New Zealand Payroll

Everything you need to know about paying your NZ based staff

COVID-19 and KeyLink #3 updated 2 April 2020 1100

28 March 2020- 43 min read

Operations

Updates 1500 28 March in red

Updates 1700 28 March in purple

Updates 1800 11 April in blue

The NZ Government have been providing updated guidance for the COVID-19 Wage Subsidy

To try and reduce confusion, I have updated this document with the latest we have. This includes possible audit strategies.

"The purpose of the wage subsidy scheme is to support employers and their staff to maintain an employment connection and ensure an income for affected employees, even if the employee is unable to actually work any hours."

Key messages are still the same:

  • This is a "high-trust system"
  • The subsidy must be paid to employees as wages or salary, not as Leave
  • Employment laws haven't changed
  • Payments to employees are taxable in their hands

New guidance we have received is:

  • Employers will need to be able verify the subsidy was paid to employees.
    This is as simple as recording in the notes of the input sheet you send to us the subsidy applied to that employee.
  • The Wage Subsidy doesn't need to paid in full to the specific employee if the employee normally earns less than the subsidy for that employee.
    You can use the excess subsidy for one employee for another employee
  • If you don't use all the subsidy in the 12 weeks, you can continue to use it for wages.
  • The 12 weeks starts when the subsidy is approved
    However, I can't see any problem as long as the subsidy was used for Wages
  • You can't use sick leave if the employee doesn't meet the normal sick leave requirements.
  • You can use the Ordinary Weekly Earnings calculation to determine Normal Earnings, i.e. the 52 week average.

Summary of changes to the COVID-19 Wage Subsidy

  • Leave Payment is no longer available.
  • You are expected to pay your employees:
    • pay the employee for every hour worked based on their usual wage rates or salary
    • their normal wages or salary as per employment agreements,
      OR if this is not possible
    • at least 80% of their usual wages or salary, where it is reasonably possible to do so,
      OR is this is not possible,
    • the wage subsidy that applies to that employee
  • If your employee's usual wages are less than the subsidy, you must pay them their usual wages. Any difference should be used for the wages of other affected staff - the wage subsidy is designed to keep your employees connected to you.

  • You must not make any changes to employment agreements without written agreement of employees.

  • You must not unlawfully compel or require employees to use their leave entitlements.

  • Casual Employees are eligible for the Wage Subsidy if they were employed at the time you apply and would have been expected to work during the time you will receive the wage subsidy.

See: https://workandincome.govt.nz/products/a-z-benefits/covid-19-support.html
Make sure you read the declaration and questions.

Also see: https://www.business.govt.nz/news/covid-19-latest-news-and-updates

If you have different interpretations of the Wage Subsidy, lets talk.

First: decide what to pay your employees

Here are the approaches we have heard of so far: 

  1. Operating as (un)usual / work from home
  2. Paying 100% of normal income
  3. Paying 80% of normal income and optional Leave top up
  4. Wages Subsidy only.
  5. Wages Subsidy and optional Leave top up
  6. Leave Payment and optional Leave top up
    Leave Payment is paid when the employee has contracted COVID-19 and is isolation. 
    You have then applied for and received that specific benefit from WINZ. 
    This benefit has to be paid to the affected employee.
    This benefit was withdrawn at 1500 27 March 2020.

If you have another approach, please let me know. 

We expect employers to be using a mixture of approaches for different employees. 
Make sure you document the approach taken for each employee, you might need it later. 

Reducing employee's income messes up Leave, you will find more information in my next blog entry 

The changes below show the method to make the changes as easy as possible for the next 12 weeks.

Weekly Earnings Report

As per my e-mail on Tuesday evening, you will have been sent a spreadsheet. 
It contains: 

  • Employee details required to apply for the Wages Subsidy
  • Data to help you determine normal income for your employees
  • Employees Ordinary rate. You will need this if you are using approaches 4, 5 or 6.

Please let KeyLink know any dates of birth you have available. These help with KiwiSaver.

Please let us know of any employment hours or rate changes.

Notes for the spreadsheet:  

  • Average Hours calculation depends on how Annual Leave is calculated for your employee.
    • Fixed Hours = Hours as per employment record
    • Variable Hours = Hours paid
    • Casual = Hours paid
  • Average Earnings is Earnings Eligible for Annual Leave
    • No reimbursements 
    • No discretionary allowances 
    • No vehicle allowances 
  • Employment Hours are as per our records

Extra Input Sheet data that may be required 

Leave Payment – Paid in hours at normal rate
Leave Payment is paid when the employee has contracted COVID-19 and is isolation. 
You have then applied for and received that specific benefit from WINZ. 
The whole benefit has to be paid to the affected employee. 

We need to receive instructions from you, so we know what to pay your employees. 

This could be using any of the following methods: 

  • Free Format e-mail (less than 10 employees only)
  • Daily Detail time sheet
  • Period Detail time sheet
  • Permanent Pay and Employee Self Service Leave
  • Employee Self Service Time Sheet
  • Salaried and Employee Self Service Leave 
  • Time and Attendance
  • Time and Attendance and Employee Self Service

Detailed descriptions below. 

Free Format e-mail 

Please provide clear instructions remember we haven’t been thinking about your situation as much as you have 

Daily Detail Time Sheet 

You have one tab in the spreadsheet for each day of the week. 

If this doesn’t make sense to you, it probably doesn’t affect you 😊 

Decide how many hours to pay. For instance, for a person who normally works 45 hours per week at $20 per hour.

Approach: 

  1. Worked hours each day + any top ups. Note that you must pay at least their 9 hours.
  2. 9 hours per day
  3. 4 * 9 hour days + a 9 hour leave day (LWOP, Sick, Alt, Annual etc.)
  4. $585.80 / $20 = 5.858 hours per day + 3.142 LWOP
  5. As per 4 + any paid leave at 9 hours per day + LWOP
  6. Please contact us.
In this case the total hours per week should be at least 45.

Period Detail Time Sheet 

Most of our customers. 

Decide how many hours to pay. For instance, for a person who normally works 45 hours per week at $20 per hour.

Approach: 

  1. Worked hours each period + any top ups. Note that you must pay at least their current (could be reduced) ordinary hours.
  2. 45 hours per week
  3. 36 hours per week or 4 * 9 hour days + a 9 hour leave day (LWOP, Sick, Alt, Annual etc.)
  4. $585.80 / $20 = 29.29 hours per week + 15.71 LWOP
  5. As per 4 + any leave at 9 hours per day
  6. Please contact us.

In this case the total hours per week should be at least 45.

Employee Self Service Time Sheet 

Please contact us. 

Salaried and Employee Self Service 

Book LWOP or paid leave to end up with the hours you want to pay.

Time and Attendance 

We will call you as soon as we can. 

Finally 

Unfortunately we are all making this up as we go.

Stay Safe 

Be Kind

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Evan Lyon

Evan Lyon

KeyLink owner, 25+ years experience in designing, building and running mission critical IT systems. More than 12 years experience supporting and using payroll systems.

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