actively auditing businesses for their use of the 2020 Wage Subsidy, so employers need to take their obligations seriously.
Further assistance
Beyond the Wage Subsidy, there are three other types of financial assistance available for employers in this lockdown.
| Resurgence Support Payment (RSP | This is intended to help businesses and organisations with one-off costs arising due to the alert level increase. The RSP is available if businesses incur a loss of 30 percent of revenue as a result of the Alert Level increase. The employer can claim up to $1500 plus $400 per full-time equivalent employee, up to a maximum of 50 full-time employees (i.e. up to a total of $21,500). Applications for this open on Tuesday 24 August 2021. |
| Leave Support Scheme (LSS) | Provides a two-week lump sum payment of either $585.80 per week for full-time workers (20 or more hours), or $350 per week for part-time workers, who are required to self-isolate and cannot perform their work from home. More information is available here. |
| Short-Term Absence Payment (STAP) | Provides a one-off (only once every 30 days) $350 payment for workers who must miss work due to a pending COVID-19 test and cannot perform their work from home. This is also available for self-employed workers. Further information about this payment is available here.
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If you have further questions about the Subsidy, please reach out to your usual DLA Piper contact.