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Modified Wage Subsidy

Published 30 Mar 2020

The Government have made minor changes to the Wage Subsidy scheme and clarified a couple of points.

The Leave Payment subsidy is no longer available. Only the wage subsidy remains, so when applying for a subsidy there now is only one option to select from.

You can now apply more than once, just not for the same employee.

Previously businesses had to supposedly commit to paying staff at least 80% of their normal wage. The Government concedes this may not be affordable in the current situation and say "...If that isn’t possible, you need to pay at least the subsidy rate...".

They go on to say the wage subsidy "...ensures businesses not able to operate do not need to lay off staff. Even if this requires businesses to operate with no activity, the subsidy allows them to keep their workers on the books, particularly during Alert Level 4."
The subsidy is also available to employers who recently let employees go because of COVID-19, provided they re-hire those employees.

If an employee voluntarily ends their employment relationship (that is, they resign) the employer must notify Work and Income and will not be entitled to further subsidies for that named employee.

Most employees are likely to be better off under the modified wage subsidy scheme than they would be on Work and Income benefits, however this depends on their personal circumstances.

Clarification in terms of tax, the modified wage subsidy scheme, and the previous COVID-19 leave and wage subsidy schemes, are considered excluded income to businesses and are also GST exempt. When passed on as wages, businesses don’t get a deduction for income tax purposes

Employer applications through Work and Income here: