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Employees won't need to give back wage subsidy if employer goes into liquidation

If the Government’s wage subsidy is paid to employees, and then a company goes into liquidation, workers won’t have to give the money back, the Ministry of Social Development has confirmed.

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With increasing number of businesses struggling during lockdown, the Ministry of Social Development has given advice about what happens if a business folds after claiming the subsidy. Source: 1 NEWS

More than $10 billion has been paid in the scheme, which aims to keep Kiwis in jobs and businesses afloat.

“At the moment, what we have said to companies is not necessarily those who completely fold but those whose circumstances change, that money is there to pay the wages of their staff and it should get to their staff in the first instance,” Finance Minister Grant Robertson said.

“Those whose circumstances change, that the money is there to pay the wages of their staff, and the staff should get it in the first instance.”

It could be a different matter for their employer, the Ministry of Social Development told 1 NEWS.

It says employers are required to notify any change in circumstances, including liquidation, and any decision to recover payments from the employer would be decided on a case-by-case basis.

“Employers are required to notify us about any change in circumstances, which would include being put into liquidation. Any decision to recover payments from the employer would be decided on a case-by-case basis based on the individual circumstances of the business,” a spokesperson said.

To claim the wage subsidy, a company has to agree to keep staff on for 12 weeks, and on at least 80 per cent of their normal income.

PWC partner and accounting expert John Fisk told 1 NEWS it’s important business directors try their best to forecast cashflow.

“Directors need to satisfy themselves that they’ve got enough runway to survive and whether it’s appropriate to claim the wage subsidy,” Mr Fisk said.

But in a situation where the money has been dished out inappropriately, he says there could be risk of legal action and having claw back type claims.