Tuesday, April 16, 2024

Income insurance scheme proposed

The Government, Business New Zealand and the New Zealand Council of Trade Unions are proposing a new way of better protecting workers and the economy, with a proposal to launch a New Zealand Income Insurance Scheme.

Every year, more than 100,000 New Zealanders are made redundant and laid off, or have to stop working because of a health condition or disability.

Few protections are available for people who lose their job. Some receive redundancy payments, though these are rarely paid if a business fails. Some people are eligible for welfare support, but not all.

In a statement, the Ministry of Business, Innovation and Employment (MBIE) says the proposed scheme will support workers with 80% of their income for up to seven months if they lose their job through no fault of their own. Under the plan, people will have the time and financial security to find a good job that matches their skills, needs and aspirations, or retrain for a new career.

“People with a health condition or disability, which meant they needed to stop working or reduce their hours, will be supported to take time off work to recover fully, or work reduced hours, or retrain if they could not continue to work in their existing job,” the Ministry said.

“Like ACC for accidents, the scheme will be funded by levies on wages and salaries, with both workers and employers contributing.”

The key features of the proposed New Zealand Income Insurance Scheme are:

  • Broad coverage for different working arrangements;
  • Coverage for job losses due to redundancy, layoffs and health conditions and disabilities;
  • A 4-week notice period and 4-week payment, at 80% of salary, from employers;
  • A further 6 months of financial support from the scheme, at 80% of wages or a salary;
  • Option to extend support for up to 12 months for training and rehabilitation;
  • A case management service to support people‚Äôs return to work;
  • Administered by ACC;
  • Funded by levies on wages and salaries, with both workers and employers paying an estimated 1.39% each;
  • Workers eligible after 6 months of levy contributions in the previous 18 months.

The scheme is now open for public comment, with submissions to close on April 26.

To read more about the proposals, complete a short survey or make a submission:

Have your say: A New Zealand Income Insurance Scheme

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