Covid-19 Update – Outbreak August 2021

COVID-19 Resurgence – Client Update August Outbreak               

The Government has announced updated support for businesses and the self-employed affected by the current outbreak.

Note that MSD will not pay an employer more than one COVID-19 payment for the same employee at the same time. We suggest you consider which MSD payments which you are eligible for, select the most appropriate, and speak to us if you have any questions.

Resurgence Support Payment (IRD)

The COVID-19 Resurgence Support Payment helps to cover wages and fixed costs for businesses who have been directly affected when there is an increase in their location to Alert Level 2 or higher for a week or more.

Am I eligible?

To be eligible, your business must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, due to an increase in Alert Levels.

What can I get?

A business may receive $1,500 plus $400 per full-time employee, up to a total of 50 full time employees. The maximum payment is (thus) $21,500.

Sole traders can receive a payment of up to $1,900.

When can I apply?

Applications for the COVID-19 Resurgence Support Payment (RSP) will open at 8am on 24 August 2021. You need to apply through Inland Revenue. The link is here: https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment and we also suggest that in advance you use the calculator on this site to assess your entitlement.

It is also possible that the Government could decide to activate the RSP multiple times if there are multiple alert level increases from Alert Level 1. Businesses and organisations can apply for the RSP each time it is activated, as long as they meet the eligibility criteria.

Small Business Cashflow Loan Scheme (IRD)

If you employ 50 or fewer staff, you may be able to apply for the Small Business Cashflow Loan Scheme. This is a one-off 5-year loan. You can borrow a maximum of $10,000 plus $1,800 per full-time-equivalent employee within your business (to a maximum of $100,000, or $11,800 for sole traders).

Loans will be interest free if they are paid back within 2 years. The interest rate is 3% for a maximum term of 5 years.

Am I eligible?

Your business must have experienced a minimum 30% decline in actual or predicted revenue over the period of 14-days, compared to the same 14-days a year ago (or 2 years ago, if that period was also affected by COVID-19).

When applying for the loan, you need to be able to declare that your business is “viable” and that you have been in business for 6 months or more. All your employees must be legally working in Aotearoa.

“Viable” here means you have a plan to remain “viable”, and evidence for this could include a cash-flow forecast, a plan for where future revenue will come from, financial statements to show the business has enough resources to sustain itself (including the loan) or an accountant’s assessment that the business is “viable” and ongoing.

When can I apply?

Applications are open until 31 December 2023 through myIR, the Inland Revenue Portal. If your business does not have a myIR account, you will need to create one to apply.

COVID-19 Wage Subsidy Scheme (MSD)

This subsidy is available for any business or self-employed person in any part of Aotearoa that will lose revenue due to a move to Alert Level 4, or simply cannot operate due to an Alert Level rise.

Am I eligible?

Businesses and self-employed people must expect a 40% drop in revenue to be eligible to receive the wage subsidy. That revenue drop is over the period 17 August 2021 to 30 August 2021 (inclusive) when compared to a typical 14-day consecutive period of revenue in the six weeks immediately prior to the move to Alert Level 4 on 17 August 2021. That calculation is exclusive of the impact of any of the COVID-19 financial support schemes and is slightly different for seasonal businesses.

What can I get?

You will receive a 2-week lump sum payment, calculated accordingly:

• $600 per week for each full-time employee; and/or
• $359 per week for each part-time employee.

Use average hours worked by the employee over the last 12 months to calculate.

Do I need to pay my employees their full pay?

At a minimum under the wage subsidy rules (but remembering that ordinary employment law still applies!), you must pass on the full wage subsidy to your employee. If the wage subsidy is more than your employee’s pay, you can continue to pay them at their normal rate.

What else do I need to do?

You need to declare that you have taken active steps to mitigate the impact of the move to Alert Level 4 on 17 August 2021 on your business activities (including, but not limited to, engaging with your bank, drawing on your cash reserves as appropriate, making an insurance claim). Collect evidence to demonstrate this and the impact the August 17 outbreak has had on your business.

You also need to retain all employees referred to in your application, use your best efforts to pay them at least 80% of their usual pay, and again, comply with your ordinary employment law obligations.

When can I apply?

Applications for the August 2021 Wage Subsidy are for the next 2 weeks. You need to apply through Work and Income, here: https://www.workandincome.govt.nz/about-work-and-income/news/2021/wage-subsidy-august-2021-announced.html

Support for essential business and their workers:

Leave Support Payment (MSD)

This payment is available for employees (or self-employed people) who must isolate if directed to do so (for a wide range of reasons). This does not include, for example, casual contacts of someone who has COVID-19, or someone who is isolating due to a belief that they are at greater risk of harm.

Am I eligible?

Businesses need to have experienced either a minimum 30% decline in actual or predicted revenue over the period of a month (compared to the same month in 2020) or a reasonably equivalent month, and that revenue loss is attributable to the COVID-19 outbreak, or your ability to support an affected employee has been negatively impacted due to the restrictions.

What can I get?

$585.80 a week for full-time employees (20 hours per week or more) and $350 a week per part-time employee. Again, use the average hours worked each week over the last 12 months to calculate.

The payment covers 2 weeks per employee from the date your application is submitted. If the employee for whom you applied returns to work before 2 weeks, you need to repay whatever amount was not used, or use that to pay for other isolating employees.

Apply here: https://www.workandincome.govt.nz/covid-19/leave-support-scheme/index.html

Short-term Absence Payment (MSD)

This is a one-off payment of $350 for employees who must miss work while waiting for a COVID-19 test result and cannot work from home.

This is only available once every 30 days.

Apply here: https://www.workandincome.govt.nz/covid-19/short-term-absence-payment/

We are all currently working remotely. For any advice from our employment law specialists, please contact us via email or by mobile, and stay safe:

Paul McBride (Partner) – paul@mdjlaw.co.nz or 021 614 215

Guido Ballara (Partner) – guido@mdjlaw.co.nz or 021 782 891

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz or 021 237 7811

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz or 021 557 236

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz 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