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Processing Payroll – Working under Alert Level 3

Updated: Nov 20, 2020

Some businesses were able to return to work last week with the change to Alert Level 3. Moving alert levels does not change your obligations to your employees under employment law and your employment agreement with them. You can use the Wage Subsidy to help you pay your employees.


  • Employees should be paid as per their employment agreement with you, or the temporary variation that has been reached by agreement

  • You must pay your employees for actual hours worked (these hours can be paid using the wage subsidy)

  • If you are receiving the COVID-19 Wage Subsidy, you must try your hardest to pay the employee named in your application at least 80% of their usual wages.

o If that isn't possible, you need to pay at least the subsidy rate (ie, full-time or part-time).

o If your employee's usual wages are less than the subsidy, you must pay them their usual wages.

o Any difference should be used for the wages of other affected staff - the wage subsidy is designed to keep your employees connected to you.

o The Wage Subsidy is to support you to pay 12 weeks of wages for your employees from the date you submitted your applications.

  • When recording the subsidy on a payslip there are no explicit reporting requirements as this is a high-trust system. Employers will need to be able to verify subsidy payments if they are audited.


o Show subsidy on payslip (e.g. for covering some of the hours worked) as a line item, or

o Make a note of the subsidy outlining how much of the subsidy was used to help cover the wage cost

  • By showing the subsidy separately on the payslip you are showing the employee that they are receiving the subsidy and you can also show IRD and MSD that the subsidy has been used correctly

  • Employers should note that their normal legal employment obligations apply. These include obligations for holiday and leave under section 81 of the Holidays Act 2003 and wages and time records under section 130(1) of the Employments Relation Act 2000. Employers need to retain all information necessary to satisfy those requirements (NZPPA)

  • The wage subsidy can be used to pay any combination of actual hours worked, ANZAC day public holiday, annual leave, sick leave, or special leave

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