Payroll & FinanceBlog
COVID-19 Payroll Information
March 31, 2020
Because the situation is changing we’ll keep updating this page as information comes in.
Last updated: 05:00pm, 8 April, 2020
The New Zealand Government has announced a wide ranging support package for Kiwis affected by the COVID-19 pandemic, including a wage subsidy and special leave payment for essential workers.
The goal of the support package is to help businesses retain their most important asset - their employees. We have taken time to analyse and understand the options put in place and provide the following information based on our working understanding.
If you need additional advice about how to pay your employees right during the COVID-19 pandemic, please contact our support teams.
COVID-19 Wage Subsidy
The Wage Subsidy payment is a lump sum payment made to the employer. In receiving that subsidy the employer gives a commitment to use their best endeavours to continue to pay employees a minimum of 80% of their normal pay.
Although the Wage Subsidy is for wages only, it is not necessary for it to be shown as a separate item on the payslip. You should continue to pay the employee the regular hours or salary gross earnings pay items. These items will be taxed as normal.
For more information about Wage Subsidy payments in FlexiTime and PayHero please refer to the following articles.
Essential Workers Leave Support
The Government has announced a new COVID-19 payment that will be available to essential employers for essential workers from Monday 6 April 2020.
The COVID-19 Essential Workers Leave Support payment is designed to help essential businesses pay their staff that can’t work.
It covers essential workers who need to take leave due to the COVID-19 Ministry of Health guidelines and cannot work from home. It is paid in a lump sum at the same rates as the Wage Subsidy Scheme.
The payment covers a four week period. Essential businesses can apply again in the fourth week if they need to.
Can I temporarily close down my business?
An employer may only have one close down in any 12 month period, however, the employer and employee may agree to have a close down and discontinue the work of an employee at other times and agree on the arrangements that will apply during that time.
If the close down is not by agreement and is the only close down in a 12 month period, the employer must give the employee 14 days notice of the close down. The employer may require that the employee take annual leave during the period of the close down.
For information on processing close down periods please see the following articles.
How will my employee’s leave balances be affected?
If the employee’s weekly pay decreases from what it was before COVID-19 then this will decrease the employee’s average and ordinary weekly rates.
We recommend setting the employee normal hours per week or work pattern for the employee to ensure they maintain their leave entitlements during this period. The hours should be set based on the employment agreement or in discussion and agreement with the employee.
Do I have to pay my employees?
If the employee is working from home you have to pay them as normal.
If they are not able to work from home then it depends on the employment agreement you have with the employee and whether you have a Business Interruption (Force Majeure) clause in the agreement.
If you do have this kind of clause you may be able to require the employee to take annual leave or unpaid leave during the time they are not working. We recommend that you refer to your individual employment agreements for whether this will apply.
If you are receiving the Wage Subsidy or Leave Support payment then you have given a commitment to continue to try your best to pay them a minimum of 80% of their normal pay. There isn’t a clear definition of what normal pay is in the subsidy information. The normal pay will either be defined in the employment agreement or must be negotiated in good faith with the employee. The normal pay should be in regard to the period prior to COVID-19 and you can view historical pay information for the employee under the pay history tab on the employee record in PayHero or FlexiTime Payroll.
What period do these payments cover?
The Wage Subsidy is for 12 weeks and the Leave Support payment is for 4 weeks. Both are paid to the employer as a lump sum payment.
Can I apply for these payments on behalf of my casual employee(s)?
Yes. You can apply for the wage subsidy or leave support payment for any casual employee(s) that are employed by you at the time you apply and who would have been expected to work during the time you will receive the wage subsidy.
What do I do if I’m receiving one of these payments for a part time employee whose normal pay is less than the subsidy amount?
If your employee's usual wages are less than the wage subsidy or leave support payment, you must pay them their usual wages. Any difference should be used for the wages of other affected staff - these payments are designed to keep your employees connected to you.
Do I need to provide evidence that I’ve passed these payments to my employees?
Payslip records indicating how much you have paid staff for the duration of the wage subsidy or leave support period will provide the necessary information to show you have met your obligations.
Can I use the subsidy to pay employee leave?
If the employee has agreed some form of paid leave with the employer, the schemes can be used to cover some or all of that cost. Employers must still meet all of their obligations under employment law in agreeing, and gaining agreement from the employee, to use that leave.
Where can I get extra help?
If you need additional advice about how to pay your staff during the COVID-19 pandemic, please contact our support teams.
This information has been provided by the FlexiTime team to help Kiwi employers during the COVID-19 pandemic. Because this is a rapidly changing situation, the information provided is subject to change.
If in doubt, please talk to your accountant, HR advisor or an employment lawyer for further advice.
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