Have questions? Ask us!

Job Retention Schemes and Wage Subsidies for Global Employers Impacted by COVID-19

Global employers are facing a difficult dilemma during the COVID-19 pandemic, as they attempt to retain their workforce while the economy recovers, or risk the loss of talent through unplanned terminations.  Initially, some companies are relying on short term salary reductions to save on payroll costs, but that may not be sufficient if revenues decrease further during the year. 

At that point, one of the many government job retention and wage subsidy programs implemented recently may provide further relief.  These programs are designed to help businesses offset payroll costs and retain valuable employees, by supporting a company financially to cover salaries and retain jobs during the COVID-19 pandemic.  

A business may already be familiar with any government assistance programs in their own country, but the solutions may be unknown if a company employs workers overseas.  This guide will outline some of the government relief schemes around the world to give you an idea of the type of support that may be available.  

Subscribe to get more insights like this.

Job Retention Schemes and Wage Subsidies Around the World (as of May 15, 2020)

There are two primary ways that governments are stepping in to support employers, either through a job retention scheme or direct wage subsidies.  The first rewards a business with grants, low-interest loans, or tax credits for simply maintaining payroll at current levels.  The second offers a direct subsidy or reimbursement to the business for all or some portion of employee wages while the pandemic affects revenue.

The two types of programs are similar in scope and effect (or may be blended together) and will take a different form depending on the country and type of business.  Here are a few examples of current programs being offered and you should be aware that some of the validity dates could be extended if economic weakness persists. You can also consult our COVID-19 Updates Page for information on all the countries Shield GEO operates in.

Hong Kong

Hong Kong is offering a wage subsidy to employers through the Employment Support Scheme (ESS), with the express purpose to avoid redundancy (termination) of employees for business reasons.  The amount of the subsidy is 50% of an employee’s monthly wage, payable for six months, but it can’t be applied for until June 2020.

Also, to qualify, a business must show that no employees were made redundant during the subsidy period, and the entire amount must be used for staff salaries and no other expenses.

Canada

Canada has a similar wage subsidy program that will cover 75% of wages for companies with a decrease in revenue of 15% (March) or 30% (April/May).  The subsidy is available from March 15 to June 6, 2020.

Italy

In Italy, there is an existing wage compensation fund and new supplementary fund that has now been increased to cover 80% of wages for hours not worked by an employee. So, it would apply even if only a portion of work hours are suspended for an employee due to the COVID-19 pandemic.

The fund is only available to companies with more than five employees.  The maximum duration for the subsidy is nine weeks and will apply to employees hired prior to February 23, 2020.

USA

The US is taking a different approach and instead of offering wage subsidies, the US has two programs to support job retention.  The first is a 50% tax credit on wages paid March 13 to December 13, 2020 (with the credit capped at $10,000). 

The other program is the Paycheck Protection Program, which offers low- interest, forgivable loans to employers who retain their current payroll for eight weeks and use at least 75% of the loan proceeds to cover salary costs.  25% may be used for other expenses.

If those criteria are met, the loan does not have to be repaid.

Australia

Australia has begun the JobKeeper scheme which reimburses employers $1500 pre-tax every two weeks for each employee who remains on the payroll during that two-week period.  Even employees who were made redundant prior to the start of the scheme (March 1) can be re-hired and the employer can claim payment reimbursement.

The employee must be paid either the $1500 or their usual wage, whichever is higher, and the reimbursement cannot affect the overall amount of wages being paid.

France

In France, companies that are forced to implement “partial activity” during the pandemic can offer their employees 70% of gross wages (approx. 84% of net wages) as an allowance to be reimbursed by the French government.  The express purpose of this program is to avoid dismissals, and the scheme is available for six months for companies that either reduce work hours below the legal limit or temporarily close their establishments.

Malaysia

Malaysia has a wage subsidy program as well, and the subsidy amount will vary depending on company size and on the number of eligible employees (RM600 to RM1200 per employee).  Subsidies may be offered for a three-month period, anytime between April 1 and December 31, 2020, but the employees must be retained for at least six months total.

For companies with less than 75 employees (which would include most overseas employers), there is no required decline in revenue to avail of the program, but only employees earning RM4000 and below will qualify for the subsidy.

Netherlands

In the Netherlands, companies that can show a minimum of 20% decrease in revenue for three consecutive months, can claim up to 90% compensation for wages under the temporary bridging scheme.  If this subsidy is claimed, employees may not be dismissed for economic reasons during the compensation period, and employees must be paid 100% of their wages regardless of the government compensation percentage.

Singapore

Singapore’s efforts to retain jobs will co-fund wages for employees from 25% to 75% of the first SGD4600 per employee.  The exact percentage will depend on the business sector (except April and May which the government will pay 75% regardless of the sector) and is payable for 9 months.

It should be noted by overseas employers that the 75% payment amount will be limited (after May) to primarily tourism and travel businesses, with the majority of business sectors receiving 25%.

UK

If a UK company cannot retain their current payroll and must furlough employees, the employer can obtain a grant for up to 80% of wages (capped at GBP2500) to continue paying furloughed employees.  The scheme is in place for 4 months starting March 1, 2020.  It is designed to support businesses severely affected by the pandemic, but any business with difficulty can apply.

Summary

The range of these programs illustrates just how serious governments view the potential job losses that could occur during the pandemic.  Despite the differences between the approaches used, the intention is clear to support businesses and their employees.

If you employ one or several workers abroad then your company is also entitled to participate in these programs if you are eligible.  However, some companies in the short term may find it easier to support those overseas employees on their own, without taking the step of furloughs and seeking government support.  

 Need more information about employing in a new country? Learn more about:

 

 

Looking for more information on international employment? Get in touch.

Related Articles

Join 9000+ employers managing overseas employees

Subscribe for tips on hiring and managing international workers!