Neither, the subsidy is paid to employers, by MSD, as a special payment in order to help employers to retain staff, and pay wages and salaries during this difficult time.
You will pay wages and salaries as usual (aiming for no less than 80% of their usual pay). Those payments are subject to all normal deductions, including tax e.g. PAYE, KiwiSaver, Student Loans.
Source (Credit): Thankyou Payroll