29/04/2020

Wage subsidy and leave support scheme

As the economy starts to reawaken in level 3 and soon, (fingers crossed), level 2, it is important to maintain a monitoring stance on the wage subsidy criteria.

If you have not yet applied and are eligible to do so (see criteria below) please contact us to discuss.  Applications remain open at the following address:  https://workandincome.govt.nz/covid-19/wage-subsidy/how-to-apply.html

If you have already applied, it is important to continue monitoring your circumstances against the criteria.  If you no longer qualify for all or part of the subsidy, a repayment should be made (details below).  This may be because:

• You applied based on projections and those projections were bleaker than reality and you have not suffered a 30% reduction in revenue; or

• It may be the situation is worse than you expected and you are facing redundancies such that the wage subsidy received is more than your wage cost; or

• There may be errors in your original application such as the inclusion of contractors or a part-timer listed as a full time employee; or

• Maybe you have received an insurance pay-out.

What is the criteria for the wage subsidy?

1. Your business must be registered and operating in New Zealand

2. Your employees must be legally working in New Zealand, including employees who:
•    Have a NZ work visa
•    Have a condition on their NZ temporary visa that allows them to work in NZ
•    Are international students whose visa allows them to work in NZ

3. Your business must have experienced a minimum 30% decline in actual or predicted revenue over the period of any month from January 2020 to June 2020, when compared with the same month last year*, and that decline is related to COVID-19

4. Your business must have taken active steps to mitigate the impact of COVID-19**

5. For applications made after 27 March you must retain the employees named in your application for the period of the subsidy; for all applications you must use best endeavours to pay them at a minimum of 80% of their usual wages; if that isn’t possible, you must pay at least the rate of the subsidy received for that employee (unless the employee’s usual wages are lower than the rate of the subsidy, then you should continue paying their usual salary for the duration of the subsidy; apply the excess to other wages).

* New businesses operating for less than a year or high growth businesses can apply for the Wage Subsidy.  To determine whether these businesses meet the 30% decline in revenue assessment, they must compare their revenue against a previous month that gives the best estimation of the revenue decline related to COVID-19 (e.g. 30% loss of revenue attributable to COVID-19 comparing January 2020 to March 2020).

** Active steps to mitigate the impact of COVID-19, for example:
•    Drawing from your cash reserves (as appropriate)
•    Activating your business continuity plan
•    Making an insurance claim
•    Proactively engaging with your bank
•    Seeking advice and support from:
–    Your financial advisers
–    The Chamber of Commerce
–    A relevant industry association
–    The Regional Business Partner programme.

One of my staff members has resigned and will leave my employ during the subsidy period; do I need to inform MSD and should I repay the subsidy claimed in respect of this employee?
Yes you should inform MSD; no you need not repay the subsidy if the funds can be applied to paying other employees.  Failure to inform is likely to result in an information request from MSD.  Talk to us if you’re unsure or if you’d like assistance.
Phone MSD on 0800 40 80 40
Email:  
information@msd.govt.nz 

I am considering staff redundancies during the subsidy period; do I need to inform MSD and should I repay the subsidy claimed in respect of these employees?
If you applied for the COVID-19 Wage Subsidy for any employees after 4pm on 27 March 2020, you must retain those employees or you will be in breach of your obligations.  In respect of earlier applications there is still a best endeavours requirement to keep paying your staff at a minimum of 80% of their usual wage.  Talk to us if you’re unsure or if you’d like assistance.

In both cases, you should inform MSD; a repayment may be required.
Call MSD on 0800 40 80 40
Email:  
information@msd.govt.nz 

Is the information I provided for the wage subsidy application publicly available?
Limited information is available publicly for any employer who has applied for the subsidy.  By searching at the following address the following information can be viewed:
•    The name of the company
•    The number of employees for whom payment has been made
•    The amount paid
This has resulted in some negative media attention for large corporates who have been criticised for not seeking funding from shareholders first.

Will I be audited by MSD regarding my wage subsidy claim?
MSD have confirmed audits of wage subsidy recipients have commenced; a team of 104 fraud experts and investigators are tasked with this role.

At a minimum applicants who provided false or misleading information will be made to repay the subsidy; civil proceedings to recover funds and prosecution under the Crimes Act 1961 may also result. There is an exchange of information between government agencies and confirmation to IRD records is already included in the application process.  Talk to us if you receive an information request.

What should I be doing now?
Documentation is key.  Whatever your position document your decision process and your claim against the criteria as at the application date and throughout the subsidy period (12 weeks from 17 March 2020).  Limit your stress!  In the case of an audit, contemporaneous documentation will turn a stressful situation into a straightforward dialogue with MSD.  Talk to VCFO if you are unsure how to approach this process.

How do I make a repayment if I need to?
The reasons for the refund and your documentation around the basis for both the original application and the need for refund will be key in showing you have acted in good faith.  Talk to us if you’re unsure.  VCFO can also assist with documentation and in liaising with MSD in respect of any repayment.

The repayment process begins with an email to MSD at: COVID19subsidy_overpayment@msd.govt.nz, including your details as follows:
•    Business name
•    IRD number
•    New Zealand Business Number (NZBN), if you have one
•    Phone number
•    Email address
•    Postal address

The amount you need to refund and why you want to refund it should also be included.

Once MSD have received the email, they will confirm the refund amount and how you can make the repayment.

When should I make a repayment if I need to?
It is important to continue monitoring your circumstances against the criteria throughout the subsidy period.  As soon as you are aware you will not meet the criteria for the subsidy in any aspect you should consider a repayment.  Contact us to discuss the position if you are unsure.

Can I claim both the wage subsidy and the leave support?
Not for the same member of staff for the same period.

LEAVE SUPPORT SCHEME

The essential worker leave support scheme has now been extended to all businesses, organisations and self-employed people experiencing hardship due to COVID-19; applying from 1 May.  Talk to VCFO if you have any questions or if you’d like assistance making an application.

The leave support scheme will cover workers who are unable to work from home and need to self-isolate for COVID-19.  This may be due to their own sickness, or the sickness of someone in their bubble; they may have come into close contact with someone with COVID-19 or be at higher risk of becoming severely sick if they contract COVID-19.  The weekly rates of the scheme will remain at $585.80 for full-time workers and $350 for part-time workers and is paid in 4 week blocks.

Multiple applications by the same employer are possible (i.e., you are not limited to a single application covering all staff), and you may apply more than once for the same employee if the leave period is longer than 4 weeks.

Applicants must sign a declaration  https://workandincome.govt.nz/online-services/covid-19/declaration-essential-workers-leave-support.html  confirming your business has either:

• Experienced a minimum 30 per cent decline in actual or predicted revenue over the period of a month when compared to the same month last year, or a reasonably equivalent month for a business operating less than a year, and that revenue loss is attributable to the COVID-19 outbreak; or

• Had its ability to support the employees named in your application negatively impacted by the COVID-19 public health restrictions; and

• Your business must be registered and operating in New Zealand

• Your employees must be legally working in New Zealand, including employees who:

• Have a NZ work visa

• Have a condition on their NZ temporary visa that allows them to work in NZ

• Are international students whose visa allows them to work in NZ; and

• Have advised you they meet the criteria (i.e., have or live with someone suffering from COVID-19, have come into contact with the virus or are higher risk)

• Employee consent to release of limited personal information to MSD is required; you must also inform them of their entitlement to information provided as part of the application

• You cannot be receiving the wage subsidy for the same employee at the same time

• You must retain the employees named in your application for the period of the leave support payment and use best endeavours to pay them at a minimum of 80% of their usual wages; if that isn’t possible, you must pay at least the rate of the payment received for that employee (unless the employee’s usual wages are lower than the rate of the leave support payment, then you should continue paying their usual salary for the duration of the period; apply the excess to other wages).


Further information is available at the following links:

https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/leave-support-scheme

https://workandincome.govt.nz/covid-19/essential-workers-leave-support/faqs.html#null

Apply at the following address:

https://workandincome.govt.nz/online-services/covid-19/apply-checklist-leave-support-employers.html