Today, the Government introduced new legislation that not only impacts the JobKeeper payment scheme but to also introduces various amendments to the Fair Work Act (Cth) 2009 (Fair Work Act).
The new legislation supports both employees and employers during the COVID-19 pandemic – it encourages employers to keep Australian employees in jobs and supports businesses by helping them to keep their doors open after the pandemic is over.
In this Fact Sheet, we take a look at the new JobKeeper wage subsidy and what it means for businesses.
What is the JobKeeper payment scheme?
The JobKeeper payment scheme is a $130 billion initiative and will operate as a wage subsidy to be paid by the Australian Tax Office (ATO) directly to employers of $1500 per fortnight for each eligible employee. The payments will operate for six months from 30 March 2020, with the first payments to be made in May and backdated.
Employers will be eligible for the subsidy if:
- the business has a turnover of less than $1 billion and its turnover will be reduced by more than 30 per cent 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 per cent relative to a comparable period a year ago (of at least a month);
- the business is a registered charity and its turnover will be reduced by more than 15 per cent 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 (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper payments.
How will the scheme impact employees?
Employees will be eligible for inclusion in the scheme if they meet the following eligibility criteria:
- are over 16 years of age;
- was employed as at 1 March 2020 (including those stood down or re-hired);
- are employed at the time payments are to be made;
- are a 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 an Australian citizen or 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; and
- are not in receipt of a JobKeeper payment from another employer.
Where an employee receives the JobKeeper payment, this may affect their eligibility for payments from Services Australia as they must report their JobKeeper payment as income.
As an employer, what do I need to do?
As part of the scheme employers are required to:
- register its intent to apply with the ATO;
- assess if turnover has or will reduce by the required amount;
- at a future date (not yet published), apply online via the ATO. The ATO will directly communicate at some future point with those who have registered an intent to apply and outline the complete application process;
- in the application, provide information on all eligible employees to the ATO, and then do so each subsequent month that the payment is to be claimed. The ATO will pre-populate employee details using Single Touch Payroll data;
- ensure that each eligible employee is paid a minimum of $1500 per fortnight (before tax), or top-up pay to that level if income has been reduced below that level and;
- inform all eligible employees that they are receiving the JobKeeper payment.
Employers can, but do not have to, pay superannuation on any additional (top-up) wage paid because of the JobKeeper payment. As an example, where an employee is currently paid $1000 in wages, but will receive $1500 moving forward as a result of the Jobkeeper payment, $1000 is still considered wages (upon which superannuation is payable) and the additional $500 is considered to be the Jobkeeper payment upon which superannuation is voluntary.
Employers must continue to employ staff who were employed as of the 1 March 2020 and can re-engage any employees stood down or retrenched, and then ensure each employee is paid at least $1500 per fortnight.
Employees who are not re-engaged, or where their income drops below the income threshold for the JobSeeker payment, will continue to be eligible for the JobSeeker payment plus the Coronavirus Supplement Payment from Centrelink.
What changes have been made to the Fair Work Act?
Temporary changes have been made to the Fair Work Act which will allow employers who are eligible for JobKeeper payments to lawfully impose certain flexibilities upon employee’s working arrangements.
Such changes include the following:
1. JobKeeper enabling stand down
This variation to the Fair Work Act has essentially reshaped the way qualifying employers are able to utilise the “stand down” provisions as we all currently know it. Section 524 of the FAIR WORK Act outlines in what circumstances an employer may lawfully stand down employees and its reach is very narrow. However, now, qualifying employers are able to enact ‘JobKeeper enabling stand downs which will allow employers to direct their employees to:
i. not work on a day or days on which the employee would usually work; or
ii. work for a lesser period than the period which the employee would ordinarily work on a particular day or days’; or
iii. work a reduced number of hours (compared with the employee’s ordinary hours of work).
Where a direction under the JobKeeper enabling stand down provision has been given to an employee, the employee will accrue leave entitlements as if the direction had not been given. In addition, redundancy pay and payment in lieu of notice of termination will be calculated as if the direction and not been given and the employee was continuing to work their ordinary contracted hours.
Employers must also ensure that the employee’s base rate of pay is not less than the base rate that would have been applicable to the employee if the direction had not been given.
2. Duties of work
A qualifying employer may direct employees to perform any duties that are within the employee’s skill and competency for the relevant period the employer is receiving the JobKeeper payment for such employees. Employers must still ensure that the duties employees are directed to perform are safe having regard to the nature and spread of COVID-19.
Where a direction is made under this provision, the employer must ensure that the employee’s base rate of pay is not less than the greater of the following:
i. the base rate of pay that would have been applicable to the employee if the direction had not been given;
ii. the base rate of pay that is applicable to the duties the employee is performing.
3. Location of work
A qualifying employer may direct employees to perform duties within the period in which they are receiving the JobKeeper payment, at a place that is different from the employee’s normal place of work, including working from home. Employers must still ensure that if they are directing employees to travel to a different location, that the distance the employee is required to travel is not unreasonable.
4. Days of work
A qualifying employer may request an employee during the period in which they are receiving the JobKeeper payment, to work on different days or at different times compared to the employee’s ordinary days or times of work. An employee who receives such a request from their employer must consider the request and must not unreasonably refuse it.
5. Taking paid annual leave
A qualifying employer may request an employee during the period in which they are receiving the JobKeeper payment to take annual leave provided that the employee will have a remaining balance of at least 2 weeks annual leave. An employee who receives such a request from their employer must consider the request and must not unreasonably refuse.
An employer and employee may also agree in writing for an employee to take twice as much paid annual leave at half pay.
6. Consultation
Before an employer gives a JobKeeper enabling direction to an employee, they must do the following:
- provide the employee written notice of the intention to give the direction at least 3 days before the direction is given (unless the employee has agreed to a shorter period); and
- before giving the direction, the employer consulted with the employee about the direction.
A JobKeeper enabling direction ceases to have effect at the end of the final JobKeeper fortnight payment for the JobKeeper scheme.
The changes to the Fair Work Act will significantly impact your ability to stabilise your workforce support the practical operation of the JobKeeper scheme. To discuss your options and how your business utilise the amendments to the FAIR WORK Act to your businesses advantage, please contact the team at HR Assured on +61 2 9083 0075.
For more information about COVID-19, you can also visit HR Assured’s dedicated landing page which supports business owners and HR managers. The content on this page aims to address some sensitive issues many businesses are facing in these uncertain times.
For further information about the JobKeeper wage subsidy, please also refer to the following resources:
The information in this article is correct at the time of publishing.