Each time Alert Levels escalate to Level 3 or higher for a period of seven days or more, there is a new Wage Subsidy Scheme (WSS) put in place. In this instance, a WSS opened for applications on Friday 20 August 2021.
Many of the terms and conditions of the WSS are similar to those applied under the former schemes, however the amounts of the payments have increased to be $600 per week for a full-time employee and $359 for a part-time employee. Key features to be aware of include:
· Support will be provided in two-weekly payments, for the duration of the COVID-19 Alert Level escalation, rounded to the nearest fortnight (e.g. if Levels 3 & 4 were in place for 22 days, there would be a payment for two fortnights). This contrasts to the lump sum approach taken with the original Wage Subsidy (12 weeks) and the Wage Subsidy Extension (eight weeks).
· Businesses will need to see a 40% reduction in revenue as compared to the typical fortnightly revenue during the six-week period immediately preceding the change in COVID-19 Alert Levels (in this case, the date range should be 6 July to 16 August 2021). The revenue loss will need to take place over a consecutive 14-day period between 17 August and 30 August. This can be based on a forecast revenue loss (provided it then materialises).
· Businesses will be required to document and have available evidence of the decline in revenue being due to the change in Alert Level (e.g. it was not an expected normal decline in revenue due to normal seasonal variations).
· Many other requirements remain consistent with prior schemes, such as seeking consent from employees to apply (ideally in writing), the requirement to retain staff, pass on the subsidy amounts to staff and taking active steps to mitigate the financial impact of COVID-19 (for example drawing on cash reserves, activating business continuity plans, engaging with your bank and insurer, and seeking professional advice.
The WSS is administered by the Ministry of Social Development. Applications opened here at 9am on Friday 20 August.
Resurgence Support Payment
A “Resurgence Support Payment” is available when New Zealand, or any region/s within the country, moves to COVID-19 Alert Level 2 (or higher) for seven days or more. A new Resurgence Support Payment will be available for businesses given at least 7 days will be spent at Alert Level 4.
This payment will be available to businesses which see a 30% or greater reduction in revenue as a consequence of the change in Alert Level.
To determine whether this criterion is met, businesses will need to show an actual 30% reduction over a seven-day period following the change in COVID-19 Alert Level, as compared with typical seven days of revenue in the six weeks immediately before the change in levels. The RSP will be available to all businesses (including sole traders) that have been operating for six months or more. Full eligibility criteria can be found here.
The value of the payment will depend on the size of the organisation; individual businesses will receive a payment of $1,500, plus an additional $400 per employee, up to a total of 50 FTEs. This means the maximum payment available will be $21,500 (noting there are specific rules for commonly owned groups). There is also a ‘lesser of’ test, meaning that the amount of the payment is the lesser of the amount calculated using the previously mentioned formula and four times the actual revenue decline.
It is worth noting that the RSP is subject to GST therefore GST registered businesses will need to return 3/23rds of the payment to Inland Revenue. However, input tax credits can then be claimed when the RSP is spent.
The RSP is administered by Inland Revenue and applications will open at 8am on Tuesday 24 August and remain open for one month after all of New Zealand returns to Alert Level 1. Further information will be provided by Inland Revenue here.
Other Covid 19 Support
Businesses are able to utilise the Leave Support Scheme when employees who cannot work from home are required to self-isolate due to potential exposure to COVID-19, or they are considered “higher risk” if they contract COVID-19 when there is active community transmission. The Leave Support Scheme provides a fortnightly payment of $1,171.60 or $700 respectively for a full-time or part-time employee who is isolating.
Since mid-February 2021 the Leave Support Scheme has also been supplemented by the Short-Term Absence Payment (STAP). This payment of $350 per eligible employee is available to support employees who are required to stay at home while they await the results of a COVID-19 test but are unable to work from home. The payment also applies to parents or caregivers who have dependents awaiting a test result, as well as self-employed workers.
The STAP will be of most assistance for those employees who have used their sick leave entitlements. Employers can apply for the STAP once in any thirty-day period per eligible worker (unless a health official or medical practitioner advises or requires the worker to re-test during that period). If the employee subsequently tests positive, they will be eligible for the Leave Support Scheme.