Wage subsidy: use it, abuse it – and lose it

Saturday July 11, 2020 Written by Published in Economy

Some employers have had their wage subsidies cancelled for not paying their employees in full, the Ministry of Finance has confirmed.

Natalie Cooke, director of the economic planning division, says there have been instances where “applications have been declined due to the wage subsidy not being paid in full”.

The team processing the wage subsidy required employers to back-pay staff for the previous month and provide documentation showing the payment before approving the next month’s application, Cooke said.

The ministry needed to confirm all the wage subsidy was declared in the filed PAYE tax returns.

Cooke said they also checked to confirm new employees on the subsidy were filling genuine vacancies in the business.

Government had been looking into complaints against local businesses allegedly misusing the wage subsidy initiative since it started in April this year.

Businesses affected by the coronavirus crisis have been receiving government’s minimum wage subsidy – paid at $266 per week from April to June, then $320 per week from July to September.

The employers are supposed to top up the balance to meet their employee’s contracted hourly rate.

If the businesses are unable to pay more, then they are required to reduce the hours of work to meet the wage subsidy amount.

However some businesses have been making their employees work for full hours on subsidy – even though these employees are contracted on more than the minimum wage.

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

Brown had warned they are 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.

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, Brown added.

“A worker cannot be forced.”

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.”

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