Paying your staff the COVID-19 Leave Support Scheme

How to pay the COVID-19 Leave Support Scheme to your employees, and manage GST and tax around this.

The Leave Support Scheme is paid as a lump sum. If you need to support your worker because they are at home and cannot work while they're awaiting the results of a COVID-19 PCR test, you may be able to get the COVID-19 Short-Term Absence Payment.

Paying wages to staff

The employer must pay their employees any amount required by the employment agreement and employment legislation. The Leave Support Scheme requirements do not remove or reduce this obligation.

You must try your hardest to pay the employee named in your application their normal wages, or at least 80% of their usual pay. If that isn't possible, you need to pay at least the Leave Support Scheme payment rate (ie, full-time or part-time).

If you can't pay your employees their usual wages, then any reduction in wages or agreed hours of work requires good faith consultation and written agreement in line with existing employment law.

If your employee's ordinary wages or salary are less than the Leave Support Scheme, you must pay them their ordinary wages or salary. If you are applying for the Leave Support Scheme based on your employee's average hours, there are further obligations that apply. Any difference should be used for the wages of other affected staff - the Leave Support Scheme is designed to keep your employees connected to you.

Visit the Employment NZ website for information about employment law.

GST and tax for businesses

Information about GST, PAYE/PAYG and income tax if you're a business.


You don't have to pay GST on the Leave Support Scheme.


When calculating PAYE/PAYG deductions, do not gross up the Leave Support Scheme component. PAYE/PAYG is deducted from the subsidy (i.e. $585.80 less PAYE/PAYG, etc).

Income tax

For most businesses, the Leave Support Scheme is classified as "excluded income" for income tax purposes. This means that as a business you don't pay income tax on the Leave Support Scheme you receive from us. You don't get an income tax deduction for the wages you pay using the Leave Support Scheme. You still need to make the usual PAYE/PAYG deductions when you pass it onto your employee.


If you're self-employed, you need to pay income tax on the Leave Support Scheme you receive, as it's a payment to replace a loss of earnings.

More information

For further information on tax queries, visit the Inland Revenue website.

For information on your obligations under employment law, contact Employment NZ on 0800 20 90 20 or visit their website. For example, you might have questions about:

  • employer contributions to KiwiSaver
  • holiday pay
  • annual leave.