COVID-19 Leave Support Scheme and Short-Term Absence Payment

COVID-19Tax

27 January 2022

As Omicron starts to spread in New Zealand many businesses will likely be impacted by staff who are required to get tested and / or self-isolate and who can’t work from home during this period. The COVID-19 Leave Support Scheme (LSS) and Short-Term Absence Payment (STAP) are available for employers, including self-employed people, who find themselves in this position.

Leave Support Scheme Payment

The LSS is available in weekly increments. For an employer or self-employed person to be eligible for a one-week payment of the LSS one of their employees must have been advised to self-isolate for at least four consecutive calendar days. If the employee needs to keep self-isolating for at least 11 calendar days a second week of the LSS can be applied for. Employers may apply for third and subsequent leave support payments for every further seven days an employee is required to self-isolate.

The LSS is paid at the rate of:

  • $600 per week for full-time workers (those who where working 20 hours or more per week before being required to self-isolate); or

  • $359 per week for part-time workers (those who where working 20 hours or less per week before being required to self-isolate).

Eligibility Criteria

For an employee, or self-employed person, to be eligible for the LSS they must have been advised to self-isolate by a medical practitioner (e.g. a GP or hospital doctor), a medical officer of health (e.g. the Ministry of Health or a public health unit), or by the National Investigation and Tracing Centre. The employee must be unable to work from home and their period of self-isolation must be at least four consecutive days for one of the following reasons:

  • they have COVID-19,

  • they are a close contact of a person who has COVID-19,

  • they are the parent or caregiver of a dependant who has been advised to self-isolate,

  • they are in the category of people most at risk of severe illness from COVID-19,

  • they have household members in the category of people who are most at risk of severe illness from COVID-19.

The LSS is available to eligible employers which includes registered businesses, the self-employed and sole traders, registered charities, non-government organisations, and incorporated societies. Prior to applying for the LSS employers must discuss the matter with the affected employee and obtain their consent.

Employers must use their best endeavours to pay the employee named in the LSS application their normal wages, or at least 80% of their usual pay, during the period they are self-isolating.

Short-Term Absence Payment

The STAP is available to help employers, including self-employed people, to pay their employees who need to stay at home while they wait for a COVID-19 test result and cannot work from home.

The STAP amount is $359 for each eligible employee, regardless of whether they work full-time or part-time. The STAP can only be applied for once, for each eligible employee, in a 30-day period (unless a doctor or heath official instructs the employee to get a second test).

Eligibility Criteria

For an employee, or self-employed person, to be eligible for the STAP they must be awaiting the result of a COVID-19 test, staying at home while doing so, and unable to work from home. The STAP is also available where an organisation’s employee, or a self-employed person, is:

  • the parent or caregiver of a dependant who is staying at home while waiting for their COVID-19 test result, and the dependant needs support to do so safely, or

  • a household member or secondary contact of someone who is a close contact of a person with COVID-19, and the employee has been advised to stay at home while waiting for the close contact’s test results.

The person who has had the COVID-19 test must have had it within eight weeks prior to the time an application is made for the STAP. Eligible employers include registered businesses, the self-employed and sole traders, registered charities, non-government organisations, incorporated societies, and local government organisations.

Prior to applying for the STAP employers must discuss the matter with the affected employee and obtain their consent.

Applying for the LSS and STAP

Employers and self-employed people can apply for the LSS using the online application form found here.

The STAP can also be applied for online using the application form found here.

You may only get one COVID-19 payment for an employee at any one time (i.e. you cannot concurrently get the LSS and the STAP for the same employee).

When applying for either payment we strongly recommend that applicants print off the declaration, carefully read the criteria you are agreeing to, and document how you satisfy each of the criteria in case your application is ever reviewed.

We also recommend that employers bank the LSS and STAP proceeds into a separate bank account and then pay their employees from this bank account. This will provide proof that the funds have been passed on to employees.

If you require assistance assessing your business’ eligibility or applying for the LSS or STAP please contact your Findex adviser.

Author: Greg James

Greg has over 25 years of tax structuring and consulting experience, including 20 years providing advice to New Zealand businesses and 8 years practicing tax in China, Hong Kong and New York. Greg prides himself in being able to communicate difficult tax law and regulations into easy to understand and practical advice, and to continually add value...