Coronavirus Changes to Government Wage Subsidy – Dukesons Business Law – Employment Lawyer – Business Lawyer

March 2020

This Blog isn't legal advice – if you need legal advice on any employment law issue, please contact me. I'm business lawyer (commercial lawyer) in Auckland who provides advice on a wide range of business law including employment law issues.

[This blog needs to be considered in the light of subsequent events, including the rules relating to Alert Levels 1-4 when in place, and rules relating to the wage subsidy extension - see later blogs on the site for further information. 13th August 2020.]

Here’s a link to the latest Government web page on the Wage Subsidy:

A summary, as briefly as I can:

From 5pm on Friday 27 March 2020, there are new rules. (They don’t apply to applications made before 5pm on Friday 27 March 2020.)

As a quid pro quo for the subsidy, the employer must agree:

  • not to make any changes to any obligations under an employment agreement without the employee's consent, including to rates of pay, hours of work and leave entitlement, ;
  • to retain the employees named in the application for the period that the employer receives the Wage Subsidy (Subsidy Period);
  • not to unlawfully compel or require any of the named employees to use their leave entitlements during the Subsidy Period;
  • to use the Wage Subsidy only to meet the named employees’ ordinary pay and the employer’s obligations in relation to the Subsidy; and
  • for Subsidy Period:

# to use best endeavours to pay at least 80 per cent of each named employee’s ordinary pay; and

# to pay at least the full amount of the Wage Subsidy to the employee (if the employee normally earns less than the Wage Subsidy, then pay the employee that amount.

Employers (which include sole traders, seeking the subsidy for themselves) must agree to and comply with a form of Declaration when applying.

Employers can’t make named employees redundant during the Subsidy Period (named employees are the employees named in the application for the subsidy). This means that an employer who applies for the Wage Subsidy can’t change their named employees’ pay without the employees’ consent and can’t make them redundant. (Technically, employment law would still permit redundancy but it would be a breach of the terms of the Wage Subsidy.)

There are also provisions relating to casual employees and as to rehiring employees who were employed as at 17 March 2020 but whose employment was terminated.


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