COVID-19 Business Support
Support For Your Trade Business During COVID-19
With building sites closed across New Zealand, COVID-19 Alert Level 4 restrictions are difficult for small Kiwi businesses and self-employed tradies.
We've put together some information on Government assistance options to keep you and your business going.
FINANCIAL SUPPORT UPDATE
The Wage Subsidy is administered by the Ministry of Social Development (MSD) through Work and Income. You should have applied for the first round of the Wage Subsidy which covered the first 2 weeks of the Alert Level 4 period. Applications for the second round of the Wage Subsidy that will cover the next 2 weeks opened on Friday 3rd September at 9.00am.
The MSD are already contacting employers who have applied for the Wage Subsidy to verify what is declared in the declaration. Among other things they are:
- Asking businesses to confirm and/or prove that they meet the criteria for a drop in income.
- Asking businesses to prove that they have the consent of every employee they have included in the wage subsidy application.
- Asking questions about the wages to be paid and hours of work.
What this means for your stores who are applying for the Wage Subsidy is that they must declare:
- That they will retain the employment of the named employees
- They will use the subsidy to support paying the named employees ordinary wages or salary set out in their employment agreement. That is 100% of their employment agreement entitlement, e.g. if an employment agreement says that an employee gets $25 per hour and the hours of work are 40 per week, that is $1,000. It is not understood to include conditional entitlements such as overtime that is received only when overtime is worked or other payments that are received only when certain conditions are met;
- They will pay the full amount of the subsidy to each named employee, unless the subsidy exceeds the pay for that employee (that may occur for some part-time employees). Any excess subsidy from an employee where the subsidy would exceed ordinary pay can go towards paying other named employees; and
- They will use their best endeavours to pay at least 80 percent of each named employee’s ordinary wages or salary. That does not provide an independent right to an employer to pay less than 100%. An employer must pay the 100% as per the employment agreement. The declaration requires that they will not make any changes to any obligations under any employment agreement, including to rates of pay, hours of work and leave entitlements, without the written agreement of the relevant employee.
An employer who receives the subsidy can only pay an employee less than 100% if it has agreed a variation with each individual employee. The Wage Subsidy declaration requires that to be in writing. An employment agreement may contain additional requirement for a variation, such as requiring that it is also signed. It is important to check your employment agreements for what is required to lawfully vary the employment agreement.
Any variation must sufficiently explain what the changes so that they make sense in relation to the employment agreement.
What that means is that to pay an employee $800 per week who would normally receive the $1000 referred to above are you agreeing to change the rate of pay for the same hours, or the hours or both. If the rate of pay is low, you will need to change the hours otherwise you may drop below the minimum wage. Sometimes agreeing to reduce the hours of work is easier as it achieves the same result when no hours are being worked and maintains the wage. You will also need to think about the time period. If you put no time frame in place, then the variation is permanent until another variation happens.
In Level 4 it is unlikely that a written document can or should be physically exchanged, particularly given the isolation requirements and that Covid-19 can exist on surfaces for some time. The requirement to be in writing can be met by email, text or any messaging app.
If there is a requirement that a variation must be signed by both parties then that may be very difficult to achieve. There are some technical solutions if email communications are available, it is also possible to sign on some devices and place a signature on a page. Where communications are limited to text or messaging, then the best that can be done is to ask the employee to confirm that by confirming the variation they are confirming they are signing the amendment. This may suffice.
Confirming that they will physically sign is not much use as it is a promise to do something in the future, and you need the promise now for a lawful variation to occur.