Applying for Wage Subsidy

This information sheet lets you know some of the details required and the necessary form to be completed to access the Government’s Wage Subsidy Scheme.

BUDGET 2020 UPDATE: The 12-week wage subsidy scheme – set to expire in June – will be extended by another 8 weeks until 1 September 2021. Applications open from 10 June and you can apply once your previous Wage Subsidy has finished. Organisations need to prove their revenue has halved over the previous 30 days compared to the year before. Payment remains at $585.80 per full-time worker (20 hours or more) and $350 per week per part-time employee (less than 20 hours). Read the details here

General

The Government has clarified that registered charities, non-government organisations (NGOs) and incorporated societies are now able to claim the Wage Subsidy so long as the conditions to the subsidy are met when an application is made.

It is up to the employer to apply for the subsidy, not the employee. The Wage Subsidy is a Government payment to help employers pay wages. It does not change any other employment law obligations, meaning employees must be paid appropriately under their employment agreements for the hours they do if they work during the lockdown. The government’s expectation is that employees are to be paid at least 80% of their pre COVID-19 income.

Budget 2020, in recognition that some businesses and organisations will not be able to operate at Alert Level 2, has committed to a targeted extension of the wage subsidy for a second period of 8 weeks (from 9 June). To qualify, organisations will now need to show (or at least expect to see) a 50% drop relative to last year, unless they are a startup. Payment remains at $585.80 per full-time worker (20 hours or more) and $350 per week per part-time employee (less than 20 hours).

Employee Consent

As part of the application process, Work and Income have asked employers, where practicable, to obtain consent from employees to have the information on the subsidy application form released to them, the Ministry of Social Development and to other necessary agencies.

Download a copy of the employee consent template

It is not necessary for the employee to sign, date and return the form and an email response from the employee will be sufficient. The consent form or email from the employee giving consent should be stored away in a secure place so that is available should the Ministry of Social Development or one of its agencies audit you.

Wage Subsidy Scheme

Wage subsidies will be available for all employers (including registered charities, NGOs, the self-employed and sole traders, contractors, incorporated societies, and post-settlement governance entities) that are significantly impacted by COVID-19.

To qualify:

  • your organisation must be registered and operating in New Zealand
  • your employees must be legally working in New Zealand
  • the organisation must have suffered (or be projected to suffer) a 30/50% decline in revenue for any month between January 2020 and June 2020 compared to the same month last year (or a reasonably equivalent month for a business operating for less than a year). That decline must be related to COVID-19. Applications can be made on the basis of forecast revenue loss within the period of the scheme.
  • the organisation accessing the scheme must still undertake best endeavours to pay employees 80% of their pre-COVID income. Where that is not possible – in particular if there is no activity whatsoever due to the shutdown and workers are not working any hours – they must pass on at least the whole value of the wage subsidy to each affected worker.

What does the decline in revenue actually mean?

The organisation will need to confirm a minimum revenue decline of 30/50% for any month between January and June 2020, compared to a similar month in 2019. Revenue for charities and other non-profit organisations includes income from business activities, grant or service funding, mass fundraising activities, and direct donations. The month used for comparison need not be the same month as in 2019 but must be one ‘that gives the best estimation of the revenue decline related to COVID-19.’

DIA Charities Services has provided further guidance for charities on this point. If the organisation was only formed in the last 12 months, then revenue will need to be compared with a more recent reasonably equivalent month. More specifically, where an organisation has had one month where it traditionally receives a large portion of funding (e.g. large contract), but the next month it relies on fundraising to pay salaries (that has dried up because of COVID-19), it can be the second month that the organisation relies on to show a 30/50% decrease in revenue.

The threshold of a 30/50% loss in revenue may be problematic for some struggling organisations. The national body of social services community organisations, Social Services Providers Aotearoa, has brought to the Government’s attention that there are NGOs who have not yet had this percentage loss in income but still face losses that impede their ability to operate. The Minister for Social Development, Hon Carmel Sepuloni, has recognised this is an important issue and as of 14 April was seeking further advice on this.

What does retaining affected staff mean?

The organisation must act in good faith and use its best efforts to retain employees for the period of the wage subsidy, which begins from the date of the application. The organisation needs to pay employees at least 80% of their usual wages, or at least pass on the full amount of the wage subsidy. If the employee normally receives less than the wage subsidy, then it has been advised the organisation should pay them their normal pay and use the remainder to support other impacted staff.

What are active steps to mitigate the impact of COVID-19?

The organisation must be able to prove that they are taking active steps to mitigate the financial impact of COVID-19. Active steps could include; drawing from cash reserves where this is appropriate; activating a business continuity plan; making an insurance claim; seeking support from a bank; seeking advice and support from a relevant umbrella organisation or a current funder.

Subsidy Payment

If eligible, employers will be paid:

  • $585.80 per week per full-time employee (20 hours or more); or
  • $350 per week per part-time employee (less than 20 hours)

The payment will be made as a lump sum and covers 12 weeks per employee and an extension for 8 weeks from 10 June. Organisations can only get this subsidy once per employee. You don’t have to pay GST or tax on the wage subsidy. It is exempt from GST, and classified as “excluded income” for tax purposes.

Application

To apply, you will need:

  • your IRD number
  • your business name
  • business address
  • bank account details
  • the names of your employees
  • your employee IRD numbers
  • contact details for your business and your employees.

Applications can be made online only. The link is: https://services.workandincome.govt.nz/ess/employer_applications/new

The online form looks like this:

Once your application is submitted, Work and Income will check if you qualify. They may contact you by phone if they need further information regarding your application.

If your application is approved, you will receive an email and text to confirm that and that payment has been made.

If it’s declined, you will receive a notification.

The initial information was adapted with thanks from guidance provided by The Methodist Church of New Zealand to its members. This page was last updated on 20 May 2020.