Covid-19 – Wages and Salaries during this lockdown

Posted 18 August 2021 by Mike Johnson covid-19, wage subsidy, staff;

Wednesday 18^th August 2021

Not a situation we want to be in, but we are at level 4 and hopefully the prompt action will help contain the disease.  In the meantime, you may have some urgent questions relating to management and payment of staff – so here are some initial guidelines for you to consider:

• Above all keep safe – follow health guidelines and only have staff at work if it fits the Essential business guidelines - see https://covid19.govt.nz/business-and-money/businesses/doing-business-at-alert-level-4/#alert-level-4-businesses-and-services 
• If it is possible for staff to work from home, then you should arrange for that to happen.
  
  
• In terms of payment of wages/salaries you should be considering a number of things:
  • If they are still working you keep paying.
  • If not (or if only able to work limited hours), check what your employment agreement says for this sort of situation.
  • If you have a clause such as our standard clause giving the right for a temporary relief from having to pay staff where you have to close, then:
    • Decide whether you are going to pay them anyway (good for morale and loyalty; but you may not have the cash)
    • Communicate with staff – explain the situation and what you are entitled to do and what you intend to do. Also explain that if you can access a government wage subsidy then you would obviously be paying them at least the lesser of the subsidy and their normal pay.
    • Ask them for their input to what you actually pay – they may like to take leave rather than be paid nothing, for example.
    • Decide what you are going to do and communicate in writing. Remember that you cannot pay out leave unless they have agreed.
  • If you do not have such a clause then you should still follow the above bullets, but you should include some explanation as to why it is so difficult for you to pay when they are not working – unfortunately as the Employer you have an obligation to provide work, so you need to address the issue collectively, if possible.
    
    
• The government have activated various means of financial support. For anyone who is affected by the change in alert levels you may be eligible for one or more of the following:
  
  
  • The Wage Subsidy – (now $600 per week full time or $359 part-time). To access this you must be able to demonstrate a loss of 40% in income as a result of the change in levels.  This previously meant you have to compare a current fortnight where you have, or expect to have, at least a drop of 40% in revenue when compared to a fortnight within the previous 6 weeks.  We are still waiting to see the exact details on the MSD website – but if this stays the same, a closure for 3 days may struggle to show a 40% reduction.
    
    
  • Resurgence Support – where the change in levels will result in a drop of 30% (across your entire “commonly-owned” group) for a 7-day period – when compared to an average week in the previous 6. Refer to this website for details https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment/eligibility This will provide a one-off amount of $1500 plus $400 per FTE to a max of 50 FTE (1 FTE = 20 hours or more per week; if less than 20 hours it is treated as 0.6FTE).  It is not limited to being used for wages and can be claimed as well as the Wage Subsidy.  If you do claim this, however, and are not eligible for the Wage Subsidy, you will be under strong pressure to use some or all of it to enable you to continue to pay staff.
    
    
  • Leave Support Scheme and Short-term Absence Payments remain accessible where you have staff off because they have to self-isolate or are awaiting a test result. This is likely to be applicable to Essential Industries or other situations where you are not eligible for the Subsidies.
    
    
• The subsidies should be able to be claimed from Friday 20^th The Wage subsidy via the MSD website and the Resurgence Subsidy through the IRD.
  
  
• I strongly recommend you do some careful work on your revenue figures to determine your eligibility for these Subsidies.
  
  
• I will stress again – if you intend to pay your employees any less than their normal pay, you need to consult with them. We can advise you on details if you need it.

If you have specific questions that come to mind as a result of this, please email me – the chances are that others have them too, and I will send regular updates for a few days anyway.

Essential HR are here to help.  For ongoing help, contact Mike on 027 2808546 or mike@essentialhr.co.nz or leave a message on 03 3650532 – our landline is not monitored, but all messages are immediately emailed to us, so we can still respond reasonably quickly – apologies for any delays in reaching us on cell phones. 

I’m happy for you to pass this on to others.

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