COVID-19 Support - August 2021
Following the change in alert levels on 17 August 2021, there is significant support available for those who run a business or are self-employed.
See below for full details and how to apply.
Wage Subsidy Scheme
This payment is available nationally and has now been increased to $600 per full time employee (20 hours or more a week) and $359 per part time employee (less than 20 hours per week). The payment covers a two week period. Applications open 9am on Friday 20 August, 2021. Your business must have had, or will have, a decline in revenue of 40% over the period between 17 August and 31 August 2021 compared to a typical 14 day period of revenue in the six weeks before the alert level change.
Click here for more information and to apply.
Scroll down to see full details for how to pay the subsidy to your employees, GST/PAYE and examples at the end of this page.
Resurgence Support Payment
This payment will be available to any business or organisation that experiences at least a 30% drop in revenue over a 7 day period due to a COVID-19 alert level increase to level two or higher. You can apply to receive the lesser of either: $1,500 plus $400 per full time employee, up to a maximum of 50 employees OR four times the actual revenue decline experienced.
Applications open 8am on Tuesday 24 August, 2021 and will be available until one month after a nationwide return to Level 1.
Click here for more information and to apply.
The Leave Support Scheme
This payment provides a two week lump sum payment of either $585.80 for full time employees or $350 per week for part time employees who must self isolate and cannot work from home. The rates increase to $600 for full time employees and $359 per week for part time workers from Tuesday 24 August, 2021.
For more information and to apply click here.
Short Term Absence Payment
This payment provides a one off (once per 30 days) payment of $350 for workers who must miss work due to a COVID-19 test and cannot work from home. The rate increases to $359 from Tuesday 24 August, 2021.
Find out more and apply here.
Small Business Cashflow Scheme
This scheme is a loan for small businesses who are struggling with cash flow due to COVID-19. Your business must have 50 or fewer full time employees to be eligible. The loan is to be used for paying costs such as rent, utilities, suppliers and insurance. The loan amount is up to $10,000 per business, plus $1,800 per full time employee.
See more about the scheme and how to apply here.
Keep in mind that this a loan and must be repaid. See more about repaying the loan and interest rates applicable here.
Wage Subsidies - more detail:
Wage subsidies are paid by the Ministry of Social Development (MSD) to employers including sole traders and the self-employed upon application. An eligible employer should apply for the subsidy and pass this on to their employees. The subsidy is designed to assist employers to retain staff and help them to pay wages during this time.
The subsidy is exempt income for the employer. The employer is not entitled to an income tax deduction for wages paid out using the subsidy e.g. this cannot be claimed as an expense. Any amount paid on top of the subsidy to top the employee up to their usual wage can be claimed as normal. Whether the employer tops up the subsidy with cash payments or annual leave is up to them to arrange with staff. Employees cannot be forced to use their annual leave entitlement.
The employer is not liable to pay GST on the subsidy received.
The wage subsidy should be processed as part of the employees normal wages - all deductions of PAYE, Kiwisaver, Student Loans etc are made as normal.
If your employee’s usual wages are less than the subsidy, you must pay them their usual wages. Any difference should be used for the wages of other affected staff who may earn more on average.
Employers should keep accurate records detailing the amount of the subsidy received and details of the employees it was paid to, to assist with MSD reviewing records later.
To be eligible for the wage subsidy businesses must declare that they:
have had a 40% revenue drop due to COVID-19 (see more details below)
will retain named employees for at least the duration of the subsidy
will pay named employees, at a minimum:
for any work they do at their normal rates
at least 80% of usual income where reasonably possible (for employees working reduced hours while self-isolating)
the full subsidy received for each named employee, except where a person’s income is normally less than the subsidy amount, in which case they can be paid their normal salary.
40% decline in revenue:
Your business must meet the revenue decline test:
your business is being or will be affected by the move to Alert Level 4 on 17 August 2021, and
your business has had, or you predict will have, a decline in revenue that can be attributed to the effect the move to Alert Level 4 on 17 August 2021 has had on your business, and that is:
at least a 40% decline over a period of 14 consecutive days between 17 August 2021 and 31 August 2021 inclusive (this is the revenue test period), compared to a typical 14 consecutive days of revenue in the six weeks immediately before to the move to Alert Level 4 on 17 August 2021 (this is the default comparator period), or
if your business has highly seasonal revenue, you must have at least 40% decline over the revenue test period compared to the same 14 consecutive days in 2020 or 2019 (this is the seasonal comparator period), provided you can demonstrate that the seasonal nature of your business makes it harder to meet the 40% revenue decline using the default comparator period than if your business was not of a seasonal nature.
This means your business has experienced a 40% decline in:
actual revenue, or
predicted revenue (e.g. for businesses who have seen a reduction in bookings such as accommodation providers), and
that decline is related to COVID-19.
When you apply for the COVID-19 Wage Subsidy August 2021 you must not also be receiving a payment under this COVID-19 Wage Subsidy August 2021 scheme, the Short-term Absence Payment, Leave Support Scheme or Essential Workers Support Scheme in respect of any of the employees named in your application.
"Employee" includes you if you are a sole trader or self-employed person that does not employ employees.
Casual Employees
Employers can apply for the wage subsidy for their casual employees who would have been expected to work during the time they receive the wage subsidy. To determine casual employees’ subsidy rate, employers should use the average hours per week for the last year. If employees have worked for less than a year, employers should average the hours worked during the total employment period. If their average hours are less than 20 hours per week, apply for the part time subsidy. If the average hours per week are more than 20 hours, apply for the full time subsidy.
If the casual employee’s average gross earnings per week are less than the subsidy amount received ($359 part time or $600 full time) you should pay them their average gross earnings amount and retain the difference to be used to help pay the wages of other affected staff who may earn more than the subsidy on average.
Remember to deduct PAYE, student loan etc from their gross earnings amount as normal (a part time employee would not receive $359 in hand for example, it would be $359 earned, less tax).
Example:
John is a casual employee who works variable hours each week. His employer will go over his timesheets from the previous year (or total employment period if less than a year) and average his hours per week to find out his average hours worked. His average hours are 23.5 hours per week so his employer applies for the full time wage subsidy.
John’s employer then looks back at John’s gross earnings per week over the last year (or total employment period if less than a year) and averages these earnings to find out his average weekly earnings. His average gross earnings amount is $490 per week. His employer will pay him for 22.69 hours ($453.80) plus 8% holiday pay of $36.30 bringing his total earnings to $490.10. PAYE and Kiwisaver is deducted from this amount leaving John with $382.84 in hand each week that the subsidy is paid. (The difference between the $490.10 paid to John and the $600 received as the full time subsidy can be used to help pay the wages of other staff who may earn more than the subsidy on average.)
You must retain the employees named in your application for the period of the subsidy.
Employers are required to agree that, for the duration of the subsidy, they will make best efforts to retain the employees the subsidy was paid for.
Examples:
Case study: Non-essential business + minimum waged worker
James is a barista at a Wellington café. James earns the minimum wage. The café is closed for the lockdown and has had a 40% loss in revenue. James’ employer cannot afford to pay any wage to James, but wants to keep him on. James does not want to use his annual leave entitlements.
James’ employer can access the wage subsidy and pay $600 per week to James, without James being required to do any work. James retains his annual leave entitlements to use at a different time.
Case study: Able to do some work from home + full-time worker
Tania is a civil engineer. She usually works 40 hours per week at $30 per hour, with a usual gross income of $1200 per week. The business is non-essential and is currently closed and has had a 40% loss of revenue. Tania can do some work from home. She works 30 hours per week.
Tania's employer can access the wage subsidy and pays Tania her usual salary at the agreed reduced hours, which is $900. Tania's employer can use the $600 per week to subsidise Tania's wages, this means Tania's employer will top up the wage subsidy with $300 to compensate the hours Tania worked.
Case study: Non-essential business + part-time worker
Phil is a HR advisor in a medium-sized business and works part-time. His hourly rate is $25 per hour, and he usually works eight hours a week. The business is non-essential and closed for the lockdown and has experienced a near total loss of revenue.
Phil’s employer can access the wage subsidy. Their revenue has dropped so much that they are worried they will be unable to retain their staff. Under the subsidy scheme requirements, Phil must receive his normal pay of $200 per week, which will be paid from the wage subsidy. His employer can use the remaining money from the subsidy for other affected employees.
Case study: Non-essential business + unable to work
Craig is a waiter at a successful restaurant chain that also needs to close during the lockdown. Craig was getting paid $1,000 per week. Craig’s employer has committed to paying full wages to their staff as they know that such workers will be in demand as the lockdown ends. The restaurant has suffered a 40% loss in revenue due to COVID-19.
Craig’s employer can access the wage subsidy scheme to pay Craig $600 per week, and the employer can then top that up with $400 per week to ensure Craig receives his full income.
Case study: Essential business + able to work
Steve is an essential services worker, ensuring certainty of electricity supply. Steve is really busy, working his normal hours and getting paid at his normal rate, and his business has not been affected by COVID and does not require support to pay or retain its staff.
Steve’s employer is not eligible for the Wage Subsidy Scheme.