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The New Zealand government put several different schemes in place to support businesses in the difficult wake of COVID-19 in 2020. The associated lockdowns and physical distancing restrictions have made for difficult financial tailwinds for many businesses. The different subsidies and support schemes can be easily confused. This article will set out the different COVID-19 wage subsidies that have been available in 2020. It will then explain the separate COVID-19 leave support scheme that is still available to employers who have employees in certain health conditions. Finally, the article will describe what the small business cash flow loan scheme is. 

What Are the Different COVID-19 Wage Subsidies?

COVID-19 has taken a sizeable financial toll on New Zealand businesses, many of which have struggled in 2020. The COVID-19 wage subsidies schemes were designed and implemented by the New Zealand government with two key aims: 

  • to support employers negatively affected by COVID-19, so that they can continue paying their employees; and
  • support workers to make sure they continue receiving an income and are staying connected to their employer, even if they cannot work their normal hours.

The original wage subsidy was available nationally for employers, including self-employed people, whose revenue was significantly affected by COVID-19 and the alert level changes. After the original scheme closed in June 2020, the scheme was extended through to September 2020.  

The COVID-19 wage subsidy rates were:

  • $585.80 (gross) per week for full-time employees, where full-time was defined as 20 hours or more per week; or
  • $350.00 (gross) per week for part-time employees, where part-time was defined as less than 20 hours per week.

These particular subsidies are no longer available. 

What is the COVID-19 Leave Support Scheme?

The COVID-19 leave support scheme is available to support employers whose employees have been told to self-isolate, and who cannot work from home. The rate of pay is the same as for the wage subsidies, i.e. $585.80 per week for full-time employees and $350.00 per week for part-time employees. With COVID-19 still an active threat to New Zealand’s community, the scheme is designed to remove the pressure to come to work if employees need to self-isolate.

To qualify for the leave support scheme, you must have employees (or be a self-employed person) who are:

  • sick with COVID-19 and are required to self-isolate until a doctor allows them to leave isolation;
  • a person who has been identified as being in contact or maybe being in contact with someone who has COVID-19 and is required to self-isolate for a period;
  • the caregiver or parent of a dependant who has been informed to self-isolate for a period of time, and who needs to support the dependant to do so safely;
  • sick with COVID symptoms and have been told to self-isolate while waiting for a test or test result. They also must work in a health and disability facility or service that gets funding from:
    • a District Health Board,
    • the Ministry of Health, or
    • the Ministry of Social Development
  • sick with COVID symptoms and work in an aged-care facility or service and have been told to self-isolate while awaiting a test or test result; or
  • considered immunocompromised or otherwise at high-risk if they contract COVID-19 (or are household members of such a person), and a doctor has informed them to self-isolate. 

What is the Small Business Cash Flow Loan Scheme?

The government is providing one-off loans to small businesses, including sole traders and the self-employed, who have been impacted by COVID-19. The aim is to support those businesses through a period of slow cash flow. Applications have been extended and are now open until 31 December 2023. If you manage a small business, you can apply through the IRD website.

The small business cash flow loan scheme can provide up to $100,000 to businesses employing 50 or fewer full-time employees. Specifically, the loan includes:

  • a $10,000 provision for eligible businesses;
  • an additional $1800 per equivalent full-time employee;
  • the benefit of the loan being interest-free if the loan is paid back within two years;
  • an interest rate of 3% for a maximum term of five years; and
  • the benefit of no repayments being required in the first two years of the loan.

Key Takeaways

There have been a range of different support schemes offered for employers in 2020 and beyond. The wage subsidy scheme was the largest and most widely available, though it is not presently available to employers. However, employers can use the COVID-19 leave support scheme to get payment support for employees who need to self-isolate. Small businesses can also access a cash flow loan scheme of up to $100,000 to manage difficult cashflow implications of COVID-19.

If you have any questions about wage subsidies or the other support packages, contact LegalVision’s employment lawyers on 0800 005 570 or complete the form on this page.

FAQs

Are the wage subsidies still available for employers?

No, although there is support available for employers with staff who have to self-isolate. There is also support for small businesses.

Who can access the small business cash flow loan scheme?

Any business that employs 50 or fewer employees can access the scheme.

What was the payment rate of the wage subsidy?

For full-time employees, it is $585.80 (gross) per week. For part-time employees it is $350.00 (gross) per week.

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