The flow on economic effects of COVID-19 have now well and truly been felt throughout several key sectors in New Zealand. Arguably none more so than tourism and hospitality, who rely heavily on the steady stream of migrant labour in New Zealand.
Immigration New Zealand's (INZ) recent announcement of automatic extensions of temporary visas until the end of September 2020 was welcome news to many, as was the ability for some visa holders employed in essential services to vary the conditions of their visas. However, also pressing is the issue where employers are simply unable to pay their migrant worker employees on essential skills work visas, the minimum rate of pay. A failure to do so may jeopardise the visa holder’s right to remain in New Zealand.
Wage subsidy eligibility
The wage subsidy can be applied for on behalf of migrant employees provided they are legally entitled to work in New Zealand. This includes employees on a valid work visa. However, it is important to note the distinction between work visa holders and those on interim visas.
An interim visa is typically held where an individual is renewing their visa and it has expired or where an individual is changing their geographic location of employment or job position.
Importantly, each interim visa has certain ‘conditions’ tied to it. In some instances, an interim visa may have the conditions of a visitor visa meaning that the individual is not entitled to work in New Zealand. If this is the case, then an employer should not claim the wage subsidy for such an individual. Given their interim visa status, such an individual is not legally entitled to work in New Zealand and is therefore unable to be included in an application for the wage subsidy.
It is therefore vital to understand the type of interim visa conditions employees are on so that employers do not fall foul of the wage subsidy requirements.
Minimum rates of pay
Many employers will now be familiar with their general obligations when receiving the COVID-19 Wage Subsidy (administered by the Ministry of Social Development) where best endeavours must be made to pay employees named in their application, at least 80% of their usual wages. Where this is not possible, an employer will need to pass on at the very least, the subsidy rate applicable to individual employees.
Points to note:
- Based on a 40-hour work week, the wage subsidy rate of $585.80 per week (gross).
- This calculates to approximately $14.64 (gross) per hour.
- The minimum rate of pay for visa holders working in ‘mid-skilled’ roles is currently $21.68 per hour (gross).
The above exposes real areas of concern in terms of visa compliance which are presently playing out across New Zealand. In the absence of a decent top-up by the employer, a subsidy-only rate will fall below INZ’s current minimum pay rate of $21.68 per hour (gross) for essential skills work visas holders who are working in mid-skilled roles and whose work visa conditions stipulate they must receive that hourly rate, at a minimum.
Take for example the manager of a popular bar in Queenstown who is now only receiving the wage subsidy and remains in New Zealand on an essential skills work visa. At what point is this person deemed to be breaching the terms of the visa that legally entitles them to live and work in New Zealand?
While the decision makers within INZ are no doubt considering what to do in relation to this section of the workforce, there does appear to be one potential option which could be reviewed on a monthly basis while the effects of COVID-19 continues to reposition the state of the economy.
A pragmatic approach may be for INZ to temporarily relax or even remove altogether the minimum pay requirements in relation to employer assisted work visa holders (who remain employed), provided they are still paid the minimum wage. Given the border closure complications, meaning a shortage of flights leaving New Zealand for visa holders who remain in New Zealand, accommodations should be made for those migrants whose skills will continue to be in short supply in New Zealand for foreseeable future.
In addition, workers who are in New Zealand on different visa types, for example the Accredited Employer (Work to Residence) Work Visa and are required to earn a minimum salary of $79,560 per annum (or $55,000 before 7 October 2019) may find that a pay cut drops their remuneration below this salary threshold requirement. Such a change may not only affect their right to remain in New Zealand as a temporary visa holder in the short term, but also, their long term plans which hinge on their ability to secure a resident visa at the end of two years spent in New Zealand on this specific type of work visa.
Changes to the labour market
As of Friday 24 April, the number of people receiving job seeker support payments was in excess of 170,000 an increase of around 30,000 from late March. Consequently, an increase in unemployment will result in a significant number of New Zealand citizens or residents looking for work over the coming months.
In response to rising unemployment, the Labour Government may be inclined to refocus its efforts towards supporting New Zealand citizens or residents over migrant workers who are on temporary visas, when it comes to securing available roles.
The current labour market test requires employers to demonstrate that they have made ‘genuine attempts’ to recruit New Zealand citizens or residents in the first instance before supporting a visa application. When assessing future visa applications, INZ may enforce a much stricter labour market test, meaning that it may become more challenging for employers to hire migrant workers.
It seems logical that an increase in unemployment among New Zealand citizens and residents may allow some employers to recruit at a greater speed. This may remain true with respect to many lower skilled roles across New Zealand. Yet, many employers who routinely fill roles requiring a higher level of and specificity of skill will remain heavily reliant on migrant workers – which may be fraught with challenges...
Support for employers
As we transition into Alert Level 3, it will now be more important than ever to ensure any future visa applications are supported by tailored and in-depth documentation to satisfy the criteria.
Amidst a fair amount of uncertainty, we expect that INZ will provide some further clarity on the issues around minimum pay rates (and others) that are sure to become apparent in the coming weeks.
Please feel free to contact our specialist immigration team if you have any further questions.
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.