Wages Subsidy explained
Wages Subsidy Help Sheet
The principle behind the wage subsidy is to keep an employment connection between you and your staff by ensuring an income for affected employees, even if the employee is unable to work any hours.
To help you calculate the payment of the subsidy to your employees we have set out below some points of clarification.
Subsidy Payment Rates
- $585.80 (gross) per week for full-time employees, where full-time is 20 hours or more per week.
- $350 (gross) per week for part-time employees, where part-time is less than 20 hours per week.
Average Working Hours
To work out an employee’s average working hours/gross earning: take an average of the last 52 weeks – this is particularly important in the Hospitality industry.
Government’s Expectations
‘You must try your hardest to pay the employee named in your application at least 80% of their usual wages. If that is not possible, you need to pay at least the subsidy rate (i.e. full-time or part-time).
‘If your employee’s usual wages are less than the subsidy – you must pay them the usual amount, with any difference used for wages for other affected staff.’
- For every part-time employee, whose average gross earnings are less than $350 a week, you do not change anything and pay them their average gross earnings wage.
Example: Employee X’s average working hours are 12, her hourly rate is $17.70. Therefore, you pay her $212.40.
- For every part-time employee, whose average gross earnings are more than $350 a week, you need to decide, based on your wages budget, whether to pay them the $350 subsidy or 80% of their average gross earnings wage.
Example: Employee X’s average working hours are 18, his hourly rate is $25.00. You need to decide, whether to pay him $360 as 80% of his average gross earnings or the $350 subsidy.
- For every full-time employee, whose average gross earnings are less than $585 a week, you do not change anything and pay them their average gross earnings wage.
Example: Employee X’s average working hours are 30, her hourly rate i$17.70. Therefore, you pay her $531.
- For every full-time employee, whose average gross earnings are more than $585 a week, you need to decide, based on your wages budget whether to pay them $585 or 80% of their average gross earnings.
Example: Employee X’s average working hours are 40, her hourly rate is $23.00. You need to decide whether to pay her $736 as 80% of her average gross earning or $585.00.
- For every part-time or full-time employee where reducing their wages to 80% means they will receive less than the subsidy amount, they must receive the full subsidy amount at least.
Example: Part Time: Employee X’s average working hours are 18, his hourly rate is $21.00. You pay him $350 (because 80% of his average gross earnings will be $302.40)
Example: Full Time: Employee X’s average working hours are 30, her hourly rate is $20.00. You pay her $585 (because the 80% of her average gross earnings will be $480)
Please realise that we are learning this as we go and there will be occasions when it may not be clear what you should do, please call us to discuss this and any other problems you are having, we can help you to work things out and make the right decisions.