Can someone please explain the Government Covid19 Wage Subsidy?

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Finch

2815 posts

Uber Geek

#268526 24-Mar-2020 08:38

Hi everyone, hope you are all safe. I'm really struggling to understand the government wage subsidy in regards to Covid 19 and looking for help. I'm sure I'm missing something, or over thinking it all lol.

In light of recent events, my job has now been put on hold for 1 month, or however long we are in lockdown. I'm not working from home as I work with kids, however not a teacher, so as my job is practical rather than office work, it's impossible for me to be working. It's a small business, with my mum being the employer, we have a total of 5 staff, including my mum. She is very old school in her methods of doing things, so anything "technical" like this falls to me, and I'm stressing out about this because obviously we all want to get paid, but I don't want to get done for fraud like the finance minister said would happen for people who abused this.

Anyway, like I mentioned before there are 5 of us in total working. Two of us are over 20 hours, the remaining three under 20 hours. Here is where I begin to not understand it all/over think it all.

So when we apply for the correct subsidy amount ($580/$350 per week) and get it, then what happens? I'm reading that the employer (So my mum in this case) would pay everyone 80% of their normal wage and this subsidy pays the extra 20%, so effectively everyone will be getting paid their normal weekly wage? The hours go through like normal?

We have someone who works with us for 5 hours per week. So the $350 per week for 12 weeks would obviously cover that considerably. Let's say for argument sake he was getting $20 per hour, that's $100 he needs to be paid every week, what happens to the extra $250? Does it go towards other staff and then what if the other staff don't need it, eventually there will be "extra" money not needed for wages. Does the company/my mum just "Hold" it for a rainy day?

$350x12 = $4200 (Total amount paid by the Government for this worker)

5hoursx12 weeks = 60 (Total hours over 12 weeks)

60 x $20 = $1200 (Total Hours x Hour rate)

There is an extra $3000 there?

I'm really confused about a scenario like the above and just in general, just worried about doing the right thing, hoping to get this all sorted today. If someone could please ELI5 the entire subsidy that would be great as I don't really want to get done for fraud.

Thanks and stay safe!

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887 posts

Ultimate Geek

Trusted

#2445287 24-Mar-2020 10:05

My understanding is that part timers get given the lower payment, and full timers get the 585. And both get all of the payment, ie if the part timer only gets $200 a week then they still get the full $350 a week. I’m pretty sure the employer doesn’t have to top up the staff members pay if they can’t afford to, but good relations would suggest that telling staff this first would be advisable.
the payment isn’t meant to cover wages and any leftovers go to the business, the payment is solely to hand over to employees. There will be a list at some stage to show what businesses are using the payment so employees can look this up. I would suggest that the business keeping the leftover after paying staff out of this money would be frowned upon.

for comparison, my wife’s work has applied for the payment, the full timers get the 585 and the part timers get the $350. The apprentices working full time get the whole $585 payment even though their regular wages are less than that normally.

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billgates

4626 posts

Uber Geek

Trusted

#2445300 24-Mar-2020 10:15

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

Do whatever you want to do man.

Finch

2815 posts

Uber Geek

#2445302 24-Mar-2020 10:17

Loismustdye:

My understanding is that part timers get given the lower payment, and full timers get the 585. And both get all of the payment, ie if the part timer only gets $200 a week then they still get the full $350 a week. I’m pretty sure the employer doesn’t have to top up the staff members pay if they can’t afford to, but good relations would suggest that telling staff this first would be advisable.
the payment isn’t meant to cover wages and any leftovers go to the business, the payment is solely to hand over to employees. There will be a list at some stage to show what businesses are using the payment so employees can look this up. I would suggest that the business keeping the leftover after paying staff out of this money would be frowned upon.

for comparison, my wife’s work has applied for the payment, the full timers get the 585 and the part timers get the $350. The apprentices working full time get the whole $585 payment even though their regular wages are less than that normally.

Thanks for the reply. That's interesting you mention the payments going to the employees. From my understanding what I've been told previously is that the payment goes to the EMPLOYER, who then puts it towards the wages, rather than the employee getting the 585/350. The way you have explained is the exact opposite to how I'm understanding the payment to work. So hypothetically what you are saying is someone who is working 1 hour per work can get $350 each week for 12 weeks.

I thought the payment was meant to cover wages as it's called the "Wage Subsidy"?

I'm so confused ugh

snowfly

511 posts

Ultimate Geek

#2445308 24-Mar-2020 10:22

From my understanding, the wage subsidy goes direct the Employer, and is except from GST and is treated as non-taxable income.

The employer is then responsible and obliged to keep their employees paid, for at least 80% of the normal wage, and use the wage subsidy cash they received to help pay the wages.

e.g.

Employer receives $7029.60 via subsidy ($585.80 x 12 weeks)
Employer uses this cash to keep paying 1 employee for 12 weeks (government says at least 80% of their usual wage)

So I guess if the employee earns less or more than $585.80 per week (gross), its up to the employer to decide how to distribute the subsidy (whether to top it up or not).

marej

186 posts

Master Geek

#2445364 24-Mar-2020 11:43

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.

billgates

4626 posts

Uber Geek

Trusted

#2445406 24-Mar-2020 12:40

marej:

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.

Is the bank going to give the landlord a holiday as well for not paying the mortgage on the building? It looks like big businesses will be bailed out, employees will be kept happy for time being but small business owners will go under if landlord cannot afford to let go of the rent because they too have to pay their mortgage to the bank.

Do whatever you want to do man.

marej

186 posts

Master Geek

#2445409 24-Mar-2020 12:45

billgates:

marej:

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.

Is the bank going to give the landlord a holiday as well for not paying the mortgage on the building? It looks like big businesses will be bailed out, employees will be kept happy for time being but small business owners will go under if landlord cannot afford to let go of the rent because they too have to pay their mortgage to the bank.

You don't know if you don't ask. Those questions are for the landlord, but if shops are empty they are no better off. I know a small businesses who asked. Answer was they could pay later, but he told me that he was talking to another business owner in the area, and her rent has been forgiven. Whatever you get its better than nothing.

bmt

574 posts

Ultimate Geek

#2445436 24-Mar-2020 13:18

This post may end up being deleted as it isn't especially helpful, but to be brutally honest, it behooves business owners/employees to understand their obligations under legislation, and that extends to this wage subsidy if you want to apply for it. The fact you are responsible for implementing it on behalf of your mother and you seem to have a very poor grasp of it suggests to me that either your mother should pay something suitable or should not be running the business?

sen8or

1611 posts

Uber Geek

#2445468 24-Mar-2020 13:52

The subsidy is to the employer not the employee. It is a figure between yourselves and the government in which you agree to keep them paid at a minimum of 80% of their wage for 12 weeks, and the Government agrees to give you an allowance for keeping that obligation.

If there is a shortfall or surplus, that is the responsibility (or benefit) of the employer, not the employee.

There may be occasions where an employer with lots of part time employees actually ends up being over subsidised, but given the myriad of other costs that aren't going to be met in the coming weeks / month(s), I'd hazard a guess that it will still be a net loss for the employer.

sen8or

1611 posts

Uber Geek

#2445473 24-Mar-2020 13:55

Loismustdye:

My understanding is that part timers get given the lower payment, and full timers get the 585. And both get all of the payment, ie if the part timer only gets $200 a week then they still get the full $350 a week. I’m pretty sure the employer doesn’t have to top up the staff members pay if they can’t afford to, but good relations would suggest that telling staff this first would be advisable.
the payment isn’t meant to cover wages and any leftovers go to the business, the payment is solely to hand over to employees. There will be a list at some stage to show what businesses are using the payment so employees can look this up. I would suggest that the business keeping the leftover after paying staff out of this money would be frowned upon.

for comparison, my wife’s work has applied for the payment, the full timers get the 585 and the part timers get the $350. The apprentices working full time get the whole $585 payment even though their regular wages are less than that normally.

That is incorrect, the employer is obligated to pay 80% of normal wages for the 12 weeks (using their best endeavours), that is a condition of accepting the subsidy

sen8or

1611 posts

Uber Geek

#2445476 24-Mar-2020 13:57

so in a lock down situation, even though not working, employers are expected to pay 80% of normal wages, irrespective of whether or not the staff are working.

Our staff will be 50% productive over the period (week on call, week off), but all are being paid "normally at 80%", some from the Govt, the balance topped up by the employer

snnet

1377 posts

Uber Geek

#2445499 24-Mar-2020 14:25

sen8or:

The subsidy is to the employer not the employee. It is a figure between yourselves and the government in which you agree to keep them paid at a minimum of 80% of their wage for 12 weeks, and the Government agrees to give you an allowance for keeping that obligation.

If there is a shortfall or surplus, that is the responsibility (or benefit) of the employer, not the employee.

There may be occasions where an employer with lots of part time employees actually ends up being over subsidised, but given the myriad of other costs that aren't going to be met in the coming weeks / month(s), I'd hazard a guess that it will still be a net loss for the employer.

I thought I read that a condition was that the employee receive the entire 585 sum the government is subsidising (as in not leaving it up to the employer to decide this particular amount)?? Is this not correct?

Not that I'm worried for my personal circumstances, though I can't find the reference I read last night on an MSD web site stating it was expected the employer pass the money on in its entirety - maybe it was for a different circumstance

sen8or

1611 posts

Uber Geek

#2445513 24-Mar-2020 14:47

I think there are different subsidies.

For an employee in isolation, that money may be required to be passed on, but I can't be sure as we didn't apply for that (and haven't read up on the T&Cs).

There are no references in the T&Cs of the wage subsidy (the general one) about passing it on, only the obligation for 80% minimum wage level for the period.

nzrocketman

46 posts

Geek

#2445912 25-Mar-2020 00:02

So the website says if the company wants to get the $585 per employee sunsidy

"they(the employer) will make best endeavours (or best efforts) to retain the named employees and pay them a minimum of 80% of their normal wages or salary for the duration of the subsidy."

How do you classify "endeavor"

pom532

147 posts

Master Geek

#2445951 25-Mar-2020 07:47

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

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