Using the COVID-19 Wage Subsidy
Please note that this help document is a guide only. If you are unsure how best to record the wage subsidy or how you should be paying your employees we recommend contacting a specialist. Employment New Zealand and WINZ also have some dedicated information regarding COVID19 that may be able to assist you.
This article assumes that you have applied for, and received the Wage Subsidy payment from MSD. If you're not there yet, learn more about the governments support packages here
In many cases, the subsidy won’t cover full wages. Under the scheme, you must commit to paying 80% of the employee's income. However, 'best endeavours' mean the employer and employee can negotiate an alternative approach.
If you’re able to, you can cover the shortfall in wages to 100%
Important considerations before you start
When you receive your lump sum payment for COVID-19, DO NOT transfer it all to our trust account! Please only make payments for each pay, as required.
The COVID-19 Wage Subsidy is funded based on a flat rate of:
- $585.80 for each employee working 20 hours or more per week
- $350.00 for each employee working less than 20 hours per week.
The subsidy covers 12 weeks per employee.
Jane is a full-time employee and works 40 hours per week. The $585.80 wage subsidy becomes part of Jane's $1000.00 gross. Dave is just part time, working less than 20 hours per week so the smaller flat rate wage subsidy of $350.00 becomes part of his gross of $500.00 per week:
How to create a pay using 'C19 Wages' custom pay type?
You must make your best efforts to pay 80% of the normal weekly wage for your employee, however "best efforts" mean the employer and the employee can negotiate an alternative approach. For instance, the employee may accept a 60% wage if that means more their workforce colleagues can also be paid income. Such best efforts would need to be documented by the employer.
Go to your employee/s profile and open the 'Pay types' tab. To pay employees using the Wages Subsidy see the 'C19 - Wages' pay type. The rate is set to "$1.00" per unit by default. You will need to change this.
In this example, Jane's Standard pay is set to an hourly rate of $25.00 per hour. If you are unsure of the pay rate, please check the 'standard pay' tab. The 80% (or the % you have negotiated with your employee) of 25 is 20 so to set Jane's C19- Wages 80% pay type, we change the rate from $1/ per unit to $20.00 per hour:
Please note the current minimum wage rate is $18.90. If the above results in a rate below minimum wage you should use their standard hourly rate and reduce the hours in the timesheet in line with the new negotiated agreement with your employee.
- Change the rate amount to the new 80% rate. In this example it's '20' (just enter the number here).
- Change the 'Rate per' selector to 'per hour' here.
- Save the new rate setting.
You will need to make this adjustment for all active employees.
Return to the dashboard to create a new pay and process the timesheet.
Set the 'C19 - Wages' Pay type in the timesheet
- If you have default hours set in your employees profile, their hours will show here as 'Standard pay'
- Note the gross value of your employees standard pay.
In this example, this employee works a default of 8 hours per day and gets a gross of $1000.00 per week.
Your employee's settings may mean that no hours load by default. Don't worry, go to the next step. The hours can be added manually just like you would normally do.
Change the pay type to "C19 - Wages"
- Select the "C19 - Wages" pay type. Any hours loaded by default as 'Standard pay' will remain. If you had no hours loaded you'll add the hours that your employee normally works. If this is variable, see below.
- Click 'Update and save'
- Note the new 'Gross' pay total. Check that the total is 80% of the original total.
You do not need to make any changes to the pay type settings in the employee profile.
In this example the employer will only be paying the amount of the Wage subsidy for Jane who works more than 20 hours a week and is eligible for a $585.80 weekly payment.
- Select the "C19 Wages" pay type in the drop down menu
- Divide the Wage subsidy by the number of days they work a week and enter into the timesheet day by day
- Check that the Gross amount matches the weekly wage subsidy amount
Exact guidelines for finding a fair average weekly rate are evolving day by day so if in doubt, speak with WINZ and your employees.
If your employee/s work variable hours, calculate 80% of their average weekly earnings. Our system provides an average weekly rate calculator for most employees depending on their leave settings, you can find this at the top of their 'Annual leave liability' table, just below the timesheet.
According to the example provided above, this employee has an average weekly rate of $696.47, which if divided by the standard hourly rate will give you the total average hours for a week.
You can also use the payslip export tool to get a summary of a specific period to help work out what an employee's normal wages are.
Feel free to email email@example.com or call us on 0800 895 146 for further assistance.