Unclear Govt advice could cost businesses thousands

Businesses need immediate clarity that they will not be liable for thousands of dollars in back pay because they followed the Government’s own wage subsidy scheme guidance, National’s Finance spokesperson Paul Goldsmith says.

The Government’s guidance to businesses who receive the wage subsidy states ‘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 per cent of their usual wages. If that isn’t possible, you need to pay at least the subsidy rate.’

“There is growing concern in the business community about an Employment Relations Authority (ERA) determination that a business who followed the Government’s guidance is in fact breaching the Minimum Wage Act, either because paying employees 80 per cent of their normal wage was below the minimum wage, or because they paid employees the subsidy rate, also below the minimum wage.

“If this determination became binding for all businesses then it would create large back pay liabilities for thousands of struggling businesses who simply followed the Government’s own guidance.

“It could even be the final straw for some businesses who have struggled to stay open up to this point.”

The difference between the wage subsidy rate and the minimum wage is $171 per week. A business who took the first two tranches of the wage subsidy scheme and paid their employees the wage subsidy rate could be liable for up to around $3000 in back pay per worker.

“Businesses have already been pushed to the brink because of Covid-19. While the wage subsidy has been helpful, this determination by the ERA will strike fear into businesses who simply followed the Government’s guidance.

“This is creating more uncertainty for businesses who are already struggling due to the Government’s failure to manage our border properly.

“The Government needs to provide businesses with immediate clarity that they will not be liable for back pay when they were simply following Government guidance.”