COVID-19 Stimulus Payroll Impact: What Businesses in Singapore, New Zealand, and Australia Need to Know
In response to the coronavirus pandemic, governments around the world have enacted COVID-19 stimulus and legislation. Singapore, New Zealand, and Australia have each taken action to combat the economic impact of the crisis.
These actions will affect payroll for companies in those countries. Let’s look at what each country has done and what that means for businesses.
COVID-19 Stimulus in Singapore, New Zealand, and Australia
Singapore has not announced any new legal changes that affect payroll, but companies are allowed to implement Monthly Variable Component (MVC).
Monthly Variable Component (MVC)
MVC is a “standby” component to be used by employers to bring down wage costs in sudden and severe business downturns to survive and save jobs.
Two broad parameters that can be considered as triggering indicators for an MVC cut:
- The company is suffering from extremely poor business performance, and cost-cutting measures are needed;
- the job security of employees is threatened.
The New Zealand government has announced a Wage Subsidy scheme as one of the measures to assist businesses impacted by COVID-19. The scheme was created with effect from 17 March 2020 but then modified with effect 27 March 2020. You can find overview details on the Employment New Zealand website.
Employers that meet the eligibility criteria can apply to receive a subsidy on behalf of named employees. The subsidy is paid as a lump sum (12 weeks) but is a weekly flat rate of:
- $585.80 to a person working 20 hours or more per week
- $350.00 to a person working less than 20 hours per week.
Employers must make their ‘best efforts’ to pay their staff at least 80% of their usual wages. If the usual wages are less than the subsidy amount, the usual wages should be paid, and the surplus subsidy is used by the employer to help fund other wages. If the employer is unable to meet the 80%, then they must pass on the full subsidy as a minimum.
Each organisation will be in a different situation as to whether they are eligible for the subsidy and the amounts that they can pay their staff. As a result, SAP can’t provide an automated solution but instead allows each company to set up their system with a pay code and leave types with which to affect the subsidy.
The Australian Government has announced the JobKeeper Payment. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.
The Government is also providing temporary cash flow support to small and medium businesses and not-for-profit organisations that employ staff during the economic downturn associated with the coronavirus.
The Boosting cash flow for employers measure will be done through two sets of cash flow boosts delivered from 28 April 2020 to support employers to retain employees. Through the Australian Taxation Office (ATO), the Government will provide tax-free cash flow boosts of between $20,000 and $100,000 to eligible businesses, delivered through credits in the activity statement system, when eligible businesses lodge their activity statements.
More COVID-19 Stimulus Legislation Around the World
We’ve also provided information on COVID-19 stimulus legislation in the UK, United States, and Canada. There may be technical considerations in your SAP Payroll system for those countries, and we’ve provided all the relevant information within those links.