COVID-19 Leave Support Scheme (NZ) – Astute Payroll Help Centre

Overview

The Ministry of Social Development (MSD) has announced they have widened the eligibility for COVID-19 Essential Workers Leave Support to non-essential businesses starting 1 May 2020. This payment is called the COVID-19 Leave Payment.

Whilst the existing COVID-19 Wage Subsidy Scheme is designed to support employers and staff maintain their employment connection, ensuring an income for employees that would otherwise face laying off staff or reducing hours, the COVID-19 Leave Support Scheme is designed for businesses who have employees who:

can’t come into work because Ministry of Health guidelines recommend they stay at home; and,
can’t work from home.

This scheme is to help employers who are struggling to pay for both the leave for these employees and the costs of hiring replacements, even if the business has not suffered a revenue drop attributable to COVID-19.

Employer and Employee Eligibility

To see if your business qualifies for the Leave Support Scheme, visit the Work and Income website.

Please note that non-essential businesses will not be able to apply for the Leave Support Scheme until 1 May 2020.

Prior to applying for the Leave Support Scheme, you must discuss the application with your employees, get their consent and agree they meet the eligibility requirements.

An employee cannot receive both COVID-19 Leave Payment and Wage Subsidy at the same time.

Differences between COVID-19 Leave Payment and Wages Subsidy

	Leave Payment	Wages Subsidy
Employer Eligibility Requirements	Your business: is either an essential or nonessential business is registered and operating in NZ has employees legally working in NZ must have taken active steps to mitigate the impact of COVID-19 must have had a 30% revenue drop attributable to COVID-19 or have had your ability to support employees (who meet the criteria and need to take leave) negatively impacted by the COVID-19 public health restrictions. For example, the cost of paying for your employees' leave and paying for replacement staff is significant (see MSD FAQ).	Your Business: is either an essential or nonessential business is registered and operating in NZ has with employees legally working in NZ must have taken active steps to mitigate the impact of COVID-19 must have had a 30% revenue drop attributable to COVID-19
Employee Eligibility	Employee must be legally employed by your business Employee must be employed in NZ Employee is not receiving the COVID-19 Wage Subsidy Employee must have advised you (and you agree) that they cannot work because of one or more of these situations: they are at higher risk if they get COVID-19, and Ministry of Health guidelines recommend they stay at home during lockdown (and potentially longer) they have come into contact with someone who has COVID-19 and must self-isolate for 14 days (as required by Ministry of Health guidelines) they have tested positive for COVID-19 and are required to remain off work until they've been cleared by a health professional to be released from self-isolation, or they have household members who are at higher risk if they get COVID-19 and the Ministry of Health recommends the worker also remains at home to reduce the risk to them.	Employee must be legally employed by your business Employee must be employed in NZ Employee is not receiving the COVID-19 Leave Payment Employee must face being laid off or a reduction of hours
Employer Obligations	Employers must: retain named employees for at least the duration of the grant (4 weeks) pay named employees, at a minimum: at least 80% of income where reasonably possible the full subsidy received for each named employee, except where a person’s income is normally less than the subsidy amount, in which case they can be paid their normal salary.	Employers must retain named employees for at least the duration of the grant (12 weeks) pay named employees, at a minimum: for any work they do at their normal rates at least 80% of income where reasonably possible (for employees working reduced hours while self-isolating) the full subsidy received for each named employee, except where a person’s income is normally less than the subsidy amount, in which case they can be paid their normal salary.
Payment Period Length	Initially 4 weeks Can reapply for further periods, if required	12 weeks

Nominating Rates for Employees

The COVID-19 Leave Payment will be paid at a flat rate of:

$585.80 for people working 20 hours or more per week (full-time rate)
$350.00 for people working less than 20 hours per week

If you have employees who work variable hours, you can calculate an average to determine which rate you should apply for.

For employees who have been employed for 12 months or more, calculate the average hours worked each week in the last 12 months
For employees who have been employed for less than 12 months, use the average hours over the period of time you (or they) have been employed.

If the average hours are 20 or more, apply for the full-time rate. If the average hours are less than 20, apply for the part-time rate.

Reporting via PayDay Filing

You don’t need to account for the subsidy separately when filing Employment Information each pay day. The leave payments are shown as 'total wages paid’ for each employee.

How to Process COVID-19 Leave Payments in Astute

Create a New Pay Item called “COVID-19 Leave Payment”

For reporting clarity, it is recommended you set up a separate pay item ‘COVID-19 Leave Payment’. When you set up the pay item, ensure that the EMS Settings > Payment Section is set to Gross Earnings.

Add Lump Sum Payment in Process Payroll

To process payroll for an employee who is eligible for COVID-19 Leave Payments, go to Payroll > Process Payroll > Add Lump Sum Payment and enter the following settings:

Employee: select the employee
Item Type: select Pay Item
Jobs: depending on your reporting structure, you may want to assign it to the job the employee would have been working in. You can also set this to ‘None’
Pay Item: select the COVID-19 Leave Payments Pay Item set up in step 1.
Rates: select “Enter Custom Rate” and put in the full or part time COVID-19 rate applicable to the employee.
Units: 1 (for one week, 2 for a fortnight etc)
Period: select “Multiple Days”
Start Date: start date of the leave period being paid
End Date: end date of the leave period being paid
Spread (Units): select “Spread over work week (Mon-Fri)” or Spread Over Days worked

Note: if you select spread over days worked and the employee has not worked any days in the defined period, the system will equally spread the defined unit/s across the selected date range.

As with the COVID-19 Wage Subsidy, employers are encouraged to make payments as part of the employee’s normal pay cycle. All deductions (such as PAYE, KiwiSaver and Child Support) should be made as normal.

Further Information

This information is up to date as at 29 April 2020. To keep up to date with the latest COVID-19 information, please refer to the following websites:

Work and Income

COVID19

Employment NZ

Disclaimer:

This article contains general recommendations relating to the configuration and use of the Astute system. The information contained is not qualified tax or legal advice and should not be relied upon as such.