Covid-19 – Preparing for the end of Wage Subsidy round 1

Posted 19 May 2020 by Mike Johnson covid-19, wage subsidy, annual leave, msd, assistance;

Tuesday 19 May 2020

Keep remembering – Play it Safe.  And now also – Let’s do this together!

Here some guidelines on a number of issues I have been in contact with government departments over – and in particular my suggestions in the run up to possible redundancies.

Funding through the RBPN
Wage Subsidy usage where greater than wages
Use of Annual Leave during wage subsidy
Focus on new jobs

Funding through the Regional Business Partners’ network (RBPN) 

We currently have a hiccough with this funding in that the initial funding made available has been utilised.  I asked Grant Robertson if more could be made available and his answer was that it has been proposed by the Minister for Small Businesses and that he (Grant) believes this is something that should be done.  If you have not yet had funding approved and believe you need it, you should still register with the RBPN and ask to go onto their waitlist. 

I recommend you also ask your Advisor if you can be eligible for Capability Development funding (50%), in case extended funding does not come through.  If you do apply ask me to tell you which services to request.

 

Wage Subsidy usage where greater than wages 

We have had a very positive response from MSD regarding a situation where the total weekly subsidy you receive is greater than the total weekly wage bill for the organisation (this can happen quite easily for a casual or part-time workforce). 

You need only pay people their normal wage and may retain the excess subsidy to pay their wage beyond the 12 weeks (or the 20 weeks if you get the extension)

 

Use of Annual Leave while in receipt of the Wage Subsidy

A number of you have realised that while you can just pay your staff the subsidy if you are unable to afford anything greater, they will still be accruing their 8% annual leave on these earnings, which will have to be paid out on termination (say, if they are made redundant at the end of the subsidy period).  This extra cost amounts to about 1 week’s pay for the 12 weeks of subsidy.  I have been asked numerous times if the subsidy can be used for this leave pay – I am sorry it has taken till now for me to crystallise my thoughts – but here they are:

Principles:

1. You cannot unlawfully compel use of leave during a subsidy period (that's what the declaration requires – emphasis added by me)
2. If someone takes leave they must be paid out at full rates or the greater of average or ordinary weekly pay (not the reduced rate of subsidy) - because that is required by the Holidays Act.
3. Where someone is taking leave (as opposed to being paid out accrued holiday pay on termination, or cashing in leave, say, as a top up) they are being paid normal wages for that time.

I am now advising the following process is reasonable as it helps keep people in employment, even where the employer has no funds of their own to pay with:

1. Once your business is able to return to work (in part, whether or not there is actually work to do), it is correct to recognise that you do not have enough work for all employees;
2. It is therefore very reasonable for the employer to immediately commence discussions with staff about reasonable ways to meet the reduced workload, including that some may take leave - resulting in perhaps slightly more work for those left (but still not enough to keep them fully occupied);
3. If these discussions do not reach agreement, then the Employer can give 14 days’ notice and require leave to be taken – in accordance with the Holidays Act s19(1)(a);
4. If you can give 14 days’ notice like this and they still have at least one week to run of the subsidy at its conclusion, you can legally require them to take leave for that week, which would not infringe the declaration of the Wage Subsidy.  
5. The Employee will get paid out for a week in full, but the subsidy would have been received for that week.

If you want help with this process please contact us – but you cannot short-cut it, so urgent action may be required.

 

Focus on New Jobs 

One of the key aspects of this year’s Budget and current efforts in the employment arena is the focus on creating new jobs.  One of the things I will be trying to do is keep you all informed on where to guide your staff in seeking jobs.  Given that many companies will be letting staff go on the conclusion of wage subsidies, it is absolutely fine to be advising staff generally of where they might look – indeed I believe we will see a number of change processes conclude well before the end of the subsidy – to give staff as much time as possible to find new jobs.  That’s one thing the subsidy is designed to facilitate.

For now:

• They expect some 11,000 jobs in the environment sector and a heap in construction (both housing and infrastructure)
• There is assistance for apprenticeships (as I understand it, both subsidies and even fully-funded support – not sure where to find this yet – I imagine it is through NZTE
• Staff can be directed to https://www.jobs-during-covid.workandincome.govt.nz/hello where they can register to look for jobs through the MSD “Keep New Zealand Working” initiative, which seeks to match jobs with seekers
• MSD also have told me they have a:

New Rapid Return to Work Service

"From today our Job Connect contact centre  0800-778-008 is offering a new phone service for clients who’ve lost their jobs because of COVID-19. We’re targeting clients new to Jobseeker Support with no benefit history.
We want to help them get back into the workforce as quickly as possible and we’ll be giving practical support with CV writing, assessing their transferrable skills, helping them navigate the job market and connecting them with current vacancies."

 

Essential HR here to help – we are back in our offices and ready to operate as normal!  

For ongoing help, you can contact Mike on 027 2808546 and mike@essentialhr.co.nz or Beccy on beccy@essentialhr.co.nz or 027 2909070 – and 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!  I’m happy for you to pass this on to others.

If you need to conference call, we are all set up with Zoom.