Paying the COVID-19 Wage Subsidy in PaySauce

Why

To help you keep on and continue paying your people

When

Your business can’t run due to lockdowns
or
your team can still work but your business is suffering financially
or
your staff are sick or caring for dependants who are sick.

Rules

• For each full-time employee (at least 20 hours a week), the employer receives a subsidy of $585.80/week.
• For each part-time employee (less than 20 hours per week), the employer receives a subsidy of $350.00/week.
• This is paid as a lump sum from the government to the employer, covering 12 weeks per employee (i.e. 12 x $585.80 = $7,029.60).
• The employee needs to be paid at least 80% of their normal pay.
• If you can’t manage that, the employee must be paid at least the full value of the subsidy.
• The only exception to the above is if the employee ordinarily makes less than the value of the subsidy (for example, a part timer who works very few hours). In these cases, the difference should be used to help cover wages for other affected staff.
• Employers are expected to keep their staff on for the entire 12-week period covered by the subsidy. If you applied for the COVID-19 Wage Subsidy for any employees after 4pm on 27 March 2020, you legally must retain those employees.

How to pay the wage subsidy in PaySauce

During the subsidised period, payments to staff are treated as wages or salary (not allowances or leave payments) and are subject to the usual deductions like PAYE, KiwiSaver, and student loan repayments.

Paying Salaried Employees

Salaried staff are paid the same amount each pay cycle. If the employee receives regular taxable allowances, you’ll need to factor these into their usual salaried payment as well. If you can’t afford to pay an employee’s full salary, MBIE says you must make your best efforts to pay at least 80%.

The easiest way to reduce an employee’s salary to 80% is to set up a ‘Reduction’ - to reduce the salary by 20%.

Calculating a 20% salary decrease in a given period

If an employee receives $70,000 annually, their fortnightly salary is $2,692.31 (annual salary divided by 26 fortnights in a year). 20% of their fortnightly salary is $538.46.

Decreasing a pay by 20%

1. Go to Employees. Select the name of your employee.

2. Select Payments on the right side of the screen.

3. Click on the + button to start a new payment.

4. Select Fixed Amount from the Rule drop-down menu.

5. Enter the details for the 20% Reduction.

6. Enter a negative amount into the payment Amount area, ie - 538.46 (20% of the employee’s normal salary).



7. Go to the Run a Pay area. Your employee’s pay card should look like this:



8. To check, click on the button on the right corner of the employee’s pay card. The pay will be reduced by 20%, leaving them with 80% of their normal salary for this pay period.

9. If your staff receive other taxable allowances, you’ll need to factor those into the calculations too. Employees are entitled to 80% of their usual pay, including regular taxable allowances.

Paying Waged Employees

If you can’t afford to pay 100% of an employee’s normal wage, start by calculating the relevant percentage (at least 80%) of their normal hours per week.

For example, an employee who normally works 40 hours should be paid 32 hours.

If an employee works variable hours and doesn’t have a standard number of hours per week, you can calculate an average using our reports, and use this.

To find average daily hours in PaySauce

1. Go to Reports

2. Select Average Rates (in the Payment History area).

3. Run the report.



4. Look for the heading No. Avg hours per day 4 weeks. This shows the average number of hours worked over the last 4 weeks.



5. Multiply average hours per day by the number of days the employee usually works in a pay period.

6. Now calculate 80% of their average hours per pay period (just multiply the total average hours by 80%). This gives you the total hours to pay.

Apply the average hours in the Run a Pay area

1. Go to Run a Pay.

2. Click the Hours field and enter average hours (which you’ve just reduced to 80% of normal hours).

3. Run your pay as usual, and repeat this process each pay run until the end of the subsidised period.

What happens to leave accrual?

Your employees should still accrue leave as usual - this means they need to accrue based on their standard or average hours, not the adjusted hours for this lockdown period.

Leave Accrual for Salaried Employees

Salaried staff automatically accrue the right amount of leave per week in PaySauce. You can check this for an employee by going to their Settings and then clicking Leave.

Leave Accrual for Waged Employees

Waged employees normally gain leave based on their actual hours worked. While staff aren’t working during lockdown, you’ll need to go to an employee’s Settings and click Leave, set the leave type to Standard Hours and enter the average hours worked. This allows staff to keep accruing annual leave.

Note: this doesn’t apply for casual staff who are paid their 8% holiday pay as they go, so you don’t have to adjust their Leave settings.

For waged staff working varied hours, this is how to set average hours as their standard hours for accrual:

1. Go to Employees

2. Click on your employee’s name

3. Select Settings and go to Leave.

4. In the drop-down menu, make sure the Type is set to Standard Hours.



5. Click into the Standard hours field and enter the employee’s average hours per pay period.

6. Click into the Days paid box and enter the number of days normally worked over a pay period.

7. Click the Save button at the top of the screen.

8. You’ll need to switch these settings back to varied hours once your waged employees are working normally again.

 

 

You can stay up to date with all the latest developments at https://covid19.govt.nz/.