Due to the economic impacts of COVID-19, the Government have a wide range of economic responses to support you and your business. Arguably one of the most beneficial is the $130 billion JobKeeper Payment which was passed in parliament yesterday.
This legislation also introduced some temporary amendments to the Fair Work Act to support the practical operation of JobKeeper and to keep Australians employed.
In this article, we explore what is included in JobKeeper.
What is JobKeeper?
JobKeeper is a payment made to eligible businesses and registered charities that are adversely affected by COVID-19, to support them to retain their employees.
Eligible organisations will receive a payment of $1,500 per fortnight for each eligible employee employed as at 1 March 2020. JobKeeper is a wage subsidy that allows you to maintain a connection with and retain employees in your business.
Is my business eligible?
Your business will be eligible for JobKeeper if:
- The business has a turnover of less than $1 billion, and its turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
- The business has a turnover of $1 billion or more, and its turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); or
- The business is a registered charity, and its turnover will be reduced by more than 15% relative to a comparable period a year ago (of at least a month); and
- The business is not subject to the Major Bank Levy.
Self-employed individuals that meet the turnover tests that apply for businesses above are also eligible to apply for JobKeeper payments.
For further information about eligibility and the process to apply, click here.
How does the JobKeeper Payment work?
Following your application and approval process, if you are an eligible employer, you will receive a payment of $1,500 per fortnight per eligible employee (before tax) who was employed with you as at 1 March 2020 and who remains employed. This includes any employees who have been stood down (as they are still your employees).
What if an employee earns more than $1,500 per fortnight?
This payment is made to you to subsidise an employee’s salary. So if an employee earns more than $1,500 per fortnight, you can use the JobKeeper payment to subsidise their wages. You need to withhold income tax as appropriate.
What if an employee earns less than $1,500 per fortnight?
If an employee would otherwise be paid less than $1,500 per fortnight (including if they have been stood down), you must provide the full amount of $1,500 per fortnight to the employee. You need to withhold income tax as appropriate.
Which employees are eligible?
Eligible employees are employees who:
- are currently employed by you (including those stood down or re-hired);
- were employed by you at 1 March 2020;
- are full-time, part-time, or long-term casuals (a casual employed on a regular and systemic basis for longer than 12 months as at 1 March 2020);
- are at least 16 years of age at 1 March 2020;
- are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
- were a resident for Australian tax purposes on 1 March 2020; and
- are not in receipt of a JobKeeper Payment from another employer.
When do the JobKeeper payments start being paid, and how often?
If eligible, you will receive the first payment in the first week of May, backdated to 30 March for each of your eligible employees.
Payments will be made by the ATO monthly in arrears.
How long will the payment continue?
JobKeeper payments will continue until 27 September 2020 (unless a decision is made to extend this).
When do I have to pay the JobKeeper payment to my employees?
We suggest you wait until you have been approved by the ATO before you pay the JobKeeper payments to your employees. Once your application has been approved, you can elect to commence the payments immediately. The rules regarding this are not yet clear, and we realise this raises cash flow concerns, but it appears the intention is to pay the employees and then be reimbursed by the ATO.
Do I have to pay Superannuation on the JobKeeper payments?
Your superannuation obligations will not change in the event you are paying an employee their usual salary (including any amount of this which is subsidised by the JobKeeper subsidy).
If, however, an employee earns less than $1,500 per fortnight (or is not working because they are stood down), and they receive the $1,500 per fortnight JobKeeper payment, it is up to you if you pay super on the JobKeeper 'top up' payment amount.
Temporary Changes to the Fair Work Act
Temporary changes have been made to the Fair Work Act to support the JobKeeper scheme. These amendments only apply to employers who are eligible for JobKeeper payments. If eligible, these changes allow you to lawfully impose changes on employees’ working conditions, for the period you receive the JobKeeper payments.
These changes to the Fair Work Act give you greater flexibility to make the following JobKeeper enabling directions:
- direction to stand down employees - to work none or some of their usual hours;
- direction to alter an employee’s duties of work; and
- direction to changes of location of an employee’s work.
Approved JobKeeper employers can also request an employee to:
- work a different pattern of days or times; and
- take paid leave.
Direction for a JobKeeper Enabling Stand Down
The temporary variation to the Fair Work Act, has broadened stand down provisions for JobKeeper eligible employers.
Eligible employers can now direct an employee to:
- not work on a day or days on which they would usually work;
- work for a lesser period than the employee would have otherwise on a given day or days; and
- work a reduced number of hours, or some or all of their regular pattern of work.
The intention of these changes is to release the cost burden on an employer to engage an employee on their original terms.
Direction to Change Duties of Work
You may direct an employee to perform reasonably different duties that are within their skill and competency (so long as these duties are safe in regard to the nature and spread of COVID-19).
The rate of pay must not be less than the greater of:
- The base rate of pay that would have been applicable to the employee if the direction had not been given;
- the base rate of pay that is applicable to the duties the employee is performing.
Think about what meaningful work you can provide employees. Be creative and innovative and use this time to create new processes, streamline systems, undertake upgrades, review business development plans and other initiatives, so that when the restrictions are lifted, you have great momentum and opportunity for business uplift.
Direction to Change the Location of Work
You can direct employees to work from a different location, including working from home, as long as that location is:
- Suitable for the employee’s duties;
- Not unreasonable in terms of travel time;
- Safe; and
- Within the scope of the business operations.
Request to Change Days (or Time) of Work
As a qualifying employer, you may request an employee – during the period they are receiving the JobKeeper payment – to work on different days or at different times.
The employee, if requested, must consider the request and must not unreasonably refuse such requests.
Request to Take Annual Leave
As a qualifying employer, you may request an employee take annual leave, so long as they retain a balance of 2 weeks annual leave.
An employee must not unreasonably refuse such a request. The leave may be taken at half pay as agreed between the parties.
Consultation and Record Keeping
All directions must be on the basis that they are necessary to continue the employment of the employee/s in your business. Your consultation requirements include:
- Before giving the direction, consult with the employee about the direction, and keep a written record of the consultation; and
- Provide written notice of the intention to give the direction to an employee with at least 3 days notice (unless a lesser period is agreed).
So, what do I need to do now...
- If you haven’t already, register for JobKeeper with the ATO.
- Communicate with your employees that you have registered for JobKeeper (you can’t do anything else until your application has been approved).
- Start preparing for the application process. Assess if turnover has or will be reduced by the required amount, i.e. prepare your BAS, review year to date, quarterly or monthly financials.
- As part of the application process, you need to provide information on all eligible employees.
- Update the ATO each month with information on your eligible employees.
- Ensure that you pay each eligible employee at least the $1,500 per fortnight (before tax).
- Inform all employees that they are receiving the JobKeeper allowance.
- Keep yourself up to date here.
If you are looking for further HR resources to support your business, view our COVID-19 HR Support page, here.