Can someone please explain the Government Covid19 Wage Subsidy?

Forums › Off topic › Can someone please explain the Government Covid19 Wage Subsidy?

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#2445965 25-Mar-2020 08:05

pom532:

I've heard from both my brother and dad that their bosses only want to pay the $585 instead of 80%

Well if they take the wage sub then they can't. They need to top up to 80%. It would also look very bad if they took the wage sub and closed up shop.

Finch

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#2445970 25-Mar-2020 08:18

Well, I must say, I felt like an idiot not knowing the answer to this and thought I was alone, it's nice to know lots of others have no idea how it all works :D

nzrocketman

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#2446024 25-Mar-2020 08:39

Finch:
Well, I must say, I felt like an idiot not knowing the answer to this and thought I was alone, it's nice to know lots of others have no idea how it all works :D

. It doesn’t say they have to top up to 80%. It’s more if they can financially do it and not go bust they should. I’m lucky the mortgage holiday is Coming in as I’m only getting 50% of my wages or else I’ll be on the streets.

The other unknown thing is does the 585 get paid before tax or after tax?

pom532

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#2446027 25-Mar-2020 08:47

nzrocketman:
Finch:

Well, I must say, I felt like an idiot not knowing the answer to this and thought I was alone, it's nice to know lots of others have no idea how it all works :D

. It doesn’t say they have to top up to 80%. It’s more if they can financially do it and not go bust they should. I’m lucky the mortgage holiday is Coming in as I’m only getting 50% of my wages or else I’ll be on the streets.

The other unknown thing is does the 585 get paid before tax or after tax?

Well the govt gives the business $7020 (12x $585). If the business only wants(can) pay $585 per week, that would be before tax. Just like a normal wage.

Unless the lockdown goes for longer than 4 weeks, I would hope the business could afford to pay more than the $585 per week for the 4 weeks. But $585 is probably a lot better than unemployment, especially if your partner works and you wouldn't qualify for benefit etc.

itxtme

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#2446060 25-Mar-2020 10:05

As per the other thread that got locked, I would implore anyone able to get access to this to consider it even if your employer is financially unable to top up to the best of their ability, as it is significantly more than the job seekers benefit. With that being said I would expect any employer asking to pay their staff less, not expecting them to work the same number of hours, so adjusted to match the payment they receive

Interestingly on the Work and Income site

Does an employee need to pay tax on a wage subsidy payment?
Yes, they will as the subsidy is paid to the employer as part of their normal wages. This means it is subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc.

This seems crazy, and really they should be calling it a $409 subsidy, before taking of student loans and Kiwisaver deductions

tripp

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#2446119 25-Mar-2020 11:42

itxtme:

As per the other thread that got locked, I would implore anyone able to get access to this to consider it even if your employer is financially unable to top up to the best of their ability, as it is significantly more than the job seekers benefit. With that being said I would expect any employer asking to pay their staff less, not expecting them to work the same number of hours, so adjusted to match the payment they receive

Interestingly on the Work and Income site

Does an employee need to pay tax on a wage subsidy payment?
Yes, they will as the subsidy is paid to the employer as part of their normal wages. This means it is subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc.

This seems crazy, and really they should be calling it a $409 subsidy, before taking of student loans and Kiwisaver deductions

I think the key there is "paid to the employer" I guess in the "grand" picture, the employer applies and gets the 585 for each of his full time employees, the government then expects the employer to do the top up to 80% - 100% of employees normal wage. The employee still pays tax / KS / Student loans on that 80% - 100% wage amount so it is taxed. It would be a lot harder to have 0 rated tax etc on this as we don't have that in our normally day to day paying employees and a number of payroll systems won't be setup for this and would be hard to do with little notice.

It would also be a lot harder if the government paid this directly to the employee as it would open a whole can of worms around job seekers, pension etc.

I do however see if this goes on for more than 6 - 8 weeks in lockdown or 12+ weeks and business has not picked up again then a universal basic salary could be the next thing.

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gbwelly

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#2446506 25-Mar-2020 17:40

bmt:

This post may end up being deleted

You shouldn't have posted it in the first place. https://www.geekzone.co.nz/forums.asp?forumid=4&topicid=262151

Simple

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#2448518 28-Mar-2020 02:26

Whatever you receive from the Government you must pay the whole subsidy to the employee regardless if it is more, if it is less then you must top it up to at least 80% >https://covid19.govt.nz/help-and-advice/for-businesses-and-organisations/employees/

Handle9

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#2448519 28-Mar-2020 04:00

marej:
billgates:

So the government is not covering monthly rent for business owners while they are shut and only employees get the wage benefits?

Talk to your landlord. They have limited options right now as well. Its better for them to keep you than there property to be vacant. They may give you a holiday.

This is pretty direct but you should ask your landlord if he wants what you can pay or nothing. If he punts you he will get zero rent indefinitely. Make it that plain and simple but ask them to think about it.

Most business people understand that half a loaf is better than nothing. Every business is in the same condition so any tenant is better than no tenant.

firefuze

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#2449061 28-Mar-2020 19:46

Where I work I have a contract for a min of 20hrs per week but have worked more (typically 2-3x as much) almost every week. Company is saying they will only pay us our min contracted hours which 20hrs, but the wage subsidy is worth more than my 20hrs given my hourly pay rate. So the employer would keep the left over change from the subsidy.

Does this seem in-line with the governments intentions? Should I be eligible for the full wage subsidy instead of 20hrs? OR am I entitled to be paid at my average weekly hours based on the last 12 months, which would be more than 20hrs (or 80% of that amount if its more than or equal to the wage subsidy)

antonknee

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#2449091 28-Mar-2020 21:21

firefuze:
Where I work I have a contract for a min of 20hrs per week but have worked more (typically 2-3x as much) almost every week. Company is saying they will only pay us our min contracted hours which 20hrs, but the wage subsidy is worth more than my 20hrs given my hourly pay rate. So the employer would keep the left over change from the subsidy.

Does this seem in-line with the governments intentions? Should I be eligible for the full wage subsidy instead of 20hrs? OR am I entitled to be paid at my average weekly hours based on the last 12 months, which would be more than 20hrs (or 80% of that amount if its more than or equal to the wage subsidy)

Average weekly hours. They should be claiming and paying the full time $585 if this is more than 20 hours.

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itxtme

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#2449125 28-Mar-2020 22:25

firefuze:

Where I work I have a contract for a min of 20hrs per week but have worked more (typically 2-3x as much) almost every week. Company is saying they will only pay us our min contracted hours which 20hrs, but the wage subsidy is worth more than my 20hrs given my hourly pay rate. So the employer would keep the left over change from the subsidy.

Does this seem in-line with the governments intentions? Should I be eligible for the full wage subsidy instead of 20hrs? OR am I entitled to be paid at my average weekly hours based on the last 12 months, which would be more than 20hrs (or 80% of that amount if its more than or equal to the wage subsidy)

I too thought they had to pay you the full subsidy, however looking at the Work & Income site, that is not the case.

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.

Dial111

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#2449127 28-Mar-2020 22:29

Simple:

Whatever you receive from the Government you must pay the whole subsidy to the employee regardless if it is more, if it is less then you must top it up to at least 80% >https://covid19.govt.nz/help-and-advice/for-businesses-and-organisations/employees/

Please correct me if I'm wrong but they way I read it is the employee is only entitled to what their wage/salary is in their contract before March 26, if that is less than the wage subsidy than that's what they get, whether or not the employer gets to pocket the balance or hand it back I'm unsure.

You will for the period you receive the subsidy:
- use your best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary; and
- pay at least the full amount of the subsidy to the employee; but
- where the ordinary wages or salary of an employee named in your application was lawfully below the amount of the subsidy before the impact of COVID-19, pay the employee that amount.
The ordinary wages or salary of an employee are:
- as specified in the employee’s employment agreement as at 26 March 2020; or

[Edit]

Balance is to be used against other affected employees

Delphinus

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#2449254 29-Mar-2020 10:14

Dial111:

Please correct me if I'm wrong but they way I read it is the employee is only entitled to what their wage/salary is in their contract before March 26, if that is less than the wage subsidy than that's what they get, whether or not the employer gets to pocket the balance or hand it back I'm unsure.

This was changed in a clarification issued yesterday.

As an employer, how much am I obliged to pay the employees named in my application for the COVID-19 Wage Subsidy (after it was modified on March 27) if they are not working?

You must try your best to pay your staff at least 80% of their regular wages/salary where reasonably possible. If that is not possible, you must pass on at least the full rate of the COVID-19 Wage Subsidy to each employee named in your application (previously the advice was to pass on the full rate of the subsidy even if their usual wage was less than the subsidy).

Finch

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#2451510 31-Mar-2020 13:57

What is determined the average if hours vary each week? Is it the past 12 months/since Jan 1st/past 4 weeks?/Other?

Thanks

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