Original Published at Ministry of Social Development
In some circumstances, employers who have received the COVID-19 Wage Subsidy (modified) may still go into receivership or liquidation and may have to sell or close their business permanently.
Business keeps operating under receivership or liquidation
If the business can continue operating under receivership or for the duration of the liquidation process, then the employer (or the receiver / liquidator) can continue to use the Wage Subsidy to support the cost of wages for employees named in their application. If the business recovers, or the receiver / liquidator sells the business during the subsidy period and the new owners take on the employees named in the application, then the business can continue to use the Wage Subsidy for these employees.
Example 1 An employer goes into receivership 2 weeks after receiving the COVID-19 Wage Subsidy (modified) for their employees. The receiver takes over the business and manages to sell the business to new owners. The new owners keep all the previous staff and use the remaining Wage Subsidy to continue paying these for the duration of the subsidy period.
Business closes under receivership or liquidation If the business is liquidated (and permanently closed), or the receiver / liquidator sells the business during the subsidy period, and the new owners do not take on the employees named in the subsidy application, then the business will not have met their obligation to retain staff and they must repay any amount of the Wage Subsidy remaining for these employees. Where employees are made redundant, the Wage Subsidy can be used to pay the notice period but cannot be used to meet any redundancy payments owed under contract and cannot be used to support other remaining affected employees.
Example 2 A restaurant owner puts their business into liquidation 6 weeks after receiving the COVID-19 Wage Subsidy (modified) for their employees. The liquidator gives the staff 4 weeks’ notice that the business will be closing permanently and uses the remaining subsidy to pay out the notice period for the employees named in the application. At the end of the notice period, the liquidator returns the remaining subsidy to the Ministry of Social Development.
For more information see: Employer makes employee redundant Employer not entitled but has been paid