Covid-19 - Lock Down

Posted 24 March 2020 by Mike Johnson covid-19, assistance, information, wage subsidy, leave subsidy;

Tuesday 24 March 2020

Essential HR here to help. First and foremost, I want to tell you all that Essential HR, while not an “essential service”, will definitely not stop working.  We are fortunate in that we can work from home and will be around for the duration to help you as needed.  Best is to contact Mike on 027 2808546 – but if you phone our landline 03 6590377 you can leave a message that gets delivered to us automatically.  Please bear with us if you can’t get straight through – we are getting many calls!

Here is an update for you, based on yesterday’s developments:

Key Contact Details:

• The list of Essential Services can be found at: https://covid19.govt.nz/government-actions/covid-19-alert-level/#essential-businesses  This list will be dynamic – if you have questions there will be an 0800 number – but the website does not have it yet.
• If you need health advice, especially to check out your symptoms – contact Healthline 0800 358 5453.  Please do not contact this number for other reasons – it delays health advice to those needing it.
• If you need advice on financial support packages – check the dedicated website https://covid19.govt.nz/ This site has a range of information and links.  If this doesn’t answer your question (often because you will be asking about your specific circumstances) then call the Chamber of Commerce or us.
• If you need to talk to someone about government support – there is a dedicated number for answering questions 0800 779 997.  However, it can be difficult getting through – hence my attempt to put together some generic answers that go beyond the published FAQs.

Key Questions:

How do I pay staff in the lock down?

• Employees who are working in essential services during this period should be paid as per usual.
• Employees who are sent home and are not working from home – you should seek to claim the wage subsidy https://workandincome.govt.nz/products/a-z-benefits/covid-19-support.html?utm_source=business.govt.nz&utm_medium=newsletter&utm_campaign=special_cv_edition#null and then ideally you will agree with each employee what to pay them – the subsidy plus any leave available to be used as a top up (seeking to get to 80% - but this is “best efforts” only – it is not mandatory to get the subsidy).

Note that sick leave can be used – although technically they may not be sick it is not difficult to imagine that someone will be stressed and mentally “sick” – so I encourage use of sick leave too.

Note also that given the speed this is happening you may not be able to consult or even talk with some staff – I recommend that you contact staff in whatever way you can to tell them what is happening and make a specific proposal as to how you propose to pay them – bear in mind that they must approve use of any leave and they will need to approve you giving their details to MSD for subsidy entitlement.

Finally note that there is no legal requirement to pay people in these situations – however an ideal world would have employers able to keep paying wages, using special leave.  The aim of the subsidy is to enable employers to keep employees employed.

• Employees who are sent home but work in part from home should be treated similarly to those unable to work from home, except that you have an obligation to pay them for the work they do – and use the subsidy to top them up – and then leave as well if needed.  I am unsure what impact this has on the subsidy available at this time.

Can I keep staff employed even if I'm not paying them?  Do I have to have a clause in our agreements regarding suspended wage payments? What can I say to them?

1. Apply for the Wage subsidy
2. Meet with staff as soon as possible today (or communicate with them remotely) and explain what is happening.
3. There is clearly no time for negotiation – but explain what you believe is the best you can do to pay them – the subsidy and whatever top ups you have available for them.
4. Ask them each to confirm what (if any) leave they want to be paid out and to confirm you can share their details with MSD and related agencies in order for you to get the subsidy for them (this is a Privacy Act thing).  Details can be found at: https://workandincome.govt.nz/products/a-z-benefits/covid-19-support.html?utm_source=business.govt.nz&utm_medium=newsletter&utm_campaign=special_cv_edition#null
5. Essentially you are telling them that you cannot provide work and they are agreeing to be kept employed and paid what you can offer them – for this you don’t need a special clause in your employment agreement.

What can I claim as a Wage Subsidy?

The Government has now introduced the following changes to the wage subsidy scheme:

• The previous $150,000 cap is being lifted, so that all employers can access the full payments to subsidise each of their employees’ salaries
• Self-employed people with variable monthly incomes are eligible if they can demonstrate the revenue loss assessment against the previous year’s monthly average (eg. 30% loss of income attributable to COVID-19 comparing March 2020 to the average monthly income in the period March 2019 to March 2020)
• The scheme does cover registered charities, non-governmental organisations, incorporated societies and post-settlement governance entities.

Please be aware the criteria have not changed (including the 30% revenue reduction for businesses and the businesses must make their “best efforts” to pay their employees 80% of their pre-COVID-19 income). The subsidy apparently will still run for 12 weeks.  However if we return to work after 4 weeks, I suspect you may have to repay that portion of the subsidy.

What if we are already restructuring?

In light of the above you may:

• Put the restructure on hold;
• Continue with the restructure; or
• Amend depending on your businesses circumstances. – I suggest you contact me to discuss

Questions around self-isolation (updated - answers in italics):

• Is a contractor/self-employed person entitled to the subsidy?  Yes.  Is it OK to simply put their name where the form requires a business name? The form has been amended to require their IR registered name.

Questions around wage subsidy:

• Is a contractor/self-employed person entitled to the subsidy?  If so, is it OK to simply put their name where the form requires a business name? Yes, The form has been amended to require their IR registered name
• What should happen where the wage subsidy is greater than the employee’s normal wage (e.g. an employee normally works 10 hours per week at $20 per hour – the $350 for a week exceeds their normal income).  Will the money need to be returned to the government?  Can the company use it to subsidise other wages (where an employee’s subsidy is less than 80% of their wage)?  Or should the whole amount be passed on to the employee?  At this stage guidance is to pay it all to the employee or hold onto the excess for possible repayment.
• If you receive a 12-week subsidy for staff and then seek to make some redundant, how much of the subsidy should be repaidto the government?  Potentially all the subsidy relating to the period they are no longer employed for.

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