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||
|Payment Period Length||
Initially 4 weeks
Can reapply for further periods, if required
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.
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:
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.