From staffing challenges to revenue decline, Omicron is continuing to have a significant impact on businesses across Aotearoa. There are a number of business support packages available to help alleviate some of the burden. Below is a summary of the key COVID-19 Government financial support packages currently available to assist businesses as a result of the Omicron outbreak.
Paying your employees when they have to isolate
The COVID-19 Leave Support Scheme payment is available to employers who have employees that:
- Cannot come into work because they have to self-isolate due to Covid-19 rules, and
- Cannot work from home.
If employers meet the criteria, the employer is eligible to apply for the following:
- $600 a week for full-time workers (working 20+ hours)
- $359 a week for part-time workers (working - 20 hours)
If the employee needs to keep self-isolating for at least 11 calendar days or more and can’t work from home then they can apply for a second week payment. There is a detailed Declaration to be made by applicants to confirm eligibility criteria and to acknowledge obligations regarding use of the subsidy. Key points include:
- You will not unlawfully compel or require any of the named employees to use their leave entitlements for the period you receive the subsidy in respect of those employees.
- You remain responsible for paying your employees' ordinary wages and salary of the named employees.
- You will for the period you receive the subsidy:
- use your best endeavours to pay at least 80% of each named employee's ordinary wages or salary; and
- pay at least the full amount of the subsidy to each named employee; but
- where the ordinary wages or salary of a named employee is lawfully below the amount of the subsidy as at the date you apply for this subsidy, pay the employee that amount.
It is also advised that if the employer cannot pay their employees their usual wage, then any reduction in wages or agreed hours of work should be discussed with both parties and there should be a written agreement in place.
When entering a subsidy payment to an employee in a Payroll system, the employer should use (or create) the ‘Covid-19 leave’ code and enter equivalent hours to generate pay of $600 or $359 so it does not affect the accumulating leave balances. (e.g. someone at $20 hours p/h would enter 30 hours’ worth of COVID-19 special payment).
Click this link for the COVID-19 Leave Support Scheme Application.
The employer also needs to have in writing that the employee authorises their information to be passed on (e.g name, IRD Number, date of birth, and type of work such as full time or part time).
Financial support for businesses facing significant revenue decline
There is also the COVID-19 Support Payment (CSP) for businesses that see a decline in revenue by 40%. This payment is $4,000 per business, plus $400 per full time worker (+20 hrs) and $240 per part time worker (up to 20 hrs).
Three fortnightly CSPs will be available. Applications for the first payment commenced on 16 February. Key points to note:
· It is over a 7 consecutive day period.
· e.g. 40% decline in any 7 day period after 16 Feb.
· Compared to a typical 7 day period between 5 Jan 2022 and 15 Feb 2022.
The application form is completed through MYIR and IRD requests you keep records of justifications on how COVID-19 has affected your business etc.
Cash flow support
In February 2022, the Government announced an increase in the COVID-19 Small Business Cashflow Scheme (SBCS) (ird.govt.nz).
The base loan would increase to $20,000 (from $10,000). This means that for new loans the amount that can be borrowed will be $20,000, plus $1,800 per full-time equivalent employee (up to 50 employees). The loan repayment period remains five years (i.e 60 months).
Existing borrowers will also benefit from this change as they will be able to apply for a top up loan of $10,000, plus any amount they were eligible for but did not take in their initial loan. This will be open for applications from 21 March 2022.
The first two years of existing and new loans will be interest-free provided the loan is not in default. Interest will apply at a rate of 3% per year on the remaining loan balance from the first day of the third year of the loan period.
This change will take effect from 21 March 2022.
If you'd like more information on any of the above or want to know if your business qualifies for Government support, get in touch with your local BDO office today.