Coronavirus: Businesses say applying for wage subsidy 'very simple'

Business owners affected by COVID-19 are congratulating the government for easy and fast payment of the wage subsidy.

Set up to help struggling businesses to pay their workers and keep them employed, the wage subsidy is paid as a 12-week lump sum, to a maximum of $585.80 per week for full-time workers and $350 for those working less than 20 hours.

David, a financial controller at an Auckland media company, described applying for the wage subsidy as "very very simple" with a lump sum of cash paid within four days.

"I was asked to confirm that the business has been affected by COVID-19 and has or is about to have a drop of at least 30 percent in income.

"I was surprised how fast the process was, it wasn't an onerous task," he said.

Having applied for the wage subsidy the day after it was released, the owner of Bread and Butter Bakery and Cafe, Isabel Pasch, told Newshub that one of her businesses received the money within hours. The others took between two and seven days.

"I really have to congratulate the government: the application was so easy and the money came through really quickly.

"For one of them, I put the application in during the morning and received the money in the afternoon."

Pasch, who owns a wholesale bakery and three cafes employing around 70 full and part-time staff, was forced to shut up shop after cafes were confirmed as a non-essential business during the level 4 lockdown.

Having applied for the subsidy for each staff member, Pasch's only concern is that when the subsidies were paid, it was difficult to reconcile each payment against her workings. 

"I wasn't sure if one employee had resigned - I couldn't get hold of her manager and [forgot] if I'd applied, it was all just such a blur.

"There's no way to retrieve the information and the amount was slightly different to what I thought I'd be getting," Pasch explained.

Pasch's wholesale bakery - which supplies organic sourdough to stores such as Farro - remains open during lockdown.

"It's not even a trickle: it drips - we're really hanging in there.

"The cafes have zero income," Pasch said.

Describing last week as "the most harrowing in ten years", Pasch said that there was confusion over essential business rules. Trying to shut everything down within 48 hours before lockdown was "an absolute scramble".

"We had to close down everything, clean everything down and try and give food away at a time when every other hospitality business was doing the same," Pasch said.

Although she is currently reconstructing the business and working towards accreditation as  an online delivery service, Pasch said that other hospitality businesses are worse-off and are unlikely to last more than three months. 

"The industry is such a low margin industry, there's no fat in the game.

"If there's no cash flow, it very quickly hits the wall."

The Wage Subsidy Scheme helps businesses affected by COVID-19 by providing money to pay their workers so they can stay employed.

On Friday, Finance Minister Grant Robertson said that if businesses are unable to match 80 percent of the employee's pre-COVID-19 income, businesses that receive the subsidy must pass on the total amount to their employees.

He said the scheme operates as a "high trust system" to get money to workers and businesses as soon as possible and that employers are urged to pass on the full amount.

"Even if the lockdown requires businesses to operate with no activity, the subsidy allows them to keep their workers on the books."

"We are requiring employers to keep employees in employment for the period of the subsidy," Robertson said.

On Saturday, Robertson clarified that if income is normally less than the subsidy, such as could be the case for part-time employees earning less than $350 per week, the employee's normal salary can be paid. 

 "We urge employers to use normal hours in the period before COVID-19 to assess the amount to be paid," Robertson said.

*The Ministry of Social Development confirmed that by Friday, it had processed payments of $2.7 billion for 428,768 workers under the COVID-19 wage and leave subsidy.

George Van Ooyen, group general manager client service delivery, said that the target for payment is within five working days and many applicants are paid faster.

"Where someone is waiting much longer, that is typically because there's an issue with some of the information they’ve provided," Van Ooyen said.

"One of the leading reasons for delay is where businesses have provided information that doesn’t exactly match information held by Inland Revenue - [requiring] checks on these applications to verify they're legitimate."

More information on the COVID-19 wage subsidy is available at Work and Income.  

*Information from MSD updated on March 31.