COVID-19 – Essential Workers Leave Scheme

COVID-19 Newsletter #3 – Essential Workers Leave Scheme – What you need to know

The Government’s COVID-19 response has introduced new support for essential businesses to pay their employees who cannot work. We outline the main features of this scheme below as a general guide. This information is correct at the time of issue, however as this is a dynamic and constantly evolving environment, the position should be confirmed prior to substantive action. Applications can be made here:

What is it?

Some employees working in essential services, who cannot work from home, may need to stay away from work because:

  • They or someone they live with may be sick with COVID-19;
  • They may have had close contact with someone who has COVID-19 (self-isolation);
  • They may be at a higher risk of severe illness if they contract COVID-19 and have agreed with their employer that they will not work.

The Essential Workers Leave Scheme is designed to support public health goals and financially assist workers.

Eligible employers will be paid:

  • $585.80 per week (gross, before tax) for each full-time worker (where they usually worked 20 or more hours a week before COVID-19), or
  • $350.00 per week (gross, before tax) for each part-time worker (where they usually worked fewer than 20 hours a week before COVID-19).

Employers should pass on to the relevant workers:

  • The full subsidy, if the workers’ usual income before COVID-19 exceeds the relevant subsidy rate, and in that case also make best efforts to pay at least 80 percent of the workers’ usual income before COVID-19; or
  • Their usual income before COVID-19 if this is less than the relevant subsidy provided.  Any surplus funding from the leave payments provided must be used to fund essential business workers’ wages where possible.

The Essential Workers Leave Scheme will be available for at least the period while the nation is at Alert Level 4.  The subsidy covers a four-week time period, with the option for organisations to re-apply for those same workers after four weeks, if necessary.


Employers and employees should work together to identify if they are eligible for the scheme. This is consistent with the duty of good faith which requires parties in an employment relationship to be communicative.

Employer Criteria

Employee Criteria

  • Workers who are sick with COVID-19 who are required to remain in isolation until advised by a health professional that they can be released from isolation.
  • Workers who are in self-isolation due to close contact with an infected person. For example, a worker identified as possibly infected through contact tracing.
  • Workers with dependents who are either sick with COVID-19, or whose dependents are self-isolating as a close contact. This does not include regular/routine childcare.
  • Workers who have serious health conditions themselves, or in their household, that put them at higher risk of becoming severely ill from COVID-19, and who agree with their employer that they will not work for an agreed period.

In each case, employers may apply for the Essential Workers Leave Scheme based on information provided by the employee. Neither the employee nor the employer needs to provide medical evidence to MSD.

Who is at higher risk?

The best place for information on this comes from the Ministry of Health:

Generally speaking, people with chronic lung disease or moderate to severe asthma, serious heart conditions, immunocompromised conditions, severe obesity, diabetes, chronic kidney disease, people undergoing dialysis, liver disease, or those over 70 years of age, fall into this category.

Some observations

It is important to note that this does not just apply to a worker but also to workers who have people in their household (bubble) at a higher risk. Again, we emphasise that workers and employers need to have a conversation to first see whether any risks at work can be appropriately mitigated. Underlying that conversation is the duty of good faith towards employees and the obligation to keep workers safe. If that conversation reveals an agreement that the employee cannot continue working safely, the parties should agree on what the leave arrangements will be before the employer then applies for the scheme.

Best Efforts to pay at least 80%

While there may be some instances where the leave scheme applies where otherwise no wages are due, as with the wage subsidy scheme, an employer must use their best efforts to pay at least 80% of an employee’s normal wages. However, any reduction in regular pay must be done lawfully, for example by agreement between the employer and employee.

Proof of Eligibility

As noted above, neither the employee nor the employer needs to submit proof to MSD to gain entry into the scheme. However, employers are within their rights to ask for some form of proof from their employees. While a request of this nature may be met with some resistance, a pragmatic approach could be to get the relevant employees to sign a declaration, attesting to their eligibility. That way, an employer has a record to return to in the event of a future audit.

Wage Subsidy and Leave Scheme?

Employers cannot apply for both schemes at the same time for the same employee. Where an employee is eligible for both schemes, preference should be given to the wage subsidy scheme as it lasts for longer duration. The leave scheme only applies to the period under level 4 lockdown.

The answers provided here are general and may not apply to your own situation. For specific advice, we recommend you talk to one of our experts (all currently working from home). You can call us on our mobile numbers, or contact us via email, and please stay safe:

Paul McBride (Partner) – or 021 614 215

Guido Ballara (Partner) – or 021 782 891

Frances Lear (Senior Associate) – or 021 237 7811

Saadi Radcliffe (Solicitor) – or 021 557 236

Emma Rose Luxton (Solicitor) – or 021 751 247 Disclaimer – this newsletter is necessarily brief and general in nature.  You should therefore seek professional legal advice before taking any action in relation to any matter addressed above.  © McBride Davenport James

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