A GUIDE TO YOUR BUSINESS SURVIVING THE LOCKDOWN AND HOW TO LOOK AFTER YOUR EMPLOYEES
Government support package to assist businesses
On March 17, the Government announced a $12.1 billion support package to assist businesses and Kiwis in the wake of the Covid-19 pandemic. Businesses affected by COVID-19 will receive an $8.7 billion boost, which includes wage subsidies for all businesses, leave and self-isolation support for employees who are sick or must take care of sick family members. Additional tax measures have also been taken to help business cashflow and encourage business investment. This support package is only available for 12 weeks.
1. Wage subsidies for all businesses
Wage subsidies will be available for all employers that are significantly impacted by COVID-19. The scheme will be open to sole traders and the self-employed as well as SMEs and large businesses.
For an employer to be eligible for the subsidies, they must demonstrate their business has suffered, or is projected to suffer, at least a 30% decline in revenue compared to last year for any month between January 2020 and the end of the scheme in June 2020. Applications can also be made based on forecast revenue loss within the period of the scheme.
Eligible businesses to receive $585.80 per week for a full-time employee (20 hrs or more) or $350 per week for a part-time employee (less than 20 hrs). The payment will be made as a lump sum for a period covering 12 weeks. This means employers will receive a payment of $7,029.60 for a full-time employee and $4,200 for a part-time employee. The maximum amount any one employer can receive has been lifted from $150,000 to being uncapped.
Other employer responsibilities:
- Employers will need to declare that, on their best endeavours, they will continue to employ the affected employees at a minimum of 80% of their income for the duration of the subsidy period. This is the equivalent of keeping people working 4 out of 5 days of the week.
- Employers must also have taken active steps to mitigate the impact of COVID-19 (e.g. engaged with their bank/financial advisor) and sign a declaration form to that effect.
Employers can apply to MSD for the subsidy now
Employers can apply from 17 March and for the duration of 12 weeks until 8 June. Applications can be made through an online portal on the Work and Income website. MSD will aim to make first payments no later than five working days from when applications are received.
2. COVID-19 leave and self-isolation support
Workers and businesses have responsibilities to prevent the spread of COVID-19. The purpose of the COVID-19 leave and self-isolation scheme is to support workers financially to self-isolate, or while ill with COVID-19, and will only support workers who cannot work from home.
The COVID-19 leave payment scheme will provide support for those people unable to work who are in self-isolation, are sick with COVID-19, or caring for others with COVID-19. The payments will be $585.80 per week for full-time and $350 per week for part- time workers.
The payment does not affect any paid leave entitlements that are owed and is available even if an employee is on paid leave for part of the period. It is not available to those who can work from home during the period of self-isolation, and who can be paid normally by their employer.
Employers will apply for the leave on behalf of any employee who is self-isolating or sick. Payments can be backdated to 17 March 2020.
Workers taking sick leave before 17 March 2020 can only access the scheme for time spent on sick leave from 17 March 2020. It will not be accessible for those who have travelled overseas since 16 March 2020. Check out the official website Work and Income Covid-19 Wage Subsidies and Leave Payments Factsheet
3. Business cashflow and tax measures
Depreciation on commercial and industrial buildings
Depreciation deductions will be reintroduced for new and existing industrial and commercial buildings, including hotels and motels. This will help support businesses with cashflow in the near-term and assist with the broader economic recovery by stimulating business investment in new and existing buildings. Reinstating building depreciation will support longer-term economic productivity and macroeconomic objectives by:
- encouraging investment in business premises and decreasing the cost of such premises over time
- improving business confidence
- enabling the capital cost of seismic strengthening of buildings to be depreciated.
Immediate deductions for low value assets
Taxpayers will be able to deduct the full cost of more low-value assets in the year they purchased them, rather than having to spread the cost over the life of the asset. Taxpayers are currently able to claim an immediate deduction for the purchase of assets that cost less than $500. This threshold will be further increased to allow the immediate expensing of assets that cost up to $5,000, for a year (2020/21 income year). The threshold will be permanently increased to $1,000 (from 2021/22 income year onwards). This will take effect for expenditure made on or after 1 April 2020 for most taxpayers.
Fewer small businesses having to pay provisional tax
Increasing the threshold for having to pay provisional tax from $2,500 to $5,000 allows more small taxpayers to delay paying their taxes. This means they have until 7 February following the year they file to pay their tax, instead of having to pay in instalments throughout the year. This lowers compliance costs for smaller taxpayers and allows them to retain cash for longer. Taxpayers who would have otherwise been paying provisional tax in the 2020/21 tax year will now be able to pay their tax on 7 February 2022 - providing immediate cashflow benefits estimated to be $350 million in the 2020/21 fiscal year.
Writing off interest on some late payment of tax
The Commissioner of Inland Revenue will be given the power to waive interest on late tax payments for taxpayers who have had their ability to pay their tax on time significantly adversely affected by the COVID-19 outbreak. Use of Money Interest (UOMI) is routinely charged on late tax payments. The relief will apply to interest on all tax payments (including provisional, PAYE, and GST) due on or after 14 February 2020.
Check out the official website.
FAQs and Scenarios - wage/leave entitlements from Govt support package
I am a sole trader or self-employed and don't employ any staff - does the wage subsidy still apply to me?
The purpose of the wage subsidy is to help keep people employed - that includes yourself! If your business is registered in NZ and is experiencing a decrease of at least 30 per cent in revenue compared to the same month last year, then you can apply directly to MSD for the wage subsidy here.
Do I have to pay my staff annual leave if they are self-isolated or sick with COVID-19?
If your employee is sick from coronavirus, taking care of someone who has the virus, or is required to self-isolate, you are not required to pay them sick leave or annual leave. This is where the leave entitlement is accessible to you. There is no maximum amount for this leave, meaning you can access this leave payment for the full 14 days required for self-isolation, or as long as it takes for the employee to get well. You must reapply for this leave every 14 days.
The leave entitlement for COVID-19 is less than what my employee earns a week, do I have to top up their pay?
If your employee is accessing the leave entitlement due to COVID-19, you are not required to use their leave entitlements to top up their income. However, you are able to offer and negotiate with your employee if they would like to use any form of paid leave.
Example: Your employee earns $1,000 a week before tax and is required to self-isolate. They are entitled to $585 a week from the Government's leave payments. They ask you to use annual leave they have accrued to make up the other $415 in order to receive an income consistent to what they would receive if they were working their normal hours.
I have casual staff who work varied hours each week - how do I know what wage subsidy to apply for?
In order to know which wage subsidy is right for your casual employees, it is best to average their hours worked over a 4-week period. This will determine if they are considered to be part-time (less than 20 hours) or full-time (more than 20 hours).
I am considering redundancies due to COVID-19
We know times are tough. If you are in the position where you must reduce staff numbers due to the current circumstances, please get in touch with us for guidance or request our specialised template. We encourage you to provide a note to affected employees outlining that this is due to the current climate, so that it doesn't hinder their ability to get another construction and trade-based job in the future.
I employ migrant workers who have not yet arrived in the country
As announced on 19 March, non-residents and non-citizens will not be allowed to enter the country for the foreseeable future. It is recommended to source locally for new employment opportunities.
I have employees on temporary or work visas currently out of the country and expected back soon
It is highly unlikely these employees will be allowed back into the country unless they meet the exemption criteria outlined by Immigration.
What are my health and safety obligations to staff around the Coronavirus?
Under the Health and Safety at Work Act 2015 you are required to provide your employees, contractors and customers with the highest level of protection from workplace health and safety risks, so far as reasonably practicable. This would include identifying risks related to the Coronavirus and taking steps to prevent these as much as reasonably practicable.
How can I keep my employees safe from the Coronavirus?
- Keep up to date with the Ministry of Health information and recommendations.
- Educate your employees on the symptoms of Coronavirus and how to reduce the risk of infection.
- Provide accessible tissues and hand-washing facilities.
- Keep up to date with staff members who are off work sick and encourage staff members that are sick and displaying symptoms similar to Influenza, to stay home and recover.
What is an essential service? Do I need to close my business?
Non-essential services across New Zealand will be closed until at least 21 April - four weeks after the Government put the country in nationwide lockdown to try to stop the spread of Coronavirus.
The Government's Unite Against Covid-19 website included the following essential services in its initial description:
Doctors, Pharmacies, Service stations, Veterinarians, Essential banking services, Lifeline utilities, Waste removal and Internet services would continue to be provided.
All New Zealanders are expected to work from home unless they are considered essential workers. This group includes:
Health sector workers, COVID-19 response and action staff, Civil defence or emergency management functions, Key public services, Transport providers including KiwiRail and NZ Post, courier drivers and freight providers, Teachers to provide essential services, Public safety and national security staff, Building and construction workers*, Utilities and Communications personnel including news media and supply chains, Social services, Financial services, Food producers, Biosecurity, Animal health staff.
*Building and construction
Lead agency: Ministry of Business, Innovation and Employment
- Any entity involved in building and construction related to essential services and critical infrastructure
- Any entity involved in building and construction required immediately to maintain human health and safety at home or work
- Any entity that performs or is involved in building and resource consenting necessary for the above purposes
New Zealand is now at Alert Level 4 which means the closure of all non-essential businesses. Your business can still operate as long as it is from home. If you are unsure whether you are an essential business please make contact to find out as there are penalties that follow.
- Non-essential businesses must now close. All bars, restaurants, cafes, gyms, cinemas, pools, museums, libraries, playgrounds and any other place where the public congregate must close their face-to-face function.
- Physical distancing means staff and the public stay 2 metres apart, hand hygiene and cleaning must be maintained. Keeping full details of visitors, and keeping people away if they are sick is required.
- Essential businesses and those that support them will continue to provide the necessities of life for everyone in New Zealand. This means food, healthcare, energy, internet, waste collection and financial support will always be available. They must have health measures and contact tracing in place.
- We need your support to protect New Zealand and eradicate COVID-19.
- Enforcement measures may be used to ensure everyone acts together, now.
What if I have staff who are sick?
If you have staff members who are sick, they are entitled to the MSD subsidies.
You should advise sick staff members who have symptoms of Coronavirus, and have travelled within a month, to phone Healthline (for free) on 0800 611 116 or a doctor.
What if I have a staff member who is travelling?
MFAT has useful information for employees who are travelling - refer them to www.safetravel.govt.nz.
Will cashflow in your business be an issue?Do you need to reduce staff hours or numbers?
If you need to cut hours or reduce staff numbers, it's critical that you're following a proper process and staying on the right side of the law. Have a look at Tips by Retail NZ or contact us for advice.
Are you looking for ways to protect your payments?
Every business should have a continuity plan in place to get through a major disruption.
Westpac have created a checklist, designed to help you understand how your transactional banking could be impacted and ways to mitigate those risks - helping you and your team get back to business as quickly as possible.
Useful Links - resources to answer your questions
- Unite Against Covid-19
- Work and Income Covid-19 Wage Subsidies and Leave Payments Factsheet
- Employer Application for wage subsidies and leave payments
- Work and Income - Covid-19 Response
- Employment NZ Covid-19 support page
- NZBN for sole traders
- Border closures, exemptions and migrant workers
- Employment-related privacy issues
You can call Kiwi Can Do on 0800 KCD WORK (0800 523 9675) or send us an email on email@example.com. If you have any questions we will answer them and add them to our Q&A section so that others can benefit. Keep up to date with advice and guidance on COVID-19 on the official websites. We’re here to support you - so ask us first.