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If you have been reading our blog you will be aware of the wage subsidies that have been available to New Zealand businesses (including Australian-controlled companies) who have been impacted by Coronavirus.

We covered the assistance on our blog where upfront payments are being made to New Zealand employers who have businesses that are under pressure as a result of Coronavirus.

The NZ Government understands that significantly more businesses are now affected as a result of New Zealand going into a 4 week lockdown.

The conditions on current and future applications have now been modified to ensure the spirit of the wage subsidy is understood and adhered to.

When the subsidy was first announced employers were expected to use “best endeavours” to retain and pay employees at least 80% of the previous income. That condition remains but if a business activity has stopped completely, the employer must now pass on at least the entire amount of the wage subsidy to the employees.

If an employee is usually paid at a rate that is less than the wage subsidy ($586 per week), they can still be paid their normal salary.

That subsidy is available for all full-time workers where a “full-time” worker is defined as someone who works more than 20 hours per week.

The subsidy for part-time workers (working less than 20 hours per week) is $350 per week.

Businesses who are receiving the New Zealand wage subsidy must now commit to keeping employees and employment for the period of the subsidy which is currently 12 weeks.

Merging Of The Sick Leave Scheme

The government has noticed a certain amount of “double dipping” between the Coronavirus sick leave scheme and the wage subsidies.

We covered the new Coronavirus Sick Leave Scheme on our blog.

The 2 schemes have now been combined where the Coronavirus Sick Leave Scheme has now been merged into the wage subsidies.

The original Sick Leave Scheme was designed at a time when there were relatively few people in self-isolation. Things have changed.

Although the new Sick Leave Scheme came into effect at 3PM on 27 March 2020, the NZ Government has advised that applications that had received before that will be processed under the previous rules.

Determining The Hours Of Work When Variable

The New Zealand Government has also put out a guide to determining the hours of work applicable to an employee when their hours are variable.

You should use the average number of hours worked each week over the last 12 months to determine a base number of weekly hours.

If an employee has been with you for less than 12 months, then the average should be determined based on the number of weekly hours since they commenced employment.

New Zealand Wage Subsidy Rationale

Clearly these measures have been put in place so that New Zealand businesses who have been affected by the Coronavirus outbreak do not have to lay off staff.

Where employees can still work during the lockdown (either they are an essential service) or they can work from home, they should still be paid in accordance with their employment agreement for the hours they actually work.


The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.