On Monday, 6 April 2020 applications opened for the Government’s COVID-19 Essential Workers Leave Support scheme. This scheme is available for essential businesses to pay their employees who:
- Cannot come into work because Ministry of Heath guidelines recommend they stay at home; and
- Cannot work from home.
The scheme replaces the previous COVID-19 leave payment which was folded into the wage subsidy scheme on 27 March 2020.
In this article we provide some further information on the Essential Workers Leave Support scheme which may be relevant to you and your business. Information can also be found on the Work and Income New Zealand website.
The situation is changing daily. We encourage you to keep in contact with us directly to discuss how the Essential Workers Leave Support scheme and other financial support measures may assist you and your business.
Who can receive the Essential Workers Leave Support?
To be eligible for the Essential Workers Leave Support scheme your business must be an essential business. Further information on what an essential business is can be found here.
The scheme is available for those businesses to pay essential service workers who cannot come into work because Ministry of Health guidelines recommend they stay at home. This means the employee:
- Has tested positive for COVID-19, or has come into contact with someone who has and is required by Ministry of Health guidelines to self-isolate;
- Is in the category of people that are at higher risk if they get COVID-19, and Ministry of Health guidelines recommend they stay at home; or
- Has household members who are at higher risk if they get COVID-19 and Ministry of Health guidelines recommend the worker also remains at home to reduce the risk to them.
In addition to the above, to be eligible to receive the Essential Workers Leave Support subsidy you must meet certain other criteria, including:
- You must operate a business in New Zealand – that may be a registered business, sole trader, self-employed person, registered charity, incorporated society, non-government organisation, or post settlement governance entity.
- You must have a New Zealand Business Number (NZBN) to make the application.
- Your employees must be legally employed by you and legally working in New Zealand.
- Your business must have either:
- Suffered (or be projected to suffer) a 30% decline in revenue over the period of a month when compared to the same month last year (or a reasonably equivalent month for a business operating less than a year), and that revenue loss must be attributable to the COVID-19 outbreak; or
- Had its ability to support the employees named in your application negatively impacted by the COVID-19 public health restrictions.
How much can you get?
The Essential Workers Leave Support subsidy is paid at the same flat rate as the wage subsidy, being:
- $585.80 per week per full-time employee (20 hours or more); or
- $350 per week per part-time employee (less than 20 hours)
It is paid as a lump sum covering 4 weeks per employee (whereas the wage subsidy is paid for a 12-week period). Employers can reapply if necessary at the end of that 4 week period.
Where an employee has worked variable hours, employers should use the average hours worked per week over the last 12 months (or over the full period of employment, if an employee has worked for less than 12 months) to work out what rate to apply for.
Your obligations under the Essential Workers Leave Support subsidy
Your obligations under the Essential Workers Leave Support Scheme are similar to those under the wage subsidy scheme. If your business receives the Essential Workers Leave Support subsidy, you must:
- Retain the employees named in your application for the period you receive the subsidy.
- Use your best endeavours to pay the employees named in the application at least 80% of their usual wages or salary. If that isn’t possible, you must pay at least the full amount of the subsidy to the employee. Where an employee’s ordinary wages or salary are less than the subsidy amount employers must pay the employee their usual wages or salary. Current guidance states that any difference should be used for the wages of other affected staff.
- Ensure that you comply with your existing legal obligations as an employer, including your obligations under the Employment Relations Act 2000.
When applying for the Essential Workers Leave Support subsidy, you will be required to complete a declaration form to confirm (among other things) that you meet the eligibility criteria for the scheme and will comply with your obligations to use the subsidy to retain and pay employees in accordance with the scheme rules. Details of the current required declarations can be found here. We are available to assist you through the application process to ensure you fully understand your obligations under the Essential Workers Leave Support scheme.
Essential businesses that have or are projected to suffer a 30% revenue decline may also be eligible to apply for the government’s wage subsidy scheme. Further information on the wage subsidy scheme can be found here.
You cannot however receive both the wage subsidy and Essential Workers Leave Support payments for the same employee at the same time. Work and Income New Zealand are advising businesses to apply for the payment that is most appropriate to your employee’s situation. We are happy to assist you through this process.
Please contact our employment team for further assistance.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose. While we make every effort to ensure the accuracy of the information contained in this article, this is a rapidly changing environment and the information will be subject to change.