Government support payments and wage subsidy scheme

COVID-19 Wage Subsidy / Annual Leave use

There have been some member queries around the COVID-19 wage subsidy in relation to using annual leave to top up staff income to 80%  We have consulted with Wotton + Kearney on this.  Read their response below.

Cashing up leave 

Employers could agree with employees to ‘top up’ the Wage Subsidy to reach 80% of their ordinary wage, but only to the value of one week’s annual leave — per year of entitlement (if the employee’s contractual entitlement is the four week minimum.  If it was more, employers and employees could agree to cash up the additional entitlement).  

This option to ‘cash up’ annual leave would only have been available to employees who had worked for the employer for more than 12 months.  

Employee agreement to having their annual leave entitlement paid out is critical, and employers should not have pressured or required staff to cash up their leave.  

Any agreement between employers and employees to pay out annual leave entitlements must have been recorded in writing. 

Taking annual leave

Where employees were unable to work — be it because the practice was not operating or operating at reduced capacity, or if employees could not work for any other reason — the value of the Wage Subsidy could be ‘topped up’ by taking accrued annual leave for the balance, up to 80% (so long as the employee agreed).  The ability to take leave in this way would persist until the value of annual leave accrued had been depleted.    

Again any agreement between employers and employees to take annual leave entitlements in this way should have been recorded in writing. 

Employers could direct that employees, who had been employed by them for more than 12 months, take annual leave in this way, on at least 14 days’ notice in writing.  

QR Codes

As per the recent annoucement made by government, under Alert Levels 2 and 3, all businesses and services are required to display the official NZ COVID Tracer QR code posters in a prominent place at or near the main entrances to each of their premises.

For more information on contact traciing, or on how to get a QR code for your business please see below.

The Business Industry Code for dental clinics is: Q853110

Or if you think your business requires a different code, this can be searched for here.

Small business cash flow loan scheme (SBCS)

Applications closed at the end of 2020.

One-off government loans are available for businesses and organisations impacted by COVID-19, including sole traders and the self-employed, to help with cash flow. Applications are now open until the end of 2020 and can be made through myIR. Detailed information can be found on the Inland Revenue website.

The SBCS is open to small to medium businesses with 50 or fewer full-time employee equivalents. This includes sole traders and self-employed businesses.

To get an indication of your eligibility, use the SBCS eligibility tool. For a full list of detailed criteria, visit Inland Revenue.

More information and an overview of this scheme can be found at

Information sourced from

Tax relief

The government has announced that they will be working on business cashflow and tax measures which include:

  • increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021 
  • increasing the small asset depreciation threshold from $500 to $1,000 — and to $5,000 for the 2020/21 tax year 
  • allowing depreciation on commercial and industrial buildings from 2020/2021 
  • removing the hours test from the In-Work Tax Credit (IWTC) from 1 July 2020.

Your accountant will be able to explain these matters to you.

The Inland Revenue website has some useful information on tax relief, with plans for more information including a Q&A to be posted in the coming week.

Medical Assurance Society [MAS]

MAS has put together a significant relief package for its Members, built around a $2 million hardship fund for MAS Members who find themselves in financial difficulty. The package also includes a pass-back of savings that MAS has made on reduced motor vehicle claims to Members with motor vehicle insurance; a series of grants to community initiatives involved in the fight against COVID-19; and a broader series of health and wellbeing initiatives.

To find out more, visit their website.

Workplace guidance and business interruption

Of major concern at present is what are the requirements regarding staff leave and wages and also that of contractors in the event of needing to close down your dental practice.

Wotton Kearney

We have contacted employment lawyer Sean O’Sullivan of Wotton Kearney (if you need further advice the conditions and his contact details can be found in the Member Perks section of the NZDA website) and asked the following questions to which he has responded. We hope the responses are useful.

Q. If my insurer does not meet the cost of wages/salaries under the business discontinuance insurance whose responsibility is it to pay employees?
A. The employer remains responsible under the employment agreements to pay wages/salary. 

Q. Under Alert Level 4, what happens if our practice was open for emergency treatments and a staff member refused to work?
A. Any employee must comply with a lawful request from an employer that is within the terms and conditions of the employment relationship. The only exception to this is if the employee reasonably believes that there are health and safety issues that would make complying with the request unsafe. Consequently, an employer could insist on an employee carrying out work during the Level 4 Lockdown if there were no imminent health and safety considerations which might create a hazard and the work was permitted under the lockdown regulations.

EQ Consultants

EQ Consultants is pleased to partner with NZDA to help members take a proactive people approach and overcome employment-related challenges. We can work closely with NZDA members to understand your requirements before providing tailored Human Resource or Employee advice. For further information on this service please visit the Member Perks section of the NZDA website.

Q. How do I start a conversation with my team around reducing their pay?
 Under normal circumstances you would need to follow the usual procedures of arranging a meeting with each employee and providing the option to invite a support person to attend. However, these are unique circumstances. Employers should take a practical approach to initiating this conversation while remaining fair and reasonable throughout. Any agreement needs to be drafted as a variation of employment and signed by both the employer and the employee.

Q. What are my options if an employee / employees refuse to have their pay reduced?
 Currently there are some companies that cannot afford to pay more than the Government subsidy. If you cannot reach agreement with the employee for a reduction of hours to the Government subsidy level, you will need to go through a formal process.  This includes consulting – outlining the company’s financial position, giving them the opportunity to provide feedback on any proposed business actions and considering their feedback before reaching a decision. 

Q. What information, if any, do I need to provide regarding the company’s financial situation when explaining the need to reduce pay levels?
 An employee is within their rights to ask for further evidence regarding the company’s situation if they are being asked to reduce their pay or hours. It is important you provide information that is not highly confidential or may generate even more employee anxiety. Explain facts such as % reduction in company turnover and the anticipated recovery period for the company to return as it was pre-COVID-19. In some circumstances you may feel comfortable discussing your cashflow situation and how long the business is able to weather the current crisis. You can illustrate a decrease in business by referring to volume of work (appointment numbers) as opposed to cashflow.

Q. How long would I need to keep my staff on reduced pay?
 This will vary from employer to employer and the length of time that it will take your business to return to near normal trading levels. If you experience a slow recovery, then you would be advised to continue to retain staff on reduced income rather than disestablishing their role.

Q. Once we can return to work can I keep my team on reduced pay until my trading revenue and cash position improves?
 It is important that you continue to operate as a fair and reasonable employer and not use this situation to your financial advantage. Consider increasing your staff wages as your business revenues improve. In some cases, it will take months before normality is achieved, so align pay increases with increased revenue and cash collections.

Q. If my staff were working from home but some team members were unable to for reasons outside of their control, do I need to pay them all at the same level if I am negotiating pay reductions with other staff who were able to work during the lockdown period?
Existing members of the team will already be on different pay scales within the business. You can vary the employee contract providing you have agreement from your employee. Each employee’s circumstances will be different. Talk to employees individually to reach an agreement on their rates and hours during this period. Be mindful that an employee’s wage cannot drop below the minimum wage set by the Government so you may need to negotiate a reduction in the number of hours rather than dollars per hour. However, there are nuances to each situation, like multiple people performing the same role. Please call HR consultants EQ Consultants on 03 366 4034 to discuss your specific circumstances and for advice appropriate to your situation.

Q. Can I ask my staff to use annual leave during this period?
Yes, but they will need to be provided with two weeks’ notice.  EQ Consultants recommends that employers allow employees to apply for annual leave, but it could be challenged if you require employees to use their leave during these circumstances. A reminder that you cannot not use the Government subsidy to pay for leave entitlements.

Employers & Manufacturers Association [EMA]

NZDA is seeking employment advice from EMA, including legal advice. Employment New Zealand advice is available here.

Dentists and staff returning from overseas

Information for people returning from overseas, including recently arrived is available on the MoH website.