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Blinded by uncertainty: Covid wage subsidy errors hit business hard

Published March 6, 2022 (last updated on June 14, 2024) | Adam Wyatt - Copywriter and Content Creator

Government guidelines on wage subsidies need to be clearer to help small business owners stay out of trouble, as more are fined for unfairly dismissing staff.

Since the start of the pandemic, employers have been propped up with subsidies to help their business stay afloat, particularly during lockdowns.

Lately however, the steps employers were forced to take during those uncertain times while they received financial support have resulted in crippling penalties.

Recently, the Employment Relations Authority ordered a restaurant pay more than $11,500 to a former employee who it ruled was unfairly dismissed in 2020 during the period a wage subsidy was being paid to her, when her hours were cut, and her employment subsequently terminated.

Another restaurant was also recently ordered to pay $19,000 by the ERA, for a similar case of the unjustifiable dismissal of a casual worker around the same time.

“2020 was a confusing time for all, and a lot of processes and subsidies were quickly put together to help keep the doors of thousands of small businesses open,” said an Peninsula spokesperson.

“Guidelines were hard to follow and in some cases business owners had no choice when making certain decisions. What we’re seeing now though are the legal ramifications from those decisions.

“If better guidelines were introduced or made clearer during this period, we wouldn’t have ended up where we are today where a number of businesses may see their final nail in the coffin after hanging by a thread for so long.”

The Government announced late last month new financial support for businesses impacted by Covid-19, including targeted payments to employers struggling to operate in the red traffic light, as well as an interest-free extension to small business loans, and flexibility on tax payment dates.

Peninsula is imploring the government to continually reach out to businesses that need support during this time of economic recovery, particularly the hospitality sector, or any industry with high  levels of casualisation.

Paying workers correctly can be confusing at the best of times for small businesses without a dedicated HR department. Nevertheless, the dos and don’ts need to be made clearer to businesses receiving wage subsidies, otherwise more cases of unfair dismissal or wage underpayments will arise.

While any new financial support is welcome, it will be a never-ending tightrope businesses are forced to balance on if more safeguards aren’t implemented to help them do right by themselves and their employees.


Media enquiries:

Matthew Bridges

[email protected]

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