New Zealand: Is the NZ government proposing to pay employees if they lose their job?

Yes. The Government is proposing to create an Income Insurance Scheme (Scheme) for employees in New Zealand. It is just a proposal at this stage and is not in effect. The proposal states that employees who lose their job through no fault of their own (i.e. their role is made redundant) may be paid 80% of their income for up to 7 months. This would be made up of a 4-week notice period and 4-week payment, at 80% of their salary, from their employer, plus a further 6 months of financial support from the Scheme at 80% of their salary.

Workers would be eligible after having made 6 months of contributions towards the Scheme within the previous 18 months. Fixed term and seasonal work would be covered up until the original end date of employment. Casual workers who could illustrate a reasonable expectation of future income would be treated like permanent workers.

Similar to how ACC works for accidents, the scheme would be funded by levies on wages and salaries. Workers and employers would both contribute, so this would represent an increased cost to businesses. It is estimated that workers and employers would each pay a levy of approximately 1.39%.

If it goes ahead, this scheme will represent a major shift in how an employee is supported when they lose their job in a no-fault situation. It would also see employers funding a 4-week notice period plus a 4-week payment in addition to levies.

Employers in the transport industry can also have their say. Employers may wish to submit their comments to the Ministry of Business, Innovation and Employment. The proposed scheme is open for comment, with submissions closing on 26 April 2022. You can email submissions to incomeinsurance@mbie.govt.nz or complete a short survey using the following website link, which is estimated to take a maximum of 15 minutes: https://www.mbie.govt.nz/have-your-say/income-insurance/ . This website provides a discussion document with further details on the scheme, a summary booklet of the proposals, and a submission template.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.