What do employer’s need to know during the COVID-19 Alert 4 Lockdown?
Businesses and employers are facing significant pressures and challenges as New Zealand is in Level 4 COVID-19 lockdown. There is a lot that employers need to know to ensure the survival of their business during and following the COVID-19 lockdown and to provide income for their employees affected by the lockdown. This article contains information for employers to know and helpful resources to keep informed of the latest news and updates for employers on COVID-19.
The economic impact on businesses may differ depending on whether they are a non-essential or essential service.
Are you an essential service?
The government have directed the closure of all businesses during the Level 4 COVID-19 lockdown, except for essential services. Businesses carrying out essential services can remain open including any critical suppliers in that businesses supply chain. Essential services are any the Government has decided can continue operating at their premises, under Alert Level 4 and must operate in a way that limits the risk of the spread and transmission of COVID-19. Non-essential businesses must now close their premises. To find out whether you are an essential business, go to COVID-19 - Essential Businesses
What support is available for employers during lockdown?
We know that businesses and employees across the country are suffering significantly from COVID-19, whether a non-essential or essential business or worker. There is support available to support affected businesses and employees get through these tough times. So, what help is available to you?
Wage Subsidy Scheme
The government has implemented a COVID-19 wage subsidy scheme that is administered by the Ministry of Social Development – Work and Income. The aim of the scheme is to provide sufficient support to businesses and employees to enable them to stay connected to their jobs, and continue to receive income now that New Zealand has moved to an Alert Level 4 shut down.
Applications for the wage subsidy scheme will be open until New Zealand moves down from COVID-19 Alert Level 4 and can be made on the Work and Income website (external link).
The wage subsidy scheme is available to all businesses adversely affected by COVID-19 including self-employed, contractors, sole traders, registered charities, incorporated societies and post-settlement governance entities.
To qualify, you must meet the following criteria;
your business is registered and operating in New Zealand
your employees are legally working in New Zealand
the business has experienced a minimum 30% decline in actual or predicted revenue over the period of a month, when compared with the same month last year, and that decline is related to COVID-19
your business has taken active steps to mitigate the impact of COVID-19
you must retain the employees named in your application for the period of the subsidy.
You can find out if you are eligible for the modified wage subsidy, and the steps and measures you are required to take in relation to the implications of COVID-19, and how to apply by visiting the Work and Income website.
Payment rates under the modified wage subsidy scheme are:
$585.80 (gross) per week for full-time employees, where full-time is 20 hours or more per week
$350 (gross) per week for part-time employees, where part-time is less than 20 hours per week.
The subsidy is paid as a lump sum and covers 12 weeks per employee.
Paying your employees?
If you are receiving the COVID-19 Wage Subsidy, you must try your hardest to pay the employee named in your application at least 80% of their usual wages. If that isn’t possible, you need to pay at least the subsidy rate (ie, full-time or part-time). If your employee's usual wages are less than the subsidy, you must pay them their usual wages. Any difference should be used for the wages of other affected staff - the wage subsidy is designed to keep your employees connected to you.
Redundancy? What if you are forced to lay off your employees?
Unfortunately for some businesses, you will be forced to lay off some employees. There may be a number of reasons why this may occur, but it is acknowledged that this is a possible outcome. Redundancy is not a situation that anyone would like to find themselves in, however there is support available for both you and your employees if this is a decision you are facing. You should visit Work and Income - Redundancy Support to see what support is available for you and your employees.
You should also remember to follow a fair and proper process when making employees redundant, as required by the Employment Relations Act 2000.
What other relief is available to businesses?
Business Finance Guarantee Scheme
The Government and the banks have agreed to implement a $6.25 billion Business Finance Guarantee Scheme to support otherwise viable businesses impacted temporarily by COVID-19 through this unprecedented time. The specifics of this initiative are being finalised and agreed urgently and details of the Scheme, and when it will be available, will be made public in the coming days.
Business cash flow and tax measures
Business cash flow and tax measures include:
increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021;
increasing the small asset depreciation threshold from $500 to $1,000 — and to $5,000 for the 2020/21 tax year;
allowing depreciation on commercial and industrial buildings from 2020/2021 ; and
removing the hours test from the In-Work Tax Credit (IWTC) from 1 July 2020.
To find out more information on COVID-19 and how it affects your business, you can visit the following sites;
The team at Dixon and Co are here to answer any questions you may have and provide advice specific to your business and situation.