Answers to questions about the Job Support Scheme
General information
Why is the Job Support Scheme being introduced?
Some employers are facing temporary difficulty in the current economic environment and may be looking at either reducing the overall size of their work force, or the number of paid hours their staff work. The Job Support Scheme will go some way to reducing the number of employees who may lose their jobs through redundancy.
The Job Support Scheme is one of the Government’s initiatives in response to the current economic situation. Work and Income has an important role to play by supporting employers and helping employees keep their jobs.
How will employers decide whether to participate in the Job Support Scheme or not?
Employers will work with employees and unions (if applicable) to negotiate a reduction of up to ten hours work per fortnight. They will need to have an agreement with employees and unions (if applicable) that temporarily varies the existing employment agreements, with the intention of accessing the Job Support Scheme.
Work and Income will then work with employers to ensure that they meet the eligibility criteria for the Job Support Scheme.
Will it be compulsory for employees to accept reduced hours?
No. The Job Support Scheme is voluntary and is based on a mutual agreement between employees and employers.
What role will the unions play? What happens if there’s a non-unionised workforce?
Unions will work with employers where their employees have a collective employment agreement, to negotiate any variation to that agreement. Those employees who do not belong to a union will negotiate a variation to their Employment Agreement direct with their employer. This Job Support Scheme will comply with existing employment law and Employment Agreements will need to be adjusted to take account of new arrangements.
Does the day off have to be at the end of the fortnight? How does this affect companies that have shift employees e.g. a workforce on four days a week working 10 hours a day?
Employers will work with employees and unions (if applicable) to negotiate how the Job Support Scheme will best work for their business.
For example if an employee participating in the Job Support Scheme worked night shifts it may be better to have the first shift of the week off, instead of having the last shift of the working week off. The key aspect of the Job Support Scheme is that an employee's hours must reduce by up to 10 hours per fortnight. But this reduction does not have to occur on any specific day.
Why is the allowance available for only one six month period?
The Job Support Scheme is temporary help to support employers during the current economic downturn and to help employees keep their jobs. It is not designed to be a long term scheme of assistance. Employers can sign up to one six month period over the next 18 months. The Job Support Scheme will end on 31 December 2010.
Can employers split the six month period over the next 18 months?
No. It is only available for one six month period to be taken over a continuous period. A business can choose to negotiate a Job Support Scheme to be in place for a lesser period, however the Job Support Scheme is to only be used once by a business and for a continuous term.
Why can’t employees apply for the assistance directly?
It is more practical to provide the assistance direct to the employer rather than the employee.
Why not just make employees redundant?
It is better to have people working and contributing to the economy than not working. Redundancies mean that people lose valuable job skills and are less able to contribute to their families and communities. Large scale redundancies are a great cost to the economy, as well as to people and communities.
New Zealand can still expect some redundancies; however the Job Support Scheme helps employers to keep their workforce and to quickly respond when economic circumstances improve. Such arrangements also allow people to stay connected to the workforce and keep their skill level up.
Who can take part
How many employees does a business have to employ to be eligible for the Scheme?
The Job Support Scheme is available for employers with 50 or more staff in New Zealand.
Which businesses are eligible?
Every employer with 50 or more staff in New Zealand is eligible, with the exception of:
- central and local government
- incorporated and unincorporated societies and associations
- charitable trusts
- all education institutions
- District Health Boards
- Local Authority Trading Enterprises and State Owned Enterprises, except in individual circumstances where exclusion would lead to an unfair commercial situation (for example if a direct competitor was using the Job Support Scheme).
What about State Owned Enterprises that are owned by shareholders?
State Owned Enterprises are excluded from the Job Support Scheme unless the exclusion would lead to an unfair commercial situation, for example where a direct competitor is using the Job Support Scheme.
What about businesses that are owned by shareholders and the Government is one of the shareholders (for example an airport or a power company)?
If a company is publicly listed as a shareholder they can access the Job Support Scheme, provided they meet the eligibility criteria.
What about education institutions? There are a number that are privately owned would they be in?
All education institutions are excluded.
What about limited liability companies with charitable status, are they eligible? If so why aren’t charitable trusts?
Limited liability companies with charitable status will potentially be eligible for the Job Support Scheme.
Charitable trusts, incorporated and unincorporated societies and associations, are not eligible to access the Job Support Scheme. The scheme is aimed at private sector profit-making companies and is not intended to support the community and voluntary sector. However where one of these organisations has a commercial arm that operates as a separate legal entity then this separate entity would be eligible for the Job Support Scheme (provided it met all the other criteria).
Are part time employees eligible for the allowance?
No, only full-time employees working full time hours are eligible (eg 37.5 hours a week or 75 hours a fortnight).
Payments
What is the maximum number of allowances that can be paid for each business participating in the Job Support Scheme?
There is no maximum amount. Allowances are available for up to 10 employees for each prevented redundancy. This means that if two employees would be made redundant, up to 20 employees can receive the Job Support Scheme allowance.
How much is the allowance?
The rate of the allowances is equal to the adult minimum wage ($12.50 an hour from 1 April 2009, or $12.75 an hour from 1 April 2010) for each employee, for up to five hours a fortnight.
This equals $62.50 (or $63.75 after 31 March 2010) per employee participating in the Job Support Scheme. Employees in the Job Support Scheme will pay income tax and ACC levies on the allowance in the same way as they pay income tax and ACC levies on wages. For more information about tax please visit the Inland Revenue website.
What will it mean for an employee’s take home pay?
The pay of employees who agree to take part in the Job Support Scheme will likely be reduced. The Job Support Scheme will go some way to mitigate the affects of reduced income for employees on reduced hours. This is to keep skilled employees in the workplace, ready to return to normal hours as the economic conditions improve. This will help to keep people in work maintaining their skill levels instead of looking for other work.
What happens when an employee leaves
What happens if an employee participating in the Job Support Scheme opts for a voluntary redundancy or leaves their employment?
This would not affect the employer’s eligibility for the Job Support Scheme but the employer would need to contact Work and Income so we didn’t pay the allowance for the employee that had left.
If an employer makes an employee participating in the Job Support Scheme redundant would that then mean the employer no longer qualifies for the allowance?
Yes, if the business makes any employee participating in the Job Support Scheme redundant then all allowances should be stopped. The employer will have signed an agreement committing them to not making any participating employee redundant while part of the Job Support Scheme.
Training and up-skilling
Will employees be forced to undertake up-skilling or work related training during their time off work?
No. There is no requirement about what employees must do in their spare time. The employer, union and employees can agree to take part in training or other activities if they wish.