Complaints of misuse of pay subsidy

Friday April 24, 2020 Written by Published in Economy
Finance minister Mark Brown. Finance minister Mark Brown.

Complaints of resorts using workers as free labour prompts warning of enforcement action if anyone rips off wage subsidy.

Government is investigating complaints that local businesses are misusing the wage subsidy initiative.

Businesses affected by the coronavirus crisis are receiving government’s minimum wage subsidy of $7.60 for 35 hours a week per employee. They are then suppose to top up the balance to meet the hourly rate of their employee as per the contract.

If the businesses are unable to pay more, then they are required to reduce the hours of work to meet the $266 per week pay.

Deputy Prime Minister Mark Brown said they were getting some reports of “misuse or misunderstanding” of the subsidy. 

Some businesses are making their employees work for 35 hours a week on the $266 subsidy – even though these employees are contracted on more than the minimum wage.

The Private Sector Taskforce acknowledged and echoed his plea for employers and workers to reach agreement: “Communication between employers and their employees is so important right now – it's part of being a good employer.”

Brown thanked all the workers and employers using the wage subsidy in the spirit intended.

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“We wanted to make sure that workers have some money to buy some food and also keep businesses on some form of life support rather than completely close down.”

But he warned they were also seeing cases of workers who collected the minimum wage but did not come in to work at all. This was also in breach and an employer had the right to withhold that wage, he added.

They had to assign more officials to help Internal Affairs investigate discrepancies and address complaints.

“This is only the first month of the subsidy,” he said.

“It is anticipated that as our monitoring starts to kick in and businesses start reporting on the first month, we will be in a position to confirm if money is reaching the workers and if it is the correct amount.

“Discrepancies will be investigated and action taken if fraud is detected.”

Brown said if a business had no income and relied entirely on the wage subsidy, and was unable to top up that wage then they must come to a written agreement for the worker to only work the hours afforded by the minimum wage.

For some businesses that would also mean redeploying staff to do new or different work, he said.

This could only be done by mutual agreement between the employer and the employee: “A worker cannot be forced.”

Private Sector Taskforce chairman Fletcher Melvin said many employers were reducing hours so staff were working shorter days on the wage subsidy.

Employers were required to sign a declaration, promising to not change agreed rates of pay, hours of work, and leave entitlement, without the worker’s written agreement.

The declaration says: “You will for the period you receive the subsidy, use your best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary, and pay at least the minimum wage rate to the employee.”

Melvin said businesses should hold on to their people. “It’s better for workers to be retained where possible – and use the wage subsidy to keep people in work.”

In the interests of transparency, Melvin said they also supported government publicly disclosing the names of all businesses that received the wage subsidy so that information was out in the open.

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