This afternoon, 17 August 2020, the Government announced the details of the second extension to the COVID-19 Wage Subsidy, designed to assist employers suffering the effects of the second wave of the virus in New Zealand. The cost of the new scheme, the COVID-19 Resurgence Wage Subsidy, is estimated to be $510 million, bringing the total cost of the already existing extension, and the new scheme, to an additional $1.6 billion. The Treasury has estimated that around 930,000 workers will be supported by the two schemes.
First, though Auckland is the only city in the country to be at the more restrictive Alert Level 3, the subsidy extension will be available for all businesses across New Zealand (provided they meet the qualifying criteria). Finance Minister Grant Robertson acknowledged that Auckland has a profound effect on the national economy, with Auckland representing nearly 40% of the country’s GDP. He further outlined that that many businesses depend on people from Auckland coming to visit them, so the nationwide subsidy extension is a reflection of that, as well as a reflection of the effects of Alert Level 2 in other cities.
This will certainly come as a relief for many businesses, especially those in the hospitality and tourism sectors, who are among the most affected by the economic effects of COVID-19.
We outline the details of the second extension of the wage subsidy below.
Qualifying criteria and entitlements
The criteria which an employer must meet in order to be eligible for the new Subsidy, and entitlements an employer may receive are largely the same for the existing Wage Subsidy Extension. These include:
- You must be an eligible employer;
- Your business must be in New Zealand;
- Your employees must be legally working in New Zealand;
- You must take steps to mitigate the financial impact of COVID-19; and
- You must retain the employees named in your application for the period of the Subsidy.
As with the Wage Subsidy Extension, the Resurgence Wage Subsidy is paid at a flat rate of:
- $585.80 (gross) for people working 20 hours or more per week (full-time rate)
- $350.00 (gross) for people working less than 20 hours per week (part-time rate).
The COVID-19 Resurgence Wage Subsidy will cover 2 weeks of support from the day an employer submits their application. It will be available nationally for employers, including self-employed people, who are financially impacted by the resurgence of COVID-19 and changes to COVID Alert Levels.
Businesses will be able to apply for the Subsidy from 1pm on 21 August 2020 to 3 September 2020. The current Wage Subsidy Extension will remain open for applications until 1 September, 2020.
New Zealand employers who have had, or expect to have, a revenue drop of at least 40% because of COVID-19, for a 14-day period between 12 August to 10 September, compared to a similar period last year can get the Subsidy. The decline must be related to COVID-19.
An employer will not be able to receive the Resurgence Wage Subsidy if they are already receiving other payments in respect of the same employee. These include the Wage Subsidy, Wage Subsidy Extension, or the Leave Support Scheme.
Employers will similarly have to declare that they meet the criteria, and agree to the obligations for the use of the payment. As with the other subsidies, payments will be subject to audits and reviews by the Ministry of Social Development.
For further information about the COVID-19 Resurgence Wage Subsidy, and details about eligibility requirements, please click here.
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