Coronovirus – Changes Announced for Wage Subsidy

Coronovirus – Changes Announced for Wage Subsidy

Coronavirus – Changes Announced for Wage Subsidy

The government announced changes to the wage subsidy scheme on Friday 27 March.

If your business has already applied for support and did so prior to 4 p.m. on Friday 27 March, you are not impacted. However, you should read on to see some commentary on asking employees to take annual leave.

Full amount of subsidy must be passed on

At the daily media briefing on Friday 27 March, the Minister of Finance announced changes to the wage subsidy scheme. For all new applications , the full amount of the subsidy must now be passed onto employees, even if their normal wage or salary is below the subsidised amount.

To recap, the following amounts apply:

    • $585.80 for people working 20 hours or more per week
    • $350.00 for people working less than 20 hours per week.

Prior to this announcement, the employer could retain the difference.

For example, if an employee is paid $200.00 per week for ten hours work (less tax), the employer would be paid $350.00 by the government. The employee would receive their usual pay of $200.00, and the employer could retain the balance of $150.00.

Any new applications for the scheme will now require the employer to pay the full $350.00 to the employee.

Update – the government “clarifies” their announcement

The government appears to changed their mind. A media release “clarifying” their comments yesterday has been published today.

At the media briefing held at 3pm on Friday 27 March, the government announced that…

“… You will, where the wages or salary of an employee named in your application is lawfully below the amount of the subsidy, pay the employee the full amount of the subsidy instead of the wages or salary that would otherwise be payable”.

This gave rise to our advice above. Please note that advice has now changed.

The Minister of Finance made issued a statement today, Saturday 28 March, saying that…

“…if a person’s income is normally less than the subsidy they can be paid their normal salary”.

The “clarification”, which seems to be a reversal of yesterday’s advice, is available here.

So employers can now revert to keeping the difference if an employee is paid less than the subsidy. We’re sure this will be music to the ears of employers.

Change to Declaration

The government has also changed the wording of the declaration that employers agree to when applying for the subsidy.

Any applications prior to 4 p.m. on Friday 27 March required employers to use their “best endeavours” to retain their employees.

After this date and time, new applications will require the employer to “retain” the employees named in the application for 12 weeks. The words “best endeavours” has been dropped.

Annual Leave Changes

There is additional advice from the government that employers cannot “unlawfully compel or require” employees to take annual leave. This advice is simply restating existing employment law.

This does not mean that employers cannot mandate their employees take annual leave, but they must give 14 days notice before taking that action.

Employees could take annual leave sooner by mutual consent. This should be in writing (email is fine) to protect the employer.

Our advice is that any employer making a new application for the wage subsidy should seek advice specific to their circumstances in order to avoid any implications at a later date.

You can read more about the government’s announcement here.

This is general advice and may not be appropriate to your own circumstances.

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