Sick Leave and COVID

Pending the onslaught of Omicron and a higher number of sick leave days, this is a reminder to NZ employers of what to do -

  1. Check sick leave balances for all your employees remembering that 10 days will roll in for every permanent full-time & part-time employee at the employee’s anniversary date AFTER 23rd July 2021. Note that some of your employees won’t have reached the anniversary date yet.
  2. Decide if you will let employees take sick leave in advance? If they resign with a negative balance, then you must have a clause in your contract or written agreement to claim back the advanced sick leave paid.
  3. Check your policy on the taking of sick leave (if you have one). It’s useful to have an employee/company handbook. This is a manual that tells employees everything they need to know about their workplace. It contains information about company policies & procedures, rules, codes of practices, and simple explanations of employment law. It should include rules around sick leave.

    An example of a sick leave rule might be -

    “you (the employee), must contact your manager by telephone the night before you’re sick to request sick leave the following day. A text, email or message isn’t acceptable. On return to work, you need to report in to your manager again by telephone.”

Remember, regular employment law still applies to all employment relationships – regardless of the circumstances that you find yourself in. Employers must act in good faith.

Employee entitlements to leave

It can be difficult to navigate the rapidly-changing situation such as with COVID. One of the key challenges is working out employee leave entitlements when the worker cannot go to the workplace or work from home.

If a worker is sick with COVID, or required to self-isolate under MOH guidelines for COVID, the first consideration for an employer should be to look after people, contain COVID and protect public health.

Employers should not require or knowingly allow workers to come to a workplace when they are sick with COVID or required to self-isolate (as a suspected case, a close contact, or on return from overseas) under public health guidelines for COVID. If they do, they are likely to be in breach under the Health and Safety at Work Act.

This information from MBIE provides guidance to employers and employees about these entitlements and is worth checking out. 

The employer and employee should seek first to reach an agreement in good faith on what approach will be taken. In other words, you must have a conversation with your employees.

Financial support (Feb ’22)

1. COVID Short-Term Absence Payment

Businesses, including self-employed people, and their workers need to meet certain criteria to apply for the COVID-19 Short-Term Absence Payment.

Your worker must be waiting for the results of a COVID test and be staying home while waiting for these results. They also must be unable to work from home.

The person who has taken the COVID test can be:

  • your worker
  • someone dependent on your worker (eg. children or a family member with a disability)
  • someone who is a household contact or secondary contact of a person who has been identified as a close contact of a COVID case.

You will be able to make an application up to 8 weeks after the covid test. You can only apply for it once, for each eligible worker, in any 30 days (unless a health official or doctor tells the worker to get another test). If your worker has a positive COVID test, you can apply for the COVID Leave Support Scheme to help pay their wages.

The payment is $600 for a full-time employee & $359 for a part-time employee (<20 hrs per week)

2. COVID Leave Support Scheme

You can get help towards wages and salary costs if your employee is self-isolating and can’t work at home. This scheme also covers wages if your employee’s household includes anyone who is self-isolating or in a high-risk group. Self-employed people can also apply for the Leave Support Scheme.

This means your employees can't come into work because they are in one of the affected groups and have been told to self-isolate, and can't work from home.

The COVID Leave Support Scheme is paid at the rate of:

  • $600 a week for full-time workers who were working > 20 hours a week.
  • $359 a week for part-time workers who were working < 20 hours a week.

To be eligible for a one-week payment of Leave Support Scheme your employee will have been advised to self-isolate for at least 4 consecutive days.

If your employee needs to keep self-isolating for at least 11 days or more and can’t work from home, you can apply for a 2nd-week payment of the Leave Support Scheme.

You can apply for 3rd and subsequent Leave support payments for every further seven days of self-isolation.

Processing Covid payment in your payroll

Pays that include Covid must be processed as follows so they leave (average) rate is calculated correctly. We recommend you create a COVID payment code and then break down the amount into an hourly rate. This means we can prove to MBIE that the subsidy has been applied to employee wages. See the example below.

The employee is entitled to $600 being full time (>20 yrs per week)

For an employee paid fortnightly at an hourly rate of $23
$600 / $23 = 26.09 hours 

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For an employee paid weekly at an hourly rate of $23
$600 / $20 = 30 hours

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Alternatively, if you process a lump sum payment of 1 x $600, then you must use an additional pay code to count the hours (at $0).

Please note that many employers top up to 100% or 80% of the employee’s wage/salary using the usual Ordinary or Salary payment code.

Complaints – Covid payments

Employees can make a complaint about their employer if they feel the employer has misused or not made the Covid payment. Worst case scenario is the employer can be investigated for fraud.
The usual complaint options are listed below. 

If you apply for any Covid subsidy, your company name will be publicly displayed on the MBIE website including the amount you received.

Repayments must be made to MBIE if you have money left over. Alternatively, you can use the spare money to pay other employees affected by Covid.

Lynley Averis

Lynley is an MYOB Certified Consultant & has been involved in training in New Zealand since 1985. She's written various accounting & MYOB workbooks including co-authoring “Bookkeeping for Dummies”. She has consulted on all versions of MYOB Accounting, Retail and Payroll over the past 18 years and has previously worked for MYOB. She currently consults to NZ businesses on all aspects of business systems - her mission for clients is for them to spend as little time as possible doing accounting!