Workers made redundant could receive up to 80% of their wages for seven months under a
new government proposal. 

Finance minister Grant Robertson has unveiled plans for a new state-backed income insurance scheme, which will work in the same way
as ACC. 

The government is seeking feedback on its scheme, which has been designed by ministers and Business New Zealand, and the Council of Trade Unions.

Employees would be covered if they are laid off, or if a health condition or disability impacts their work hours.

The government scheme is likely to have a significant impact on New Zealand’s income protection market. 

Ministers say the scheme could be run and managed by ACC. Employers and self-employed workers will pay a levy on salaries and income to pay for the programme. Employers are expected to pay a 1.39% levy.

Robertson said the government had learned lessons from the Covid-19 pandemic and the value of the wage subsidy scheme. 

Permanent employers would need to give four weeks' notice and provide four weeks pay at 80 percent after
the job ends, after which the scheme would kick in for up to six months.

"Our proposed scheme provides economic security to individuals directly, and supports them to transition into a good, new job, as opposed to economic support packages which keep people in their existing job even if that role is no longer viable," Robertson said.

MBIE will manage a consultation process on the new scheme, which has drawn criticism from the National Party.

March 2022

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