When New Zealand first went into a full lockdown in March 2020, Morrison Kent*, like many other businesses, applied for the Wage Subsidy to help retain our people at full pay.
While New Zealand is still impacted by COVID-19 almost 20 months on, conversations about the Wage Subsidy – the first national subsidy of its kind for employment in New Zealand – continues to be a hot topic.
We at Morrison Kent were recently asked by a New Zealand media organisation why we took the Government’s Wage Subsidy and if we’ll be paying it back.
We care deeply about our people and wanted to do whatever we could to protect them during such an uncertain time.
We met the Government criteria for the Wage Subsidy based on a predicted downturn in revenue, and this subsidy helped alleviate pressures and enabled us to navigate this period of uncertainty. We were able to continue with business as usual, serving our clients while continuing to pay our staff. This was the intention of the Wage Subsidy, and we were grateful to be eligible.
Unfortunately, this was an incredibly challenging time for our business, like many others in New Zealand, and post-lockdown, our financial analysis showed that there was an actual decrease in revenue of 31.6% within a three-month period (February – April 2020).
The Ministry of Social Development’s database outlines what organisations have claimed the Wage Subsidy. You can see there that Morrison Kent claimed $567,938.40 for our 82 employees at the time.
Despite this Government support, and following the period for which the Wage Subsidy was paid, we unfortunately had to make some of our valued team redundant in 2020. Of the seven redundancies, six were retained and employed throughout the entire period to 9 June 2020 when they were then made redundant with effect from the end of this period. One of the seven employees found other employment during the lockdown period.
The impact of lockdown was, and continues to be, tough. Mid-to-late 2020 was an extremely difficult time and we as a business were faced with many challenges and decisions that we had not come up against before – as were many other businesses. It was devastating to lose valued team members, but we are grateful that no other employee has been made redundant since.
In June 2020, when the opportunity to apply for the Wage Subsidy Extension arose, we made the decision not to apply. Like many other businesses, we benefitted from an unexpected upswing in economic activity post-lockdown – especially in residential property development, and in family law matters (to highlight a few areas). The way in which the economy bounced back after the first lockdown was more positive than we and others had expected.
The impact of COVID-19 was, and continues to be, an unknown. It was only just three months ago that New Zealand was living very freely before the Delta variant made its way into the country. During the first lockdown in 2020, there were sound business reasons for the redundancies based on predicted future workloads as a result of the unknown, and we received independent advice on our actions at the time. In each case the redundancy was as a result of decreasing workflow across the team as a whole over prior months, and the likelihood, in our view, that this trend would both continue, and worsen, as a result of the measures taken to combat COVID-19.
We have subsequently supplied evidence, like many businesses, to the satisfaction of MBIE. While the Wage Subsidy model was one of high trust, we have acted with integrity and are confident in our firm’s use of the Wage Subsidy.
We are grateful to the New Zealand Government for the Wage Subsidy which enabled our firm to retain the vast majority of our people during an unpredictable and unprecedented time. The last two years have been a rollercoaster for New Zealand and we at Morrison Kent look forward to the upcoming opportunities and stability of living in a country where COVID-19 is under control.
*Morrison Kent in this article refers to the legal firm operating during the relevant period in Wellington and Rotorua. The firm operating as Morrison Kent in Auckland is a separate legal partnership and operates independently.