On 30 March 2020, the Federal government announced implementation of the wage subsidy package to assist business owners and operators to keep their businesses functioning and people employed through the COVID-19 pandemic. Whilst approximately 500,000 businesses signed up in the first week, many did not understand that the package was a wish list at the time of its release. The Bill was yet to be drafted and put to parliament for voting. The Bill was read in Parliament on 8 March and passed . It is now available to be viewed. Links are attached for the two Bills dealing with the JobKeeper programme:
We look at JobKeeper and how you can use it to trade through COVID-19 and save the jobs of your employees, saving time and money later by not having to recruit and train new staff. This is not legal advice, rather this information is provided to assist you to understand how JobKeeper is intended to work.
The Bills are yet to be voted and passed as legislation. However, the opposition have assured the government of their support for the Bill as it stands, despite their concerns about approximately 1.1 million workers being excluded from the programme. The legislation is intended to be retrospective to 30 March and has a restricted lifespan. The intended end date is 28 September 2020 but can be extended if parliament determines that it is necessary to do so.
The JobKeeper Payment has been introduced to assist businesses impacted by the coronavirus, to allow them to continue paying their employees. Eligible employers can claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020. The programme will be managed by the Australian Tax Office (ATO) and payments will be made in accordance with account information held by the ATO.
The payment works on the premise that businesses that can remain open will do so and will pay the $1,500 per fortnight to their employees, even if the employee would normally earn less than $1,500. Payments will be made to the employer monthly in arrears by the ATO. If a business is paid more than they are entitled to receive, they will be required to repay the overpayment amounts. Records substantiating the information relied on to make the claim must be kept and recorded in English or be easily translatable to English.
What can Employers do under JobKeeper?
The Government has included temporary amendments to the Fair Work Act to implement flexibility measures to save jobs. Employers can already stand down employees, but the amendments now allow employers to issue JobKeeper enabling directions, including:
- directions to:
- work reduced hours or days;
- undertake alternate duties; or
- work at an alternate location;
- request employees to take some of their accrued annual leave; and
- agree with employee requests for annual leave to be taken at half pay.
Rights of review
Employers, employees and their representatives may raise disputes with the Fair Work Commission (FWC) about JobKeeper requests and directions between them. The FWC may deal with disputes in whatever way it sees fit, including by arbitration (meaning that it can make decisions that are binding on the parties). Ultimately, the FWC must consider fairness between the parties concerned when dealing with a dispute.
An employer will contravene a civil penalty provision if it purports to give a JobKeeper enabling direction if the direction is not properly authorised under the legislation and the employer knew that was the case when they gave the direction. The maximum penalties for contravention of this provision are up to $63000 per contravention for companies and up to $12600 per contravention for an individual.
To be eligible, an employer will need to demonstrate that:
- their turnover will be reduced (or already has been) by more than:
- 30% for businesses with annual aggregated turnover less than $1 billion;
- 50% for businesses with annual aggregated turnover greater than $1 billion; or
- 15% for not-for-profits and charitable organisations registered with the Australian Charities and Not-for-profits Commission (ACNC), other than certain educational charities;
- they had an employment relationship with eligible employees as at 1 March 2020;
- confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.
The payment will also be paid for staff you have had to stand down because of COVID-19 and examples are set out below.
Turnover for the purposes of a business’ eligibility is the entity’s projected GST turnover for a test period, and this is compared to the entity’s GST turnover for a relevant comparison period.
Eligible employees are employees who:
- are currently employed by the eligible employer (including those stood down or re-hired);
- were employed by the employer as at 1 March 2020
- are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020)
- are at least 16 years of age
- are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder
- are not in receipt of a JobKeeper Payment from another employer.
Employers are required to consult with their employees about directions and decisions related to the employee before information is provided to the ATO. Written records must be kept of directions given to employees relating to the JobKeeper provisions. If your employees receive the JobKeeper Payment, this may affect their eligibility for payments from Centrelink as they must report their JobKeeper Payment as income.
Employers will be paid $1,500 per fortnight for each eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment. If employees continue to work, and would earn more than $1500 each fortnight, the employer must top up the payment to ensure the employee is correctly paid.
Where employers participate in the scheme, their employees will receive this payment as follows:
- If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee(s).
- If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
- If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
- If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight, before tax.
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
The subsidy payments will be backdated to commence from 30 March 2020, with the first payments to be received by employers in the first week of May. Businesses will be able to register their interest in participating in the JobKeeper Payment from 30 March 2020 on the ATO website. The challenge will be for employers to maintain cashflow to carry them through to the first payment date.
How to apply
Employers have been able to register their interest in applying for the JobKeeper Payment via the ATO from 30 March 2020. The link is attached here: https://www.ato.gov.au/general/gen/JobKeeper-payment/
Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO to continue to qualify for the payments.
Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.
If you require advice about how JobKeeper applies specifically to your business and staff, you can call our team on (07) 3160 0000 or email at firstname.lastname@example.org. To assist you, we have provided example scenarios below.
Employer with employees on different wages
Adam owns a real estate business with two employees. The business is still operating at this stage, but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The employees are:
- Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
- Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.
Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
- The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income;
- The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.
Adam can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees. In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.
Employer with employees who have been stood down without pay
Zahrah runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time beauticians, but the government directive that beauty salons can no longer operate has required her to shut the business. As such she has been forced to stand down her three beauticians without pay.
Zahrah’s turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of her three beauticians for up to six months. Zahrah will maintain the connection to her employees and be able to quickly resume her operations.
Zahrah is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Zahrah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.
If Zahrah’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.
Worker with multiple jobs
Michelle currently works two permanent part-time jobs, at an art gallery during weekdays, and at the local café on the weekend. Due to the impact of the Coronavirus, the gallery has closed, and Michelle has been stood down without pay under the Fair Work Act. Michelle continues to work at the café delivering take-away orders.
Michelle can only receive the JobKeeper Payment once, from the employer from whom she nominates as her primary employer. As Michelle only claims the tax-free threshold from her job at the art gallery, this will be treated as her nomination of the art gallery as her primary employer.
The art gallery is eligible for the JobKeeper Payment. The art gallery will pass the JobKeeper Payment on to Michelle, so she will receive $1,500 per fortnight before tax. During the application process, the art gallery will notify the ATO that Michelle receives the payment from them. The art gallery is also required to advise Michelle that she has been nominated to the ATO as an eligible employee to receive the payment.
The café is not eligible to receive the JobKeeper Payment for Michelle. The income that Michelle receives from her job at the café does not change her entitlement to the JobKeeper Payment she receives from the art gallery.
Employee made redundant after 1 March
Miles worked as a permanent part-time personal trainer at a gym for six months and was made redundant on 20 March 2020 in response to the Government directive that gyms close. Miles was not entitled to redundancy pay due to his length of service.
In response to the announcement of the JobKeeper Payment, the gym decides they want to re-engage Miles, so they are well placed to resume their operations once the Coronavirus restrictions are lifted.
After being made redundant, Miles had registered an intent to claim with Services Australia for access to the JobSeeker Payment and the Coronavirus Supplement. Miles is single, with no children and in total he would be eligible to receive $1,124.50 before tax per fortnight.
If Miles chooses to be re-hired by the gym, under the JobKeeper Payment he will receive $1,500 a fortnight before tax while he is stood down. Miles will need to advise Services Australia of his income. He is no longer eligible for the JobSeeker Payment and the Coronavirus Supplement from Services Australia as a result of receiving the JobKeeper Payment.
Employer with 5 employees who all currently get paid more than $1,500 per fortnight
Sara runs a landscaping company and employs five full-time gardeners. Sara is paying her employees $1,700 per fortnight before tax. She expects that her turnover will decline by more than 30 per cent over the coming months and that she will either need to lay staff off or reduce their wages significantly.
As a result of the JobKeeper Payment, Sara will be able to keep employing every gardener, and only needs to pay the $200 wage cost per fortnight before tax per employee above the $1,500 per fortnight (before tax) JobKeeper Payment.
Employee who has been stood down and applied for income support
Phoebe works in administration services of a large retail company as a permanent full-time employee, but she has been stood down under the Fair Work Act without pay. Phoebe had registered an intent to claim with Services Australia for access to the JobSeeker Payment and the Coronavirus Supplement. Phoebe is single, with no children and in total she would be eligible to receive $1,124.50 before tax per fortnight from Services Australia.
Phoebe’s employer has decided to apply for the JobKeeper Payment for all its eligible employees for up to six months. This would entitle Phoebe to $1,500 per fortnight before tax. Phoebe’s employer is required to advise her that she has been nominated as an eligible employee to receive the payment.
If Phoebe elects to receive income support though Services Australia, she will need to report her income from the JobKeeper Payment to Services Australia. Phoebe may no longer be eligible for income support from Services Australia as a result of receiving the JobKeeper Payment.
Disclaimer: Reliance on Content
The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.