Covid-19 – Restructuring and Redundancies – now or later?
Wednesday 27 May 2020
Keep remembering – Play it Safe and Let’s do this together!
Long term goals are important – we need our businesses to survive and our people to have jobs – but those jobs won’t all be still with us. So, if your business is not going to get back to 100% reasonably soon, what is the right thing to do now? Do you make people redundant now or desperately try and keep them on? We have had a couple of clarifications from MSD that help with this dilemma.
It is closing in on the end of the first Wage Subsidy and leaving you fully responsible for wages unless you can access the extended subsidy. These thoughts may help you with decision-making at this time.
Use of the Extended Wage Subsidy
Access to the Income Relief Payments
Use of the Extended Wage Subsidy
To be able to claim this subsidy (for the 8 weeks following 10 June) you need to show that your turnover is 50% less than in 2019 for the period of 4 weeks immediately prior to your application – i.e. while operating at level 2. But what is best for your business and your staff? To help your decision-making MSD have clarified that you do not have to claim the extended subsidy for all employees – you can make some redundant at the end of the first subsidy and apply for the extended subsidy only for the rest.
This way you can encourage those who have no hope of retaining work with you to find other jobs by registering with WINZ as the new jobs start to come on line.
Access to Income Relief Payments
(details available at https://www.beehive.govt.nz/release/new-payment-support-kiwis-through-covid)
These payments were announced on Monday and generally will provide for $490 per week tax free for anyone made redundant because of Covid who was previously working 30 hours or more per week (and $250 per week if 15-29 hours per week). However, there are a number of criteria that affect entitlement, one of which is that they must have been working for the last 12 weeks at this level. MSD have clarified for us that this does ignore interruptions by Covid and that if someone has been not working (or working less than normal) because of Covid, then they will look at the contracted hours pre-Covid to determine this eligibility.
This means that anyone you make redundant because of Covid (and we must note that it therefore is necessary that your termination letters state this) will get immediate support that is better than the normal benefit, while they seek new employment.
Collectively this means that if you need to make staff redundant, WINZ are well-placed to help them find new work as the current initiatives come on-line.
But please note – while now may be the right time to make people redundant, you must follow a fair process in doing so – please contact us for advice, if you need to do this.
Unanswered Questions
I am really sorry, but we have still had no responses to the following questions. I will certainly let you know when we get them:
- Whether entitlement to paid parental leave payments will include periods where an employee has been forced to not work because of Covid, as if they had worked? And
- Will there be more funding provided for consultant fees advising small businesses?
For now:
If you need funding to help cover your consulting fees from us, it is probably best to approach the Regional Business Partners’ Network and seek Capability Development Funding (small businesses only) – and request Essential HR services: Minimising the Risk of a PG – understanding process needs and taking proactive steps to manage staff appropriately and
One-on-One Training - Implementing good HR management practices
Essential HR are here to help – we are back in our offices and operating as normal! For ongoing help, 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.