COVID-19 Resurgence Wage Subsidy

Yesterday the Government announced a 2-week COVID-19 Resurgence Wage Subsidy payment that will be available for employers, the self-employed, and independent contractors, who are financially impacted by the resurgence of COVID-19 and changes to Alert Levels.

The resurgence wage subsidy is a nationwide wage subsidy which covers the period Auckland is at Alert Level 3 and is available for businesses who meet the criteria, and are not currently getting the Wage Subsidy, Wage Subsidy Extension or the Leave Support Scheme.

Businesses that have already applied for, and received, the wage subsidy or wage subsidy extension, which expires on September 1, will not be able to apply for the resurgence wage subsidy extension until the relevant 12 week or 8 week period has finished as a business is not able to receive more than one COVID-19 payment for the same employee at the same time.

The eligibility for the resurgence wage subsidy is similar to the wage subsidy extension. A business must have had, or is predicting to have, a revenue drop of at least 40% due to COVID-19 for any consecutive period of at least 14 days within 12 August and 10 September compared to the closest period last year.

New businesses which have been operating less than a year, or high growth businesses (e.g. that have had a significant increase in revenue), can apply for the Resurgence Wage Subsidy. To determine whether these businesses meet the 40% decline in revenue assessment, they must compare their revenue against a 14-day period that gives the best estimation of the revenue decline related to COVID-19.

The resurgence wage subsidy is for 2 weeks from the day the application is submitted and will be paid $585.80 gross per week for a full time worker (20 hrs or more per week), and $350.00 gross per week for part-time workers (less than 20 hrs per week).  Payments are expected to be made within 5 working days of submitting the application.

Employers will pass the subsidy on to employees in the form of continuing to pay their employees in accordance with their employment agreement, or, if they are unable to do that, then employers should try to pay employees at least 80% of their usual wages, using the subsidy to subsidise a portion of it.

Employees that earn less than the wage subsidy will still be paid their usual wages, with the difference applied towards wages of other affected staff or paid back if not needed.

The resurgence wage subsidy will be open for applications the through the Work and Income website from 1pm on 21 August 2020 to 3 September 2020.

The Government also announced changes to the leave scheme and mortgage deferral scheme and a review of overall COVID-19 support.

Leave scheme more accessible

The revenue-drop test for the COVID-19 Leave Support Scheme has been removed which means businesses with workers who have been told by health officials or their GP to self-isolate will receive the equivalent of the wage subsidy to help cover that person’s wages for the time they are in isolation.

Mortgage deferral scheme extended

The mortgage deferral scheme is being extended to 31 March 2021. Further details will be made available by the Reserve Bank and the retail banks.

Integrative support schemes

Further work is being done to ensure support continues to be adaptable and flexible for alert level movements. This includes work on the Small Business Cashflow Loan Scheme and potential further changes to the Leave Support Scheme.

If you would like to discuss any of the above, or how Covid-19 is impacting your business, please contact your Hayes Knight Advisor.