Grant Robertson modifies wage subsidy scheme to protect workers amid COVID-19 lockdown

The Finance Minister is cracking down on employers taking advantage of the COVID-19 wage subsidy scheme, modifying it to ensure workers get the whole value of the pay-out.

Businesses accessing the wage subsidy scheme are required to do their best to pay employees 80 percent of their income before the coronavirus affected the economy.

But businesses that have no activity whatsoever because employees are not working any hours, must now pass on at least the whole value of the wage subsidy scheme to each affected worker, if they're unable to match 80 percent of the worker's pre-COVID income. 

A $12.1 billion COVID-19 economic support package was announced by the Government earlier this month, and part of it was the wage subsidy scheme that had a $150,000 cap per business. 

At the time, the Government estimated the scheme to cost $5.1 billion, but it has since been adjusted to have no cap - meaning all businesses can access it - and Treasury is now estimating the scheme to cost between $8 billion and $12 billion depending on uptake by businesses.

Part of the $12 billion package was a sick leave scheme, with payments made to be equal to what was outlined in the wage subsidy scheme, available for a period of eight weeks. 

That sick leave scheme has now been folded into the wage subsidy scheme to prevent double-dipping of Government money. 

The original sick leave scheme was designed when there were fewer people in self-isolation, which is not longer fit for purpose, because the whole country is now self-isolating. 

Finance Minister Grant  Robertson is working on arrangements for those in essential work who require sick leave due to the coronavirus. 

"These modifications are about keeping New Zealanders currently at home in lockdown connected to the job they were in on Wednesday before it started," Robertson said. 

"This ensures businesses not able to operate do not need to lay off staff. Even if this requires businesses to operate with no activity, the subsidy allows them to keep their workers on the books, particularly during alert level 4."

Wage subsidy scheme refresher

The wage subsidy scheme is designed to help employers pay wages during a time when most New Zealanders are unable to work during the COVID-19 lockdown. 

It does not change any other employment obligations, meaning workers must be paid appropriately under their employment agreements for the hours they do if they work during the lockdown. 

For those businesses that take up the scheme to support their staff, $585.80 a week is given to full-time workers who worked 20 hours or more per week before COVID-19 and $350 a week for part-time workers. 

The money is paid out in lump sums, meaning a full-time worker should get $7029.60 for a period of 12 weeks. 

Robertson said demand for the scheme is high, with the Government already paying out $2.7 billion for more than 400,000 workers. 

"People are working hard to respond and process applications as fast as they can under challenging conditions. Please be patient when applying, and please be kind to each other," he said. 

Auckland Business Chamber is urging companies to take advantage of the package, with CEO Michael Barnett describing it as a means to "cushion the blow". 

He said businesses should not be intimidated by the process. They can visit and go through a three-step process, and within days the money will be in the bank account. 

"The support from the Ministry of Social Development so far has been superb and efficient."