COVID-19: Practical information to help you understand COVID-19 entitlements

Wage subsidies are back - 5 March 2021

When the Government announced that Auckland would be spending a minimum of seven days at Alert Level 3, commencing from Sunday 28 February 2021, this automatically triggered a new wage subsidy scheme being implemented. The new wage subsidy (entitled Wage Subsidy March 2021 (‘WSM’)) opened for applications on 4 March 2021. This is the fourth wage subsidy implemented, and while it retains many of the same features of its three predecessors, there are important differences for businesses to be
aware of.

The purpose of the WSM is to support employers who have experienced a minimum 40% decline in actual or predicted revenue in order to keep employees on the payroll during this difficult period. The WSM is calculated based on number of employees and spans an initial 2-week period that may be extended further depending on the length of time that Auckland (or another part of New Zealand) is at Alert Level 3. The weekly amount of the subsidy is calculated as $585.80 per employee working 20 hours or more per week and $350.00 per employee working less than 20 hours per week. The subsidy will be paid as a lump sum covering a 2-week period and must be passed through to employees.

What is the same as previous wage subsidies?

There are many similarities to the previous wage subsidy schemes which many will be familiar with:

  • The regime remains a “high trust” regime and is administered by the Ministry of Social Development.
  • The same business types can apply, including companies, partnerships, self-employed, contractors, charities, etc.
  • Payment is made in an upfront lump sum.
  • There is no cap on the maximum payment a single employer can receive.
  • Payment rates are $585.80 per week for a full-time worker and $350 per week for a part time worker.
  • A full-time worker is one who works 20 or more hours per week and a part-time worker is less than 20 hours.
  • Employers need to seek (ideally written) consent from employees that a wage subsidy can be sought in respect of them. Employers should share privacy information with employees.
  • Employers need to commit to retaining the staff named in the WSM application.
  • Employers should do their best to pay employees at least 80% of their normal pay and must follow all employment laws.
  • The WSM amount must be passed on in full to employees (unless they ordinarily earn less).
  • Applicants need to have taken active steps to mitigate the impact of COVID-19 on their business, this can include drawing on cash reserves, making an insurance claim and activating a business continuity plan.
  • Applications are made through the Work & Income website, with a separate CSV upload process for employers with over 100 staff.
  • All applicants need to read and agree to a detailed declaration.
  • If a 40% revenue decline does not eventuate or any other eligibility criteria are not met it will be necessary to repay the WSM in full.
  • Employers who have received the WSM will have their names added to the searchable register.
  • Only one form of employment support can be received at a time in respect of an employee, so, for example, you can’t claim a wage subsidy in relation to any employee who is already the subject of a leave support scheme payment.
  • You can however receive the WSM and the Resurgence Support Payment at the same time.
  • The WSM is not subject to GST and is not subject to income tax (unless received by a self-employed person).

What is different from previous wage subsidies?

  • A business must have suffered a decline in revenue due to the move to Alert Level 3 on 28 February 2021 (i.e. it can’t be a natural reduction in seasonal revenue or voluntarily choosing not to work to suppress revenue).
  • Businesses need to have suffered a 40% decline in revenue over a 14-day continuous period between 28 February and 21 March 2021, compared with revenue in a ‘typical’ 14-day consecutive period within 4 January to 14 February 2021.
  • ‘Highly seasonal’ businesses will be able to measure revenue decline in a slightly different way.
  • The WSM Scheme runs for an initial two-week period, meaning the payments are $1,171.60 for a full-time employee and $700 for a part time employee. Applicants may be able to apply for an additional two-week payment if Alert Level 3 is extended beyond a fortnight (a continued 40% revenue decline will be required as well as a separate application).
  • There is a clearer onus on applicants to prepare and retain evidence to support how the eligibility criteria have been satisfied. These don’t need to be provided as part of the application, but will need to be available on request.

Can you explain the new revenue test?

The key new issue for businesses to grapple with is demonstrating a 40% or more reduction in revenue due to the move to Alert Level 3 on 28 February 2021. There are two key elements here:

  • What is the revenue comparison period?
  • How do you establish that the decline in revenue was due to the move to Alert Level 3?

Revenue earned in a 14-day continuous period post the move to Alert Level 3 needs to be compared to ‘typical’ revenue in a 14-day consecutive period in the six weeks prior to any Alert Level changes, in this case, between 4 January and 14 February 2021 (known as the ‘default comparator period’). Businesses will have discretion to assess and choose what 14-day period best represents ‘typical’ revenue. The 14-day period doesn’t have to run to a calendar week, it simply needs to be 14 consecutive days. Likewise, there is no need to undertake any calculations to determine what ‘average’ revenue was over the six-week period.

Complicating the current situation is the time of year we are in and how that influences the revenue which was derived between 4 January and 14 February 2021. Many businesses may have been experiencing higher than typical revenue due to the holidays, but equally many businesses may have been undertaking a holiday shutdown and had very low revenue for part of the six-week period. In addition, the school holidays and a number of public holidays may influence (positively or negatively) the revenue earned during the default comparator period. This is perhaps best illustrated with a calendar:




What 14-day period will make the best comparison period will differ by business and the individual facts and circumstances. For businesses which are ‘highly seasonal’, it may be possible to do a comparison back to 2019 or 2020. This is discussed further below.

The next essential element is that any drop in revenue must be due to the move to Alert Level 3 on 28 February. Businesses need to be able to draw a direct correlation between the reduction in revenue from the comparator period and the Alert Level change.


The Wiggle Room (TWR) is a business that offers school holiday programmes and after school care. In the 14-days from 11 January to 24 January, TWR earned $100,000 of revenue. In the 14-days from 28 February to 13 March, TWR only earned $25,000 of revenue. However, the 75% reduction in revenue was expected and budgeted for as it related to a change from full-day programmes to after-school care. TWR does not satisfy the eligibility criteria for the WSM.

Businesses should be able to supply evidence of the specific impacts on their business of the Alert Level change. This could include things like cancelled contracts, the inability of a business to open, the change in customer levels due to people working from home, the impact on productivity or ability of staff to work because of the requirement to keep school children home, etc.

How do the rules apply to seasonal businesses?

There are a number of scenarios where it simply may not be appropriate to look at revenue in the last six weeks to determine the impact of COVID-19 Alert Level changes. A business with highly seasonal revenue will be able to look back at revenue in either 2019 or 2020 to establish a baseline of revenue to determine if there has been a revenue drop. Businesses using this approach need to look at the exact same time period. For example, revenue from 28 February to 13 March 2021 would be compared against revenue for 28 February to 13 February 2019. Again, it will still be necessary to evidence that the reduction in revenue has been caused by the most recent change in Alert Levels.


FiFi Feijoa Limited (FiFiFL) grows and sells feijoa’s. The feijoa’s typically start dropping from the trees from mid-February each year. In early March 2021, because of Alert Level 3, FiFiFL is unable to obtain enough staff to travel to its Auckland orchard to pick feijoa’s. As such, a large proportion of fruit spoils and is unable to be sold. FiFiFL had no income between 4 January to 14 February 2021 as the feijoa’s were not ripe. FiFiFL would not satisfy the standard revenue drop test as it has not had a 40% reduction in revenue. Because the nature of the business is highly seasonal, FiFiFL is able to look at revenue earned in early March 2020 and is able to evidence a 40% reduction in revenue. FiFiFL is eligible to apply for the WSM.

Brakes Mountain Bikes Limited (BMB) is a business run out of Wānaka. In 2020 BMB employed 50 mountain biking guides and owned 250 mountain bikes which were rented out to predominantly foreign tourists. The peak mountain-biking season for BMB has traditionally run from November to January each year and BMB considers they are clearly a highly seasonal business. As a result of COVID-19, during 2020 BMB took steps to downsize the business to adapt to the New Zealand-only tourist market; a substantial portion of which come from Auckland. As of March 2021, BMB has only 10 employees and 50 bikes. There is an over 40% reduction in revenue between 2020 and 2021. However, before being eligible to apply for the WSM, BMB will need to establish that the reduction in revenue has been caused by the change in Alert Levels on 28 February 2021, and not purely due to COVID-19 related downsizing during 2020.

Applicants who wish to make use of the rules for ‘highly seasonal’ businesses will need to keep evidence to demonstrate why the seasonal nature of the business makes it harder to meet the 40% revenue decline test than the standard rules.

Can applications be made on the basis of an expected reduction in revenue?

Yes, applications for the WSM opened on 4 March, but require a revenue drop to have occurred over a 14-day period between 28 February and 21 March 2021. As such, businesses won’t currently have the revenue data yet to confirm that a 40% revenue drop has occurred.

The WSM operates under a high-trust model; however any business which applies on the basis of an expected revenue drop will need to verify that the drop in revenue actually occurred. If it did not, the eligibility criteria will not be satisfied and it will be necessary to repay the wage subsidy.

What are the other key criteria?

There are also other eligibility criteria that must be met before an application is made under the scheme. Broadly speaking the other criteria are:

  • The business is an eligible employer;
  • Active steps have been taken to mitigate the financial impact of the move to Alert Level 3 on 28 February 2021 (such as engaging with banks, drawing on cash reserves as appropriate and making an insurance claim);
  • The subsidy is used to:
    •  retain the employees named in the application for the entire 2-week period of the subsidy;
    • pay the employees named in the application 80% of their normal salary/wages (if this is not possible, at a minimum the full value of the subsidy must be passed on, or the amount the employee ordinarily earns if this is less).

Applicants must agree to a number of other information sharing consents and agree that the subsidy will be repaid if the applicant is no longer eligible.

It is not possible to receive more than one COVID-19 payment from the Ministry of Social Development for the same employee at the same time. If claims have been made for the Short-Term Absence Payment or the Leave Support Scheme in respect of an employee, they should be checked to ensure there is no overlap. The WSM can be claimed at the same time as the Resurgence Support Payment.

When and how can claims be made?

The previous three wage subsidies had over 980,000 applications, so many people will be familiar with the process to apply for the subsidy. The WSM opened for applications at 1pm on 4 March, with payments starting from 8 March. Applications close on 21 March 2021.

What other support is available?

Details of other business support available from the Government, including the Resurgence Support Payment are available here.

If you have any questions in relation to the issues discussed above, please consult your usual Deloitte advisor.

The content of this article is accurate as at 5 March 2021, the time of publication. This article does not constitute professional advice. If you wish to understand the potential implications of current events for your business or organisation, please get in touch. Alternatively, our COVID-19 webpages provide information about our services and provide contacts for relevant experts who can help you navigate this quickly evolving situation.

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