COVID-19 Wage Subsidies – What is “best endeavours”?
The Government has put together a COVID-19 Wage Subsidy for employers in all regions. The subsidy is there to support your business if you're impacted by COVID and face laying off staff or reducing their hours because of COVID-19
Who can get it
If you're an employer, contractor, sole trader or self-employed, you may qualify to get the COVID-19 wage subsidy. To qualify:
- your business must be registered and operating in New Zealand
- your employees must be legally working in New Zealand
- the business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19
- your business must have taken active steps to mitigate the impact of COVID-19
- you must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.
How much you can get
The COVID-19 Wage Subsidy will be paid at a flat rate of:
- $585.80 for people working 20 hours or more per week
- $350.00 for people working less than 20 hours per week.
The subsidy is paid as a lump sum and covers 12 weeks per employee.
This subsidy is for wages only. It is to help employers keep your staff employed while you consider changes that may be needed while the disruption continues, and to ensure the future viability of your business.
Businesses can only get this subsidy once.
When employers apply for the wage subsidy they make a declaration that they will, using best endeavours, retain their employees named in the application on at least 80% of their regular income for the period of the subsidy.
Although best endeavours are not absolute obligations an employer should do all they can reasonably do to retain their employees and pay them at least 80%. In doing so, they may be required to incur some expense and act against their own commercial interests. An employer cannot forego these obligations on the basis that the circumstances are commercially undesirable or unprofitable.
Employers would not be expected to take steps which would be certain to result in bankruptcy or continue a course of action which would lead to the ruin of the company or to the utter disregard of the interests of its shareholders. However, employers should exhaust all the reasonable courses of action which could be taken in these circumstances.
If you think you need assistance with any COVID-19 related matters please do not hesitate to contact our Employment Team.