COVID-19 Wage Subsidy (NZ) – Astute Payroll Help Centre

Overview

The Ministry of Social Development (MSD) has introduced a COVID-19 Wage Subsidy to support employers and employees affected by COVID-19.

As of 27 March 2020, the COVID-19 Leave payment is no longer available to employers. While already submitted applications will continue to be processed and paid, relief will now be provided by the COVID-19 Wage Subsidy.

To see if your business qualifies for this subsidy, check the Work and Income website.

As the MSD is working to process applications as quickly as possible, you should ensure that the information in your application is the same as what is held by Inland Revenue to prevent delays.

Nominating Rates for Employees

The COVID-19 Wage Subsidy will be paid at a flat rate of:

$600 a week for each full-time employee retained (20 hours a week or more)
$359 a week for each part-time employee retained (less than 20 hours a week).

This subsidy is paid as a lump sum to employers and will cover 12 weeks for each employee.

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.

Employer Obligations

Employers need to try to retain employees who they are receiving the COVID-19 Wage Subsidy for. If you apply for the wage subsidy after 4pm on 27 March 2020, you must retain those employees or be in breach of your obligations.

If you receive the COVID-19 Wage Subsidy, you must try your hardest to pay the employees named in the application at least 80% of their usual wages. If that isn’t possible, then you need to pay at least the subsidy rate applicable to each employee.

If your employees’ usual wages are less than the subsidy amount, you must pay them their usual wages. Any difference should be used for the wages of other affected staff.

Reporting via PayDay Filing

Wage subsidies should be passed onto the employee by the employer. Employers are encouraged to do this as part of the employee's normal pay cycle. All deductions (such as PAYE, KiwiSaver and child support) should be made as normal.

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

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