Employer Subsidy Scheme

FAQs for Employers

The Chamber has been receiving calls regarding the Employer Earthquake Subsidy Scheme. We’ve put together some FAQs to help answer commonly asked questions.

Please continue to call us on 0800 50 50 96 if you have any questions – we are here to help.

1. What is the subsidy for?

The scheme is intended to help employers continue to employ staff in instances where the earthquakes have caused a downturn and the business is unable to cover wages. The expectation is that the subsidy allows businesses to get through what is hopefully a short-term period of disruption.

Redundancies may be unavoidable long term however the down turn may also be temporary. The subsidy aims to help businesses delay making this difficult decision and enable them to continue to operate under current employment arrangements.

The subsidy is paid directly to employers on the basis they will then pass  on the subsidy to  their employees while they deal with the impact of the earthquake. The intention is to provide a continuation of employment.

It’s important to note that if there is work available (even if it is less than usual) then employees are obligated to turn up for work, just as the employer has the obligation to ensure employees are not disadvantaged for reasons outside their control. The only exception is personal circumstance where employees cannot attend work ( see FAQ’s 9 and 10).

2. Which businesses are eligible?

The scheme is designed to help small to medium businesses that employ fewer than 20 staff or are a sole trader, or self-employed and are:

  • operating in the area covered by Ward through to Cheviot on State Highway 1, and from Rotherham through Waiau, and Mount Lyford to Kaikoura and
  • either unable to access the workplace due to damage, a cordon, or an essential service that is not available or able to operate the business but experiencing a significant loss of trade due to the earthquake.

The subsidy is available to employers outside of the geographic area above or an employer with 20 or more employees (either inside or outside the area above) if they can provide evidence of a sudden, large and sustained drop in revenue due to earthquake related impacts.

If you continue to operate at full capacity and are able to pay your employees you are not entitled to get the subsidy.

3. How much am I entitled to?

The subsidy is for the employers who are then expected to pay their employees what they would normally receive. Employers are entitled to receive:

  • $500 for every employee who would normally work 20 hours or more
  • $300 for every employee who would normally work less than 20 hours

4. What are my obligations?

You must notify all employees that you have applied and keep records of payments.

You need to continue employing all the staff you claim for, for the period that you claim for – currently up to 8 weeks.

5. Do I have to top up employee salaries?

This depends if you have a clause in your employment agreements that allows you to cease work, either temporarily or permanently at times of natural disaster (it might be called a ‘force majeure’ or ‘temporary disruption’ clause). If you have this clause and you claim the subsidy then you should continue to pay your employees the subsidy until the subsidy runs out as an alternative to implementing the option of ending the job or stopping pay temporarily. This may well tide you over as a business and assist you to retain your staff. If the subsidy is more than the employee is normally paid, then you only need to pay what they are normally paid (see FAQ 7) In these situations please call the HR Team at The Chamber, as each set of circumstances are different.

6. I have business interruption insurance – can I apply?

In first instance we recommend that you contact your insurance company to establish when you will be likely to receive payment. If there is going to be delays, the Chamber recommends applying for the subsidy and paying it back once your business interruption insurances is paid to you. We understand that it can sometimes be months before payments are able to be made by the insurance companies (this was a key learning from the Christchurch earthquakes). Please note – the subsidy will need to be paid back - it is intended to maintain continuation only and a government benefit that should not be abused.

7. I have employees who usually receive less than the government subsidy – what does this mean?

The subsidy is not intended to remunerate employees over and above their conditions of employment.. Employers are encouraged to pay the maximum the employee was receiving before the earthquake occurred. This means that if an employee’s weekly wage is $150, they are not contractually entitled to more than that, even if the subsidy provides more.  Let’s say you have a part time employee normally earning $150 per week. In this instance you will receive the $300 per week government subsidy. You should pay the employee at least $150 provided they were unable to work (e.g. personal circumstances) or if you are unable to provide for these hours – this means you are honoring the terms of their employment agreement.

8. What do I do if I have an employee who is normally paid more than the subsidy?

Let’s say you have a full time employee normally earning $550 per week. In this instance you should claim the $500 per week government subsidy. If you have not enforced a temporary disruption option allowed for in your employment agreement it is recommended you pay the employee at least $550 provided they were unable to work (e.g. personal circumstances) – you are adhering to your contractual obligations.  If you have implemented a temporary disruption option and you receive the subsidy you can continue payments up to the value of the subsidy i.e. $500 – this means you are operating in good faith to continue their employment. In these situations please call the HR Team at The Chamber, as each set of circumstances are different.

9. I have the work for them, but I have an employee who can’t come back to work. He/she is willing but unable to due to personal circumstances. Should I pay them?

The short answer is yes. Let’s say you have a part time employee who doesn't want to come back to work who normally earns $150 per week, and you have the work available for them.  If they can prove (refer FAQ 11) that they are willing but unable to attend, you should pay them and hold their job open at no disadvantage to them.

10. I have employees who appear not to want to work. They aren’t turning up and they think they’re entitled to the subsidy – are they?

The short answer is no. If there is no reason why the employee is unable to attend work, then you do not have to provide them with payment. You may choose to use the subsidy as an incentive for them to get back to work but otherwise it becomes unpaid leave. Please note: they remain employed unless they have resigned or a fair process is followed that results in them departing the business. It’s important to acknowledge the physiological impacts that the earthquakes and aftershocks have on people. You should act in good faith unless you are certain they are simply choosing not to work.  In these situations please call the HR Team at The Chamber, as each set of circumstances are different.

11. When can I ask for evidence for reasons of absence?

An employer has the right to request evidence of reasons for absence if this is not absolutely clear (e.g. displacement and evacuated out temporarily). A decision may need to be made as to the intention of the employee to continuing their employment relationship. If there is no intention to continue to fulfill their commitment to the employment contract, and they inform you of this fact and you provide them with time to reconsider, then there is no obligation for the employer to provide ongoing financial support for business continuation purposes.

12. What do I do with leftover monies from the subsidy?

You can use any leftover monies e.g. For instances where you’ve been paid more

  • to top up wages for those who you can only provide part time hours and they turn up and do what they can for continuation purposes.
  • As an incentive payment to return to ongoing work, whatever the employer feels necessary to retain employees and continuation of services.
  • Anything that further allows you to continue your operation and ongoing employment.

Please contact us for further clarification on any issues: 0800 50 50 96 or email info@cecc.org.nz.

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