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Wage Subsidy Extension and
Resurgence Wage Subsidy
August 26, 2020
Chris Lynch, CA, Managing Director
Applications have closed for the initial wage subsidy. However, if you’re still significantly affected by COVID-19, you may qualify for a Wage Subsidy Extension. Applications opened 10 June 2020 and close at 11.59pm on 1 September 2020.
A 2-week COVID-19 Resurgence Wage Subsidy is available nationally for employers, including self-employed people, who are financially impacted by the resurgence of COVID-19 and changes to COVID Alert Levels. Applications for the Resurgence Wage Subsidy opened 21 August 2020 and close 3 September 2020.
No double dipping
You can apply for the extension even if you didn’t apply for the original wage subsidy. However, you can't receive more than one COVID-19 payment for the same employee at the same time. This includes the:
- Wage Subsidy
- Leave Support Scheme
- Wage Subsidy Extension
- Resurgence Wage Subsidy
You can't apply for the wage subsidy extension for an employee until their 12-week wage subsidy has finished.
You are entitled to the Wage Subsidy Extension if:
- your business has experienced a 40% drop in revenue because of COVID-19 for a continuous 30-day period. The 30 day period must be within the 40 days before you apply (and no earlier than 10 May 2020, and compared to the closest period in 2019). If you are a pre-revenue research and development start-up business, you can include a drop in projected capital income when determining the 40% decrease in revenue.
You are entitled to the Resurgence Wage Subsidy if:
- your business has experienced, or you predict you will experience, a 40% drop in revenue in a two-week period between 12 August and 10 September, compared to a similar period in 2019 because of COVID-19.
For both subsidies you will need to show that you have taken active steps to mitigate the impact of COVID-19 on your business. This includes talking to your bank, drawing on cash reserves, making an insurance claim. You need to be able to provide evidence of the impact on your business and the steps you have taken.
And, as an employer, you:
- must retain employees for the period of the subsidy
- do your best to pay your employees 80% of their pre COVID-19 income for the period of the subsidy. If this is not possible then you pass the entire wage subsidy on to employees. This applies to all employees, and they all must at least receive the full value of the subsidy. Where the ordinary wages or salary of an employee was lawfully below the amount of the subsidy before the impact of COVID-19, you can pay the employee that amount
- can't apply for a wage subsidy for employees if you've already made them redundant. If you want to apply for them, you must cancel their redundancy notice and re-hire them. You can then apply for that employee and you must retain them for the period of the wage subsidy.
Your declaration and obligations
When you apply for either the Wage Subsidy Extension or the Resurgence Wage Subsidy, you make a declaration about your business and how you will use the subsidy. You must meet your obligations as an employer and notify the Ministry of Social Development within 5 working days if anything changes.
Talk to us about the requirements and obligations.
Chris Lynch, CA