• Insights

COVID-19 crisis management in New Zealand is a success story, but how are businesses facing the ongoing challenges?

Written by
Kiely Thompson Caisley, New Zealand’s leading boutique employment law firm.
Authors
Michelle Hall Collins
Senior Associate - New Zealand
Kiely Thompson Caisley
Laura Chapman
Senior Associate - New Zealand
Kiely Thompson Caisley
New Zealand
11.06.20
4
This article provides details of the employment and business support schemes currently in place to assist New Zealand employers and explores some of the challenges around immigration matters.  

New Zealand has earned a positive reputation globally for its success to date in managing the COVID-19 health crisis. A combination of quick and decisive action, tightly controlled borders, clear communication from the country’s political and health leaders, and a generally compliant population has put it in the enviable position of virtually eliminating the virus, for now.

New Zealand downgraded its ‘alert’ level at 23:59 on 8 June 2020 to level 1. This means that the current tight border restrictions remain in place but there are no longer any restrictions on public gatherings and there are no social distancing requirements.  Within New Zealand therefore, it is back to business as usual.  However, the challenges for businesses remain very real.

Although New Zealand’s lockdown and period of internal restrictions has been short in relative terms, the economic consequences of the COVID-19 outbreak are likely to continue to be seen for a significant period of time. While life appears to be returning to normal, we are still in the early stages of understanding the full the impact on businesses and their workforces.

Several New Zealand government schemes that support employers and employees remain in force. These schemes were designed with the overall intent to limit the economic impact of the pandemic. Any business accessing these government schemes needs to consider the conditions of the schemes though, as some of criteria relate to the maintenance of an employment relationship.

Government schemes supporting ongoing employment in New Zealand

From the early stages of the pandemic, the New Zealand government introduced packages designed to support ongoing employment for individuals in businesses that were being adversely impacted by COVID-19. Eligibility criteria have been tweaked since the introduction of these packages, but they remain in place to date.

COVID-19 wage subsidy scheme

The COVID-19 wage subsidy scheme was available to most non-state sector New Zealand employers, including the self-employed, sole traders and contractors. Under the scheme, these parties could receive a lump sum payment to subsidise workers’ wages over a 12-week period. In order to be eligible for the subsidy payments, employers had to meet a range of criteria including (among others), a 30% decline in actual or predicted revenue as a result of the COVID-19 outbreak over the period between January 2020 and 9 June 2020. In accepting the subsidy, employers were required to agree to certain conditions. If the subsidy was applied for after 16:00 on 27 March, those conditions included requirements that, during the period for which the employer receives the subsidy:

  • The receipt of the subsidy does not override existing obligations under the Employment Relations Act 2000.
  • There will be no changes to obligations under any employment agreement, including to rates of pay, hours or work and leave entitlement, without the written agreement of the relevant employee.
  • The employees named in the application will be retained as employees for the period the subsidy is received in respect of those employees.

 

Wage subsidy extension

The government has recently announced a wage subsidy extension, which is available from 10 June 2020 until 1 September 2020, so that employers can keep paying their employees. For this extension, businesses must have had a revenue loss of at least 40% for a continuous 30-day period. This period needs to be in the 40 days before the application is made, but no earlier than 10 May 2020, and it must be compared to the closest period last year. The extension covers eight weeks per employee from the date of submission of application. If an employee has been given notice of redundancy before the application, an employer cannot apply for those employees unless the redundancy notice is withdrawn. There can be no double dipping: an employer cannot receive more than one COVID-19 payment from the government for the same employee for the same time period.

Leave support scheme

This rule against double-dipping also applies to the leave support scheme. This scheme supports businesses and employees through a governmental payment for employees who cannot come into work because Ministry of Health guidelines recommend they stay at home (for instance because they are at higher risk if they get COVID-19, or they have tested positive for COVID-19), and the employees cannot work from home. As with the wage subsidy scheme there are a number of eligibility criteria and a declaration is made on submitting the application.

It is paid at the same rate as the wage subsidy scheme payments but for the lesser period of four weeks per employee from the date of application.

Other schemes

As well as these support packages, which are specifically targeted at maintaining and continuing employment relationships, other governmental schemes that support businesses more generally have been brought in, including:

  • The business finance guarantee scheme (supporting loans made with participating approved banks)
  • Business cash flow and tax measures.
  • The small business cashflow loan scheme, where the Inland Revenue Department provides interest-free loans up to NZD 100,000.

 

Immigration laws

At the time New Zealand closed its borders to everyone except New Zealand citizens and residents, there were around 350,000 overseas nationals already lawfully in New Zealand on temporary visas. An Epidemic Management Notice relating to immigration matters came into effect from Thursday 2 April 2020. One of the impacts of this notice is to extend the expiry dates of all temporary entry class visas where the visa holder is in New Zealand.

This means that any holder of a work, student, visitor, limited or interim visa with an expiry date of 2 April to 9 July 2020 inclusive who was in New Zealand on 2 April 2020 has had his or her visa automatically extended (on the same visa conditions) to 25 September 2020, receiving confirmation of this via email.

Despite that extension, employers are continuing to experience difficulties, for example. where they have had to change the terms and conditions of employment for their workers whose right to work in New Zealand is subject to specific visa conditions. The government has recognised that it may be difficult to make an application to vary the conditions of a current visa, if this is necessary for instance because an employer has shut down and the visa holder has found other work.

On 15 May 2020, legislation was passed to ensure the government can respond flexibly and efficiently to immigration issues arising from the COVID-19 outbreak. For a temporary 12-month period, the legislation allows for visa conditions to be amended for certain groups of people and for visas to be extended for groups of people for varying periods of time. It includes powers to impose, vary or cancel conditions for classes of temporary entry class visa holders. It is expected that further changes to the New Zealand visa policies will be announced shortly.ki