Covid-19 – Update #2 - An update

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8 Apr

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At alert level 4, we now have a new “normal” to manage. To help you navigate the effects of Covid-19 on you and your employees, we have included key information and some common questions

Wage Subsidy Scheme (in short)

Changes were introduced on 27 March 2020 to clarify an employer’s obligations. If you applied and received the wage subsidy before 27 March, the old rules will apply – confusing we know!

New Rules

You must try your hardest to pay staff at least 80% of their usual wages for the full 12 weeks.
An employer cannot make an employee redundant during the 12 week period.
You must pass on the entire subsidy received to your employee (except for a subsidy surplus – see below).
If you cannot pay your employee 80%, you must pay the employee at least the subsidy.

You need to discuss and agree with your employees what you can afford and what they will be paid. You cannot make a change without their agreement. Confirm what you agree in writing as a variation to their employment agreement. If you need a hand with this, give us a call.

Need more information?

https://workandincome.govt.nz/products/a-z-benefits/covid-19-support.html#null

Other Government Support

The Covid-19 Leave Payment has been rolled into the wage subsidy scheme.
The government is working on an essential services sick leave scheme. Watch this space…

Self-employed, contractors and sole traders

Wage subsidies are also available to self-employed, contractors and sole traders. MSD have information available: https://workandincome.govt.nz/products/a-z-benefits/covid-19-support.html#null.

If you are unsure, get in touch with us or call MSD on 0800 40 80 40.

Application forms

Employer: https://services.workandincome.govt.nz/ess/employer_applications/new

Self-employed/contractors or sole trader: https://services.workandincome.govt.nz/ess/trader_applications/new

Wage subsidy surplus

An employer must give the entire subsidy received to their employee.

A subsidy surplus can occur:

You have a part time employee whose normal pay is less than their subsidy – you should pay them their normal pay (not the full subsidy).
Someone resigns during the 12 week period (even with the subsidy being used towards their notice period).

What to do with the surplus:

There are a few options, which aren’t entirely clear. Be cautious and sensible here. You could either:

Pay the employee for a longer period;
Top up other employees' wages;
Spread payments for other employees over more than 12 weeks.
Keep it aside should you be asked to repay it.

Wage Subsidies and Tax

The wage subsidies are:

GST exempt;
Subject to normal payroll deductions (i.e. PAYE, ACC, student loan, KiwiSaver).

If you are still puzzled, phone your accountant.

Temporary Variations in Employment

A temporary variation commonly includes a reduction in pay (e.g. 100% to 80%) or change in working hours (e.g. 32 to 24 hours per week). That said, it’s not limited to these two - a variation can cover any clause in their Employment Agreement.

What to do

Talk to your team. When you’ve verbally agreed a temporary change, you need to get this in writing. Keep it clear and simple. We can work with you through this process and develop variation letters, just get in touch.

Our new norm - working from home (with and without children)

While we are all figuring this out, it pays to think about how this might work in practice and what your team might need from you right now.

Set them up - Ensure they have internet connection, phone, computer, headphones etc. This will ensure they can still be productive at home. If someone isn’t used to working from home, they might need a bit more support.

Communicate - Let your team know what is going on. Update them about changes when you can – try to avoid making changes without any notice. Be positive!

Have regular catch ups – video calls, online meeting apps/programs, a simple phone call, text message or email. We are all feeling slightly cut off at the moment. A text, call or email can mean a lot. We’ve also heard of Friday afternoon virtual drinks (alcoholic and non-alcoholic) – why not?

Set clear expectations - Be realistic. Ask your employees what they can achieve at home. Some may be able to continue with their normal work. However, for many this will not be the case (e.g. working from home with children). And remember, we all need to switch off when working from work – your team aren’t available 24/7!

Be flexible – Talk about when they can work. Give them some flexibility to get on with their work, unless your business needs specific hours worked for operational reasons.

Consider alternative work – If there isn’t much work to do, can they do some work they wouldn’t normally do. What about online training courses or other professional development?

Our friend health and safety – H&S applies when we are working from home too. In H&S speak you need to ensure that the risks "as far as reasonably practicable" in their home are managed or eliminated.

What does this mean? Talk about their H&S – have a discussion about their workspace or create a simple checklist they can complete themselves.

Keep moving. Don’t let your team fall into the habit of sitting at their desk for 12 hours a day. Go for a walk, do a virtual gym session or pilates class, get out in the garden or chop some firewood. Your brain and body will thank you.

Provide support – We all cope with change and uncertainty differently. Rule 1 - Be kind. Rule 2 - Be supportive. Support can look quite different for each of us - from regular team calls, to an Employee Assistance Programme (EAP) or other helplines or resources, or IT support and information about how to access that.

Non Covid-19 News – Minimum Wage

From 1 April 2020 the minimum wage increased:

Adult - $18.90 per hour (gross).

Training and starting-out - $15.12 per hour (gross)