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On 17 March 2020, the New Zealand Government announced a $12.1 billion relief package to address the damage caused by COVID-19 (Novel Coronavirus). This package is a small part of the “recovery budget” expected to be implemented by the Government later this year.

 

Employers have already begun to feel the effects of COVID-19, and the leave support payment scheme and wage subsidy scheme have been designed to support employers in retaining employees and keeping businesses running as usual.

It is important businesses understand what support they may be entitled to before making decisions that affect their employees because the government package may provide a solution.

 

Leave support

To support employees who should self-isolate in accordance with the current Ministry of Health guidelines, the Government have announced that they will provide leave payment assistance. Employers will be able to apply to the Ministry of Social Development (MSD) for this assistance when their employees have taken leave in relation to COVID-19.

 

‘Employers’ refers to sole-traders, contractors, those who are self-employed and companies.

 

‘Employees’ refers to full-time, part-time and casual employees who are legally working in New Zealand.

 

Please note that contractors are technically employers and will need to apply for their own leave support payments.

 

To be eligible for the leave support payments, employers must meet the following requirements:

  • The employer must apply for the leave payment on an employee’s behalf.
  • An application may be made on behalf of any employee who cannot work from home, has not left New Zealand to travel overseas after 16 March 2020, and:
    • Is self-isolating in accordance with public health guidance and who has registered with Healthline; or
    • Is sick with COVID-19; or
    • Cannot work because they are caring for a dependent in either of the above circumstances.
  • The application must be for a period of time between 17 March 2020 and 12 May 2020 (eight weeks).

 

On the above being satisfied, provisionally, employers will be entitled to payment for up to eight weeks. The leave support payment, however, may only be used for the period that an employee is not actually at work and must be paid directly to the employee by the employer. An employer may apply more than once both in general, and in relation to the same employee.

 

Payments will be made every two weeks by the Ministry of Social Development. If an employee requires an extension for leave related to COVID-19 for more than two weeks, the employer will need to apply again for every relevant two week period. The financial support offered equates to the following:

  • Per full time employee (scheduled to work twenty hours or more, per week):
    • $585.80 per week.
    • Lump sum payment to employer for two weeks: $1,171.60
  • Per part time employee (scheduled to work less than twenty hours, per week):
    • $350.00 per week.
    • Lump sum payment to employer for two weeks: $700.00

 

It is important to note the following, with respect to leave support payments:

  • The payment does not replace leave entitlements owed.
    • If an employee exhibits other symptoms such as tooth ache, and has no reason to believe that they are infected with COVID-19, then ordinary sick leave entitlements apply.
  • The payment cannot be claimed for employees who have travelled overseas after 16 March 2020.
    • An employer can also advise an employee who intends to travel overseas during the next eight weeks, that if no agreement can be reached on how to manage the employee’s self-isolation (upon return to New Zealand) then the employee will have to take unpaid leave.
  • Payments can be backdated to Monday, 17 March 2020.

 

Privacy Considerations

 

The Privacy Commissioner has released communication around the parameters of an employee’s right to privacy regarding any related COVID-19 medical conditions. The starting position is that employers have a duty to keep their employee’s information confidential. However, the exception is where the disclosure of an employee’s information is necessary to lessen a threat to public health or the health of an individual.

 

Our interpretation of this, is that, to prevent the spread of COVID-19, it may be important for employers to convey when an employee is not at work because they have been required to self-isolate. It may also be important to advise employees about whether their co-worker is not at work because they are suspected to or have been confirmed as having contracted COVID-19. However, employers should be careful to withhold as much personal information about an employee as possible, whilst still communicate enough information to comply with their obligations for health and safety. Seeking consent from the sick employee to release the nature of their condition is the best way to avoid any risk of breaching their privacy.

 

Health and Safety Considerations

An employer may not require or knowingly allow an employee to come to work when they are required to self-isolate, or are caring for someone who is required to self-isolate. Employers should be aware that if they do so, they are likely breaching their obligations under the Health and Safety at Work Act 2015.

 

Alternatively, employees who are aware that they should self-isolate under the current Ministry of Health guidelines, but choose to come to work, may also be in breach of their obligations under the Health and Safety at Work Act 2015.

 

Wage subsidy scheme

Employers who are significantly impacted by COVID-19, including sole-traders, contractors, those who are self-employed and companies, may be eligible for financial assistance from the Government to cover a portion of their employee’s wages. This is a payment designed to support the employer’s business by facilitating their retention of employees. The key requirements are:

  • The employer must be able to show a 30% decline in actual or projected revenue over a one month period in 2020, when compared with the same month in 2019.
    • This month must be between January 2020 and June 2020.
    • The decline must show a clear connection to the COVID-19 outbreak.
  • The employer must also be able to show that:
    • They have actively taken steps to mitigate the impact of COVID-19 on their business.
    • They will use best endeavours to continue to employ the employees and pay them at least 80% of their normal income.

 

On the above being illustrated, provisionally an employer will be entitled to a lump sum payment to cover a period of twelve weeks. The catch is that the subsidy must be used to pay employees; it may not be used for any other commercial reason. This equates to the following:

  • Per full time employee (scheduled to work twenty hours or more, per week):
    • $585.80 per week.
    • Lump sum payment to employer: $7,029.60.
  • Per part time employee (scheduled to work less than twenty hours, per week):
    • $350.00 per week.
    • Lump sum payment to employer: $4,200.00.

 

An employer may only receive support under the wage subsidy once, and the maximum that any one employer can obtain has been capped at $150,000.00.

 

It is important for employers to be aware that the information they apply with under the wage subsidy scheme, must be consistent with the parameters of their business for the upcoming twelve weeks. In practice, this means that if an employer applies for the wage subsidy scheme citing that they have four full-time and two-part time employees, they are then required to retain those four full-time and two-part time employees for the next twelve weeks.

 

Employers will need to apply under this subsidy scheme on or before 30 June 2020, otherwise they will not be eligible.

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