Extension to the Wage Subsidy Scheme

COVID-19 / 21 May 2020
Extension to the Wage Subsidy Scheme

Last Thursday’s Budget 2020 delivered an extension to the Wage Subsidy Scheme, initially granted for 12 weeks.

Details of extension

From 10 June 2020, eligible employers can apply for an additional eight week extension.  The eligibility criteria has been adjusted as the Government seeks to target support to those businesses who have been hardest hit.

The key aspects of the extended subsidy are:

  • To be eligible, a business has to have suffered, or expect to suffer, a revenue loss of at least 50% for the 30 days prior to making your application, when compared to the closest period a year ago.
  • An application can only be made after the 12-week wage subsidy has finished.
  • The eight week subsidy will be paid in a lump sum, at the same weekly rates as the existing scheme with no change following the increase to minimum wage rates on 1 April 2020 and will be backdated to the date that the business submits its application.
  • In applying, businesses will need to agree to certain obligations, such as:
    • Passing the subsidy to employees;
    • Retaining staff for the duration of the subsidy;
    • Making best endeavours to pay employees at least 80% of their normal pay; and
    • Taking active steps to mitigate the impact of COVID-19 on their business.
  • Businesses cannot receive more than one COVID-19 support payment for the same employee at a time. For example, if an employee being paid with the assistance of a wage subsidy subsequently could not work and became eligible for the Leave Support Scheme, only one scheme could be utilised to support the payment of their wages.
  • As with the original 12-week Wage Subsidy Scheme, businesses will be subject to auditing, with data matching possible between government departments. Businesses receiving support will be listed on the publicly searchable register, in the interests of transparency and accountability.

Interface with the COVID-19 Leave Support Scheme (previously known as the Essential Worker Leave Support Scheme)

As we discussed earlier, support available to workers at higher risk from COVID-19 was expanded from 1 May 2020 to encompass all eligible businesses, organisations and self-employed people, not just essential services, and this will continue to apply through Alert Level 2.  Payments for these workers will be for four weeks, with businesses able to re-apply for further support on an on-going four-weekly basis while the scheme remains open.

Message for employers

The application of the wage subsidy and leave support do not change employment or health and safety law obligations, and employers should take care to ensure that action taken with employees is lawful, to avoid successful personal grievance claims.  Employers who are looking to restructure should also ensure that they consider and address the implications for any wage subsidy that they have received for employees.  Contact our team to discuss what this means for your business.

We remind you that while this article provides commentary on employment law and health and safety topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.



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