Last Friday 27 March, the Government announced further amendments to the Wage Subsidy Scheme, effective from 4pm that day. In particular, a number of modifications were made to the declaration required to be made by anyone applying for the wage subsidy including employers.
These modifications are:
Passing on the wage subsidy to employees
- Businesses accessing the scheme must still undertake best endeavours to pay employees 80% of their pre-Covid income.
- Where that is not possible (in particular, where a business has no activity and workers are not working any hours), employers must pass on at least the full amount of the wage subsidy to each affected worker.
- However, where an employee’s ordinary wages or salary was lawfully below the amount of the subsidy before the impact of COVID-19, employers are to pay the employee’s ordinary wage or salary.
- “Ordinary wages or salary” are defined in the declaration:
- As specified in the employee’s employment agreement as at 26 March 2020; or
- If an employer ended its employment relationship with the employee as a result of COVID-19 and have re-employed that employee on or after 17 March 2020, as specified in the employee’s employment agreement as at the date that the employment relationship ended.
Retention of employees for the period of the subsidy
- Businesses must retain the employees named in their application for the period that the subsidy is received in respect of those employees
Accordingly, employers who applied for the wage subsidy after 4pm on 27 March 2020, are unable to make employees redundant for the period they are in receipt of the wage subsidy.
The purpose of these modifications is to ensure that the wage subsidy is passed on to employees and to keep employees and employers connected during the period of the lockdown. The Government has advised that they will be publishing a list of employers who are in receipt of the subsidy to assist with compliance.
Breach of declaration and repayment of salary
Whilst the wage subsidy scheme is a “high-trust” model, recipients of the wage subsidy may be subject to civil proceedings or prosecution if they provide false or misleading information, fail to meet any of the obligations regarding how the subsidy is to be used or receive any subsidy they were not entitled to receive.
Further, the declaration requires the wage subsidy to be repaid (in whole or in part) if the recipient:
- Fails to meet any of the obligation regarding how the subsidy must be used;
- Was not or stops being eligible for the subsidy or any part of the subsidy;
- Provides false or misleading information in the application; or
- Receives insurance such as business interruption insurance for any costs covered by the subsidy.
Accordingly, we advise employers to ensure that they fully understand and are able to comply with the obligations required by the wage subsidy scheme, particularly those who applied after 4pm on 27 March 2020.