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LETS GET DOWN TO BUSINESS.

Question :
Wages – when paying the 80% for people away for lockdown do we pay the standard hourly rate or average weekly earnings (52 week average)

Question submitted 26/03/20 @ 11:27am
Industry: HR & Talent
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  • Hi Peter

    An organisation can claim NZ$7,029.60 for a full time employee and NZ$4,200 for a part time employee (less than 20 hours per week). The total amount is paid out in a lump sum that covers a 12-week period, and there is no longer a cap of NZ$150,000 per organisation.

    If an organisation has already applied for, and been granted, the Wage Subsidy for all its employees and the Ministry of Social Development (MSD) has capped the amount paid, it doesn’t need to do anything further because MSD will top up the difference.

    One of the conditions of eligibility for the subsidy is:
    The employer must commit to making best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.

    So if you can maintain the terms and conditions previously applied for their payroll would be optimal e.g if they are on an hourly wage, then apply as an hourly wage. If they are salaried and paid weekly, then pay it weekly. When you receive the lump sum you can distribute it according to your regular pay cycle.

    If you are paying your employees 80% prior to receiving approval and the funds, you must let your employees know in writing and allow them the opportunity to respond, accept/decline.

    Thanks @jade-macfie, but this does not answer my question. I will clarify.

    My question is when paying the employees their hourly or weekly amounts, is this 80% of their standard hourly/weekly rate, eg $20 per hour ($20 * 40hrs = $800 * 80% = $640) or is it the same as we pay public holidays and bereavement leave, which reflects a 52 week average eg $20 per hour with an average work week in the last 52 weeks being 45 hours ($20 * 45 = $900 * 80% = $720). Should the 80% be based on average weekly earnings i.e. ($640 or $720)?

    Hi Peter, I’m picking you’ve seen what WINZ have on their website which simply refers to paying your employees 80% of their “normal” wages or salary. There’s obviously nothing normal about any of this, but the approach I’ve seen is that its the standard hourly rate, ie what the employee is paid for the vast majority of the year. The situation may differ if it’s agreed / determined that employees will take leave within the 12 week subsidy period. Arguably this would then require paying an amount that is no less than 80% of their normal holiday pay (based on average earnings) for the week(s) of leave. All the best.

    Hi again Peter,

    Thanks @darren-white for pitching in.
    It means 80% of their average annual earnings as you laid out (52 week average) used to calculate holiday pay etc.
    It is obviously a higher sum than say their average base salary per week, and perhaps you can negotiate an arrangement in the interest of keeping your business going during this time that you apply the other rate. It is all up for negotiation during this time as long as the employer is communicating, giving an opportunity for feedback, and being seen to be fair and reasonable.
    It is also fair and reasonable for an employer to want to stay solvent, so asking an employee to accept the lower rate for now is worth asking in my opinion if it is the difference between viability of your business 12 weeks from now.

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