Wage Subsidy FAQs
When do applications open for the August 2021 Wage Subsidy?
Applications open at 9am on Friday, 20 August 2021 - you can apply here.
Do employers have to provide proof of loss of revenue for the Wage Subsidy application?
Not at this stage, the application is based on ‘high trust’ and there may be random checks, or a full audit completed further down the track (as they have done in the past). Your company details will also be publicly searchable online, to confirm if you have claimed for the subsidy.
Do I need my employees permission to apply for the wage subsidy?
Yes - especially with updates to the Privacy Act 2020 last year. It’s important that you seek permission from your employees to apply for any government subsidies on their behalf. The application process involves sharing of their information, so make sure you get their consent first. We have a great template email you can utilise, to seek permission to apply and share their details - you can contact our team for a copy of this.
Can I make changes to my employees terms of employment relating to hours of work, wages etc.?
No - you are still required to meet your obligations relating to consulting with employees regarding any changes to their terms and conditions. You must act in good faith, put a proposal to the employee and try and get their agreement. You cannot unilaterally vary any terms and conditions including their remuneration, or hours of work.
Be transparent, keep communication open and honest with where you are at, consult and be fair in your approach. Ring us to discuss some options before jumping in.
Do we have to top up the Wage Subsidy to 80% of the employee’s normal pay or higher?
In the past, you were required to make your ‘best endeavour’ to top up to a minimum of 80% of the employees normal pre-COVID-19 income. Some employers proposed to top this up to 80% using annual leave entitlements, or by way of advancing annual leave. In order to pay less than your employees normal wage, you must consult, and follow proper process (see above). As a minimum, you must pass on the whole value of the Wage Subsidy amount to the affected employee, unless their wages are normally less than this (see below).
It is important again, to remember that you cannot unilaterally reduce an employees pay or hours of work, without following proper process (as above).
What are our options to top up the Wage Subsidy?
Talk to your employees, propose and consult on some options; this can include using the employee’s normal pay or discuss and gain agreement with the employee to utilise annual leave as a top up, however you must consult with the employee and seek agreement.
If the employee is working from home, or an essential worker, you must be mindful that minimum wage still applies. You are unable to reduce wages for those employees who are otherwise ready and able to work, without going through a fair consultation process.
If an employee or their dependent is sick, then you can utilise sick leave as a top up, however once again speak to your employee, get agreement.
Do I have to pass on the full Wage Subsidy to the employee?
Yes, you must pass on at least the full subsidy amount, unless the Employee would normally earn less than this (see below question).
The Wage Subsidy is higher than my employees usual pay, do I pay them the full amount of the subsidy?
No, if the Wage Subsidy is above the employees average weekly pay, they will not receive the full subsidy amount. The amount will be processed through payroll based on their average hours of work per week over the past 12 months or for the period they have been employed (if less than 12 months).
The remaining funds can be reallocated to supplement other affected Employees. Just ensure you keep good records of this to evidence if audited by using the Covid-19 coding during your pay run.
I am using the Wage Subsidy to pay my employees, will they still accrue annual leave?
Yes, the employee will accrue annual leave from the Wage Subsidy payment. We recommend contacting your payroll provider to ensure the Wage Subsidy code is set up correctly.
My employee has no annual leave and the Wage Subsidy has not been paid to us yet - what do we do?
Talk to your employee, consider advancing annual leave or normal pay. Please contact us to discuss options around consulting with your employees.
I have a new employee starting, what do I need to know?
If you are a non-essential business and the employee is not able to work from home, we recommend being open and transparent with them regarding your situation and what this may look like i.e. proposing to push out their start date out. You need to be careful with this as you still have obligations - so coming to an agreement is key.
If you have applied for the Wage Subsidy, you can also apply for your new employee, and we recommend doing this when the employee starts. You will need the employee’s permission to apply.
Can I pay the Wage Subsidy in a lump-sum to the employee?
The Wage Subsidy should be paid to the employee in their usual pay frequency.
If yourself and your employee agree to vary the frequency of their salary or wages (i.e. pay the subsidy in a lump sum), this must be discussed and agreed, as this may have adverse tax implications for the employee.
My casual employee is a ‘true casual’ and does not have any pattern in their hours and days of work – do I still pay them the Wage Subsidy?
We recommend reviewing their average hours for work over the past 12 months (or since employed with you, if less than 12 months) and if they have completed any hours in this time, consider applying for the Wage Subsidy and pay them up to 80% of the average hours worked.
Do Employers have to pay GST or TAX on the Wage Subsidy?
No, the Wage Subsidy is exempt from GST and is classified as excluded income.
Can I stop my employer KiwiSaver Contributions?
No, however, the employee can apply for a Saving Suspension through the IRD, if this is approved, yourself and the employee will receive a confirmation letter and the employee and employer contributions will no longer need to be made during the ‘holiday’ period.
I am an essential business and my employee is unable to come to work due to illness ie: diabetes or childcare reasons how do I pay the employee?
Have a conversation with the employee - you may be able to apply for the Leave Support scheme on their behalf if they are required to self isolate due to health guidelines. For all information on the government support schemes, see here.
Otherwise you may wish to discuss options such as sick leave (if they or their dependants are sick), annual leave, advancing annual leave or special covid-19 leave.
I am self-employed can I apply for the Wage Subsidy?
Yes you can, you can apply here from Friday, 20 August at 9am.
Krista McDowell
HR Partner