Article:

COVID-19 Short-term Absence Payment & FAQs

15 February 2021

Jessica Powell & Leisa Kelsen |

In mid-December 2020, the Government announced the introduction of a new financial support package for COVID-19 affected employers and self-employed persons, known as the COVID-19 Short-term Absence Payment.

This will help businesses pay their employees who are unable to work from home while awaiting test results and will protect others from possible COVID-19 transmission.

The payment became available to eligible workers on 9 February 2021.

This payment is designed for:

  • Employees and self-employed persons who are required to stay home while they await COVID-19 test results, will miss at least one shift of work, and are unable to work from home.
  • Parents or caregivers who are required to stay home while they await COVID-19 test results for a dependent, will miss at least one shift of work, and are unable to work from home.
  • Household members or secondary contacts, of someone who is a close contact of a person with COVID-19, and where the worker has been advised to stay home while they wait for the close contact’s test results. They must also be unable to work from home and will miss at least one shift of work in doing so.

The one-off payment of $350 is  available at all Alert Levels for each eligible worker (employee or self-employed person). The payment can only be applied for once in any 30-day period, or if a health professional has required the worker to re-test in a shorter period.

If the results show the affected person tested positive for COVID-19, then they may be eligible for the Leave Support Scheme

 

Please see our detailed FAQ’s for the Short-term Absence Payment below.

Anyone who is unwell should call Healthline on 0800 611 116 or talk to their doctor or health provider.
 

When do applications open for the scheme?

 

Applications for the short-term absence payment scheme opened on 9 February 2021.

 

How long to have to make an application for the short-term absence payment?

 

Applications can be made up to 8 weeks after the test was taken for the eligible worker, provided the test was taken on or after 9 February 2021.
 

Who is eligible for the short-term absence payment?

 

The scheme is to help businesses pay their eligible workers who:

  1. cannot work from home; and
  2. will miss work while they stay at home awaiting COVID-19 test results (per Public Health Guidelines)

An eligible worker is:

  • legally employed in New Zealand at the date the application is made; and
  • is not able to be at work, and is also unable to work from home; and
  • is staying home while they await; either
    1. their COVID-19 test result
    2. the COVID-19 test result of a dependent (i.e., they are the parent or caregiver in this situation, and need to support the dependent while they stay home)
    3. a household member or secondary contact (refer to public health guidance) of someone who is a close contact of a person with COVID-19, and the worker has been advised to stay at home while waiting for the close contact’s test results.

Please Note: Close contacts self-isolating while they await test results are covered under the Leave Support Scheme. Point 3 above therefore only covers household and secondary contacts. Please refer to our FAQ below on which workers are not eligible for the COVID-19 short-term absence payment.
 

Which workers are not eligible for the COVID-19 Short-term absence payment?

 

1. Employees and self-employed persons that would otherwise be entitled to the Leave Support Scheme, including but not limited to;

  • Employees or self-employed persons who are sick with COVID-19; or
  • Have been in close contact with someone who has COVID-19; or
  • Are the parent or caregiver of someone who has been in close contact with someone who has COVID-19; or
  • Have been instructed to self-isolate (or the parent/caregiver of someone who has been instructed to self-isolate) in accordance with the Health Act 1956; or
  • Are considered 'higher risk' or have household members who are considered ‘higher risk’ if they were to contract COVID-19.

2. Employees and self-employed persons who do not have any COVID-19 symptoms and are involved in surveillance testing, or have not been notified to stay home (via National Contact Tracing)

3. Employees and self-employed persons who do not have any COVID-19 symptoms and are involved in routine testing in their workplace

4. Returning air crew

5. New Zealanders who are currently overseas

6. Those staying in managed isolation facilities

7. State Sector or State-Owned Enterprise employees

 

What payment could I get under the scheme?

 

A one-off payment of $350 will be made for each eligible worker. This is regardless of whether they work full-time or part-time.

The payment is made to the employer (including self-employed persons) to support them to pay their employees while they are unable to work.
 

How long does it take to receive the subsidy?

 

MSD have not advised of a timeframe for payment.

We are aware they are checking information provided in the applications against the information held by IRD, and any discrepancies may result in delays or your application may be declined.

You should also check that the bank account details you provided in your application are correct.

Your application may be declined if:

  • The employee completes the application
  • The employer applied using the wrong application form
  • The details provided in the application do not agree to Inland Revenue
  • The employer is already receiving another COVID-19 support payment for the named employee

 

Can I apply for the payment more than once?

 

Yes – however you can only apply for each eligible worker once in every 30-day period, unless a health professional or doctor has instructed the eligible worker to get another test done.

If the eligible worker has been required to take another test, the earliest you can apply is still three days after your previous application.
 

Where can I find a copy of the declaration for the short-term absence payment?

 

A link to the short-term absence payment declaration can be found here.
 

What are my obligations once I have received the short-term absence payment?

 

The COVID-19 Short-term Absence Payment does not override employment law, or your obligations to employees under their individual employment agreements. You can contact Employment NZ on 0800 20 90 20 or on their website if you have any concerns about meeting your obligations to your employees.

Of notable importance:

  • You should not make any changes to an individual employment agreement without the written agreement from the relevant employee
  • You should not unlawfully compel or require any of your employees to use their leave entitlements

You will also need to meet your obligations under the declaration (which you agreed to at the time you applied for the payment). A link to the short-term absence payment declaration can be found here.

 

Can I receive the Short-term Absence Payment and Leave Support Payment simultaneously?

 

Yes - but you cannot receive two payments for the same worker simultaneously (where they would be covering the same situation for the employee).

Correct Application: You apply for the Short-term Absence Payment for one employee who is getting a COVID-19 test because they are symptomatic. You apply for the Leave Support Payment for another employee because they are a close contact of someone who is getting a COVID-19 test.

Incorrect Application: You apply for the Short-term Absence Payment for an employee who has a dependent who is required to stay at home while they await COVID-19 test results. You apply for the same employee for the Leave Support Scheme on the basis that they are a parent of a dependent, who has been told to self-isolate by a doctor through the National Contact Tracing process.
 

Does my business or legal structure preclude me from receiving the short-term absence payment?

 

The COVID-19 Short-term Absence Payment is designed to be accessible for all NZ employers with NZ employees including:

  • Registered Charities
  • Non-Government Organisations (NGOs)
  • Self-employed and Sole Traders
  • Contractors
  • Incorporated Societies
  • Post-settlement Governance Entities
  • Local Government Organisations
  • Kindergartens and Early Childhood Centres.

State sector organisations are not eligible to receive the COVID-19 Short-term Absence Payment unless they have asked for (and been granted) an exception to become eligible for the scheme via their monitoring agency. State sector organisations should contact their monitoring agency directly if they wish to discuss this.

Private businesses contracted to provide services to state sector employers (e.g. Cleaning, security) are not state sector employers, and can apply for the short-term absence payment scheme provided they meet the other criteria.

Your business must also be in New Zealand. This means that at the time of application, your business must be:

  • Registered with the New Zealand Companies Office
  • Physically located in New Zealand
  • Employees are legally working in New Zealand

If you are not sure whether your employees are legally working in New Zealand, feel free to visit the Employment New Zealand website here.

Self-employed persons are not required to be registered with the New Zealand Companies Office, but will instead be required to provide the following information in respect of their application:

  • Personal IRD Number
  • Government licenses and permits for their business needs (as applicable)
  • Qualifications or registrations for their trade or profession (as applicable)
     

Do I need to tell my employee if I am applying for the COVID-19 Short-term Absence Payment on their behalf?

 

Yes – you must discuss the application with your employee prior to submitting it

  • To confirm the date of their COVID-19 test fits within the parameters of this scheme
  • To obtain their consent to the relevant points in the declaration
  • The acknowledge they need to stay home (per public health guidance)
  • To confirm they can’t work from home, and will miss work while they wait for their COVID-19 test results

Part of this discussion should include whether the employee should utilise other leave options, such as annual leave or sick leave. The idea of this discussion is to facilitate open communication between the employer and employee and ensure the employee is well-supported during this time.

 

What are the circumstances where I should repay the short-term absence payment?

 

You will be required to repay the short-term absence payment if:

  • Your application was false or misleading
  • Your application was incorrect
  • You no longer meet the eligibility criteria (at the time you applied)

Repayments can be made using the following link.
 

What should I do if I made a mistake on my application?

 

You do not need to submit a new application.

You can call 0800 40 80 40 and they will correct the error for you.

 

Will my application be audited?

 

Work & Income have advised that all payments made under the Short-term absence payment scheme could be subject to audits and reviews.
 

How do I apply for the COVID-19 Short-term Absence Payment?

 

There are two main applications you can use:

  1. If you have people working for you
  2. If you do not have people working for you

 

Should I pay my employees the Short-term absence payment as a lump sum?

 

We would recommend paying your employees in their usual pay cycles. Making lump-sum payments could have adverse impacts for:

  • Personal Tax Rates
  • Working for Families entitlements

 

Is the COVID-19 Short-term Absence Payment subject to tax?

 

GST (Goods and Services Tax) No
PAYE, Student Loan, Kiwisaver etc Yes – wages paid to employees from the Short-term absence payment are subject to the usual employer deductions
Income Tax - Employers

No – Short-term absence payment is classified as Excluded Income. This means you won’t be required to pay tax on the subsidy, nor will you be allowed to claim any deduction for wages paid from the subsidy

If the full payment has not been passed on to employees, any excess amounts will be taxable income to the employer/business
Income Tax – Self-Employed Yes – the Short-term absence payment is to replace lost earnings and is therefore liable for income tax in the hands of a self-employed person

 

What do I need to pay my employee who I have received the Short-term absence payment for?

 

Your obligations under Employment Law and per the employees Individual Employment Agreement have not changed.

  • where an employee is entitled to be paid while they are waiting for the relevant COVID-19 test result, you should pay the employee the obligated amount
  • where an employee is not entitled to be paid while they are waiting for the relevant COVID-19 test result, you should
    • try to pay the employee as if they had worked that day; or
    • pay at least the full amount of the short-term absence payment to the employee
  • If the usual wages of the employee are less than the amount of the short-term absence payment, you should pay the employee that amount. Any leftover amount can be used to help pay other affected staff.

To confirm whether the employee is entitled (or not entitled) to be paid while waiting for their test results, you should refer to the employment agreement, as well as your statutory obligations.

 

Can I pay my employee sick leave while they are waiting for their test results?

 

If the employee is sick, or caring for a dependent that is sick, then:

  • The employee should be paid sick leave at their relevant rate (Relevant Daily Pay if known, otherwise Average Daily Pay).
  • The sick leave should also only be paid to the extent the employee is entitled to it.

If the employee is not sick, or their dependent is not sick – then sick leave should not be paid.

We encourage you to refer to the Holidays Act 2003 or contact your employment lawyer if you have any concerns whether you should be paying your employee sick leave.

 

Can I pay my employee annual or special leave while they are waiting their test results?

 

If the employee should not be paid sick leave (please refer to the above FAQ) then:

  1. You could pay the employee annual leave if the employee requests this (you cannot require the employee to take annual leave at short notice).
  2. You could pay the employee special leave if you so wish to do so, or if the employment agreement dictates that you should.
  3. You could just pay them the $350 short-term absence payment (or less if their usual pay would be less than $350).

 

We encourage you to refer to the Holidays Act 2003 or contact your employment lawyer if you have any concerns whether you should be paying your employee sick leave.

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