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Jenna’s Jackets Limited – Wage Subsidy Extension Case Study

19 June 2020

Jenna’s Jackets Ltd is a clothing retailer. During Lockdown they were deemed to be non-essential and were unable to open. Jenna’s Jackets Ltd were not set up to offer online sales so they did not earn any revenue during that time. The company employs three part time and four full time staff. 

The company successfully applied for the 12-week Wage Subsidy on the basis that revenue in the month of April 2020 was at least 30% down compared to revenue in April 2019.  The wage subsidy received was $40,718.40, calculated as follows:

  • $585.80 per week x 12 weeks x 4 full-time employees (>20hours) = $28,118.40
  • $350.00 per week x 12 weeks x 3 part-time employees (<20hours) = $12,600.00

The subsidy was used to help pay wages for the 12-week period from 30 March – 21 June 2020, with the employer topping up the difference between the weekly subsidy amount and the employee’s usual wage. Two of the part time employees at Jenna’s Jackets Ltd usually earned less than $350 per week, so they received their usual pay with the excess subsidy used to assist with the wages of the other staff.

Once Level 2 was announced, Jenna’s Jackets Ltd was able to reopen but with a strict set of Health and Safety guidelines. Sales are initially slow as customers slowly began to return to their favourite clothing store.

Applications for the Wage Subsidy Extension opened on 10 June 2020, however as you cannot apply for the Wage Subsidy Extension until the initial 12-week Wage Subsidy finishes, Jenna’s Jackets Ltd had to wait until 22 June to apply. On 22 June, the Company reviewed its revenue for the prior 40 days, to see whether they had experienced a minimum 40% decline in revenue in any continuous 30-day period, when compared to the closest period last year.

Jenna’s Jackets Ltd found that their revenue was 50% down for the 30 days comprising 21 May – 20 June (inclusive), when compared to the same period of trading last year. Because Jenna’s Jackets Ltd has experienced at least a 40% decline in revenue compared to last year, they are eligible for the Wage Subsidy Extension. The Extension pays at the same rate per employee as the Wage Subsidy for 8 weeks meaning Jenna’s Jackets Ltd would receive $27,145.60 to use to assist with its employee wage costs.

 

New Staff & New Jackets!

Jenna’s Jackets Ltd has just started stocking a new range of designer jackets. They anticipate this jacket line will need its own sales representative, who will need to work variable hours on a week to week basis depending on demand.

Jenna’s Jackets Ltd hires Maddie as their new sales representative on a casual contract with a clause for 20 minimum hours. Jenna’s Jackets Ltd want to know if they can apply for the Wage Subsidy Extension for Maddie, and how much they should pay her.

 

Can Jenna’s Jackets Ltd apply for the Wage Subsidy Extension for Maddie?

Yes – there is nothing to preclude the company from applying for the scheme for a new employee. Jenna’s Jackets Ltd will need to confirm they meet the criteria for Maddie, which will include testing their revenue again at the time they apply.

 

What does Jenna’s Jackets Ltd have to pay Maddie?

Maddie should be paid her normal hourly rate for all hours worked at the store. Jenna’s Jackets Ltd can use the Wage Subsidy Extension to help cover the wages paid to Maddie, or if there is leftover subsidy after paying her 100% of her ordinary wages, the company can use this to cover the wages of other affected staff.

Jenna’s Jackets Ltd can reduce Maddie’s pay by way of mutual agreement, and this must be done in writing. Maddie should never be paid less than minimum wage for her hours worked, nor should she be paid less than 80% of her normal wage per the Wage Subsidy Extension declaration requirements.

 

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