On Wednesday 8 April, 2020, the Federal Parliament passed legislation giving effect to the new JobKeeper Payment (JKP) to support employment in businesses. The Fair Work Act 2009 (Cth) (FW Act) was also temporarily amended to support the scheme’s operation.
The JKP will be paid to eligible employers and the wage subsidy will be $1,500 per fortnight for each eligible employee.
What EMPLOYERS are eligible?
The Treasury Fact Sheets and FAQs set out eligibility requirements for employers and other information.
The broad rules around employer eligibility are that an employer will be eligible for the JKP on behalf of their employees if:
- their business has a turnover of less than $1 billion and their turnover has fallen, or is likely to fall by 30 per cent or more; or
- their business has a turnover of $1 billion or more (or is part of a consolidated group with turnover of $1 billion or more) and their turnover has fallen, or is likely to fall by 50 per cent or more; and
- the business is not subject to the Major Bank Levy.
An employer can be a self-employed person, a sole trader or structured through a company, partnership or trust. Not-for-profits are also eligible. Some charities will be eligible if their turnover falls by 15 per cent.
Employers are encouraged to check the Treasury and the Australian Tax Office websites regularly, as the Tax Commissioner and the Treasurer may release further information.
What EMPLOYEES are eligible?
For an employee to be eligible, they must be employed by an eligible employer. This is not currently widely appreciated, and employers are strongly encouraged to discuss this requirement with their staff.
Full-time and part-time employees are eligible as are long-term casuals (a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020).
In addition, employees must be at least 16 years of age; have been on the employer’s books on 1 March 2020; and, be retained or continue to be engaged by that employer.
Employees who meet other requirements and who are stood down before or after 1 March 2020 will be eligible. Employees made redundant since 1 March and subsequently re-hired will be eligible.
New employees of the business (i.e. those first employed after 1 March 2020) will not be eligible employees.
This appears to exclude from eligibility employees who are converted from casual to permanent after 1 March 2020 (unless they were employed as a casual on a regular and systematic basis by the business for more than 12 months before 1 March 2020).
Eligible employees include Australian residents, New Zealand citizens in Australia who hold a subclass 444 special category visa, and migrants who are eligible for JobSeeker Payment or Youth Allowance (Other). The employee also must have been a resident for Australian tax purposes on 1 March 2020.
Employees on paid leave from their employer are eligible.
Employees on parental leave from their employer will be eligible. However, employees receiving Parental Leave Pay from Services Australia are not eligible for the JKP.
Employees receiving workers compensation will be eligible for the JKP if they are working, for example on reduced hours, but will generally not be eligible if they are not working.
Employees can only receive the payment from one employer. Self-employed people will be eligible to receive the JKP where they have experienced or expect to experience a 30 per cent decline in turnover relative to a comparable period a year ago (of at least a month).
How much will eligible employers need to pay eligible employees? What about superannuation?
The JKP is a flat $1,500 per fortnight paid, in the first instance, to eligible employers for each of their eligible employees. The relevant payments from the employer to their employees are set out below.
For an eligible employee who continues to work and who, in the absence of the JKP, would be entitled to a wage of at least $1,500 per fortnight;
- the employer would pay the employee the amount they are entitled to receive under the agreement with them;
- the employer would retain the $1,500 JKP as partial reimbursement; and
- superannuation would be payable on the wage.
For an eligible employee who continues to work and who, in the absence of the JKP, would be entitled to a wage of less than $1,500 per fortnight;
- the employer would pay the employee the amount they are entitled to receive under the agreement between them PLUS the difference between this amount and $1,500 per fortnight (both amounts are pre-tax);
- the employer will be reimbursed for the wage they pay the employee and the rest of the $1,500 is paid to the employee (the top-up component); and
- superannuation is only paid on the wage component (not the top-up component) unless the employer wants to pay more super than required.
- Issue directions to employees about their work duties, work location and the number of hours of work; and
- Make agreements with employees about the days and times of work, and annual leave arrangements. An employee must consider and must not unreasonably refuse the employer’s request for agreement to proposed arrangements.
If the employee is stood down without pay and was on the eligible employer’s books on 1 March 2020, the employer would pay the stood down worker the full $1,500 per fortnight. No super is payable on the JKP paid to stood down employees.
How will the JKP scheme work for employers?
The JKP will be administered through the Australian Tax Office (ATO). Employers must elect to participate in the scheme if they want to be considered as eligible. Employers are strongly encouraged to register their interest at www.ato.gov.au. The ATO will contact each business that registers an interest.
Employers need to make an application to the ATO and provide supporting information demonstrating a downturn in their business. In addition, employers must report the number of eligible employees employed by the business on a monthly basis.
Employers will receive a payment from the ATO equal to $1,500 per fortnight per eligible employee. The first payment to employers will be made from the first week in May. The ATO payments will reimburse amounts paid by eligible employers to eligible employees (the Government’s initial announcement referred to forthcoming increases in cash flow support for businesses and the Australian Bankers Association has announced that Australia’s banks will make available additional short-term credit in relation to payments to employees that will be reimbursed).
The JKP commences in respect of wages paid from 30 March and will continue for six months.
Further details about the timing of JKP payments to employers and employees are available in the Treasury’s JobKeeper Payment – Frequently Asked Questions document.
Employers are advised not to pay the JKP until the ATO confirms that they are eligible. Once they are confirmed as eligible, employees should adjust their payments to eligible employees to reflect their eligibility. Employers will be paid in arrears by the ATO.
Amendments to the Fair Work Act
Legislation has been passed by Parliament temporarily amending the FW Act to support the practical operation of the Australian Government’s JobKeeper scheme in Australian workplaces.
Ai Group was involved in the development of the legislation and we worked hard to achieve a successful outcome.
The amendments to the FW Act allow employers who are eligible to access the JobKeeper Scheme to:
Various safeguards apply.
The Fair Work Commission (FWC) has been given the power to resolve disputes about the rights and entitlements of employers and employees under the new provisions, including by arbitration.
Do you require further advice?
Treasury’s Fact Sheets are being regularly updated and can be accessed here.
Advice or assistance
Our advisers are ready to answer your questions. For advice on this topic, or any other workplace relations matter, Employment Plus clients who have placed two or more candidates have free access to the Ai Group Workplace Advice Line.
The Advice Line is currently experiencing a very high volume of calls at the present time. Thank you for your patience and understanding.
Please call 1300 862 217. We are open Monday to Friday from 8:30am-5:15pm AEST, except for public holidays.
The information contained in this article is correct at the time of publishing (9 April 2020) and does not constitute legal advice. Government regulations are subject to change, so it is recommended that employers check with the relevant government sources for up-to-date information.