Current as at 5.00am 24 March 2020
On 11.59pm Wednesday 25 March 2020 New Zealand will move into COVID-19 Alert Level 4.
We have listed some things you need to do immediately:
1. Get clarity - Grab some paper or post it notes, one idea per page/note and write down everything that’s in your head
2. Check if you are on the essential services listing, if yes
a. Decide what stock, parts, supplies you will need during the lockdown period and get your team onto getting this ASAP, within 48 hours some of your suppliers will be closed for, likely, a minimum of 4 weeks
b. You are still required to put in place alternative ways of working to keep employees safe, including shift-based working, staggered meal breaks, flexible leave arrangements and physical distancing
3. Set-up anyone who can to work from home:
a. Get someone in your team to list every team member in your business who could work from home and tell them to sort it out. Include a clear instruction that they have permission to buy essential items to enable those people to work from home (but with a limit before they have to check back in with you). If employees have personal laptops, consider getting those set up.
b. Make sure you can work from home, you are the business owner and you are going to need to make business decisions over the next four weeks
4. Have one of your team prepare a business shut-down plan. How are you going to secure your premises for at least four weeks, what services need to be turned off, what supply contracts can be turned off?
5. Get one of your team to ensure you have a list of every single team member, their mobile phone numbers, their personal email addresses and the address they will be at so you can contact them if you need to
6. Have a meeting with your team and explain:
a. Which individual is essential services vs. working from home vs. business closed for four weeks
b. What steps you need them to take from the list you are creating
c. That you are investigating the Government Wage Subsidy and determining if you qualify and if you do, you will be making an application
d. All other questions be very clear, the Government has moved the country to Alert Level 4, you do not have all the answers and you need them to focus on the list above
7. Apply for the Govt Wage Subsidy (application process noted below)
8. Write off bad debts from your accounting system, this is actually quite important. You have until 31 March 2020 to write off any bad debts and get a tax deduction and reduce your 31 March GST bill.
Example - For every $11,500 (incl GST) of sales you will reduce your GST bill by $1,500 and your tax bill by $2,800, that is an immediate $4,300 cash saving
Applying for the Government Wage Subsidy
Current as at 5.00am 24 March 2020 The application process itself is relatively simple but first you need to work out four things:
If you get the subsidy what will be the weekly wages shortfall that you need to cover (refer below)
Can you show that your predicted revenue or actual revenue for any month between January and June will be down 30% on the same month prior year (there are special rules for newer businesses)
Have you taken action to mitigate (reduce) the impact of COVID-19, make a quick list of the actions taken i.e. physical distancing, contacting the bank, applying for the subsidy, working from home practices etc
Do you meet the rest of the criteria (click through links below to check):
a. Fact Sheet
Weekly Wages Shortfall As of 23 March 2020, the weekly wage subsidy is only $585.80 for each person working more than 20 hours per week and $350 for each person working less than 20 hours per week. To qualify you need to make best endeavours to pay people 80% of the normal wage, therefore you will need to top-up the wages to get to that 80%. Will the Govt help cover the weekly wage shortfall – this is not yet clear, this is what Grant Robertson said yesterday: "We will make sure that all New Zealanders continue to receive some form of income through this period." This will include a new package that will be "above and beyond" the Government's already announced wage subsidy scheme. “We’re looking to protect the income of New Zealanders while we’re on alert level 4 – that work is currently underway now” He said he will detail with what that would look like "within the next couple of days".
With that limited information our advice is, if you qualify, claim the subsidy immediately and reassess what to do about the weekly wage shortfall later this week when the Government give further details.
We will get out further thoughts on this as soon as the Government updates everyone.