COVID-19 has wreaked havoc on the Australian economy and in response to this, the Government has rolled out a suite of financial stimulus packages to support employers, employees and those who now find themselves out of work.
On 30 March 2020, the Federal Government launched the JobKeeper payment – a $130 billion initiative which encourages employers to keep Australian employees in jobs.
Today, the Government has passed the Coronavirus Economic Response Package Omnibus (Measures No.2) Bill 2020: Amendments to the Fair Work Act 2009. The amendments to the Fair Work Act (FW Act) is intended to support the practical operation of the JobKeeper scheme in Australian workplaces in the national workplace relations system and keep Australians employed.
This FAQ is intended to not only answer some of the most common questions arising from the JobKeeper scheme but also answer how the FW Act amendments can support your business. The information provided in this FAQ is current as of the date of publication.
How will the JobKeeper payment work?
- Eligible businesses will receive a payment of $1500 per fortnight per eligible employee who was employed with the business as at 1 March 2020 and who remains employed.
- Where an eligible employee’s total pay is less than $1500 per fortnight (before tax), including where the employee has been stood down the employer must provide the employee at least $1500 per fortnight (before tax). Where an employee earns more than $1500 per fortnight, employers can use the payment to subsidise the employee’s wages.
What is the eligibility criteria for employers?
Employers will be eligible to receive the JobKeeper payment if they meet one of the following:
- the employer has a turnover of less than $1 billion and has lost or is expected to lose 30% or more of their turnover compared to a comparable period a year ago (of at least one month) or
- the employer has a turnover of more than $1 billion and has lost or is expected to lose more than 50% of their turnover compared to a comparable period a year ago (of at least one month).
What happens if my business was not in operation a year ago, how do I assess the turnover threshold?
Where a business was not in operation a year earlier, the Tax Commissioner will have the discretion to consider additional information that the business can provide to establish that COVID-19 has adversely affected them.
What happens if my turnover has not decreased by 30% this month but it decreases in the coming months? Can I apply for the JobKeeper payment at a later date?
Yes. The wage subsidy appears to allow an employer to become eligible once the turnover test has been met. However, payment will not be backdated to 30 March 2020.
Additionally, the Commissioner of Taxation is able to give consideration to other factors when determining eligibility. For example, if revenue over a period has not fallen by 30%, but the business has substantially closed down or curtailed its operations, the Commissioner can take this into account to grant eligibility.
What is the eligibility criteria for employees?
An eligible employee entitled to the JobKeeper payment is an employee who:
- was employed by the employer at 1 March 2020;
- is currently still employed (including those who are stood down or have been re-hired);
- is full time, part-time, or a casual employed on a regular and systematic basis for longer than 12 months as of 1 March 2020;
- was aged 16 years or older at 1 March 2020;
- was an Australian citizen, the holder of a permanent visa or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
- was a resident in Australia for tax purposes on 1 March 2020; and
- is not in receipt of the JobKeeper payment from another employer.
It is important to note that an employee who receives a JobKeeper payment will need to inform MyGov or Centrelink if that employee is also claiming the JobSeeker payment.
When will the JobKeeper payment start being paid?
Employers will receive the first payment in the first week of May but will be backdated to 30 March 2020 for eligible employees. Payments can continue until 27 September 2020 if eligible.
How often will the JobKeeper payments be made?
The payments will be made monthly in arrears by the ATO.
What are the eligible payment periods for reimbursement of the JobKeeper payment?
Employers will need to pay their eligible employees in respect of each 14-day period. The first period starts Monday 30 March 2020 and ends Sunday 12 April 2020.
Where an employer pays its staff monthly, the ATO will be able to reallocate payments between periods. However, an employee must receive the equivalent to $1500 per fortnight.
When do JobKeeper payments end?
The final period will start on Monday 14 September 2020 and end Sunday 27 September 2020 (unless a decision is made to extend this).
What happens in instances where employees currently earn under $1500 a fortnight?
These employees will be eligible to receive $1500 per fortnight. Superannuation is payable on the employee’s wage (before the JobKeeper payment), however, it is up to the employer to decide whether they make superannuation payments on the additional wage the employee has earnt as a result of the JobKeeper payment.
For 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.
What happens in instances where employees earn more than $1500 a fortnight?
Employers will be able to use the $1500 JobKeeper payment to offset the employee’s current wage. The employee will continue to earn their normal wage and JobKeeper payment is there to help the employer support their continued employment.
What happens in instances where I have stood my employees down without pay?
Employees who have been stood down are still entitled to the JobKeeper payment provided the business and the employee meets the eligibility criteria.
What happens if I don’t have the money to continue paying my eligible employees until the payments are made?
In many circumstances, employers may be faced the problem of inadequate cash flow to continue to fund employees until the JobKeeper payments are made to you by the Government. We anticipate the legislation will provide more detail on how this will be managed.
Can I direct employees who have been stood down and are receiving JobKeeper payments to perform work for me?
Yes, please refer to JobKeeper enabling stand down direction which is discussed below.
I have an employee on paid Government parental leave. Am I eligible to receive the JobKeeper payment for this employee?
No. Employees who are receiving Government paid Parental Leave are not eligible to receive the JobKeeper payment for the period of time they are receiving such the paid Parental Leave.
What happens if I hired an employee after 1 March 2020?
The employee will not be eligible to receive the JobKeeper payment.
What if I want to re-hire someone who I have previously made redundant and who has received a redundancy package?
It will be up to each individual employer and employee to have a discussion about the repayment of the redundancy pay. An employee who is re-hired is entitled to the JobKeeper payment provided they were employed as at 1 March 2020 and were therefore terminated after this date.
What if my employee who I have stood down has taken up another job? Am I still liable to pay the JobKeeper payment?
Yes. The JobKeeper payment is not income-tested. However, employees can only receive JobKeeper payment from one employer.
What if my employee has multiple employers, who are required to pay the JobKeeper payment?
The primary employer is required to pay the JobKeeper payment. To determine which employer meets the definition of ‘primary employer’, it is usually the employer from whom the employee claims the tax-free threshold from.
I am self-employed. Am I eligible for the JobKeeper payment?
Yes, provided you:
- estimate your turnover to fall below 30% or more;
- had an ABN on or before 12 March 2020 and
– either had an amount included in its assessable income for the 2018-19 year and it was included in your income tax return lodged on or before 12 March 2020 (or such later time as allowed by the Commissioner), or
– made a supply during the period 1 July 2018 to 12 March 2020 and provided this information to the Commissioner on or before 12 March 2020 (or such later time as allowed by the Commissioner);
- were actively engaged in the business;
- are not entitled to another JobKeeper payment;
- were at least 16 years of age at 1 March 2020; and
- were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020.
Amendments to the Fair Work Act 2009 FAQ
1. Why has the FW Act been amended?
The Fair Work has been amended to ensure that the JobKeeper payment scheme can not only operate practically and effectively but also:
- to help sustain the viability of Australian businesses during the COVID-19 pandemic;
- to continue the employment of employees; and
- to help ensure that employees continue to contribute to the business of their employer where it is safe to do so.
2. What are the significant changes to the FW Act that I should be aware of?
2.1 Section 789GDC – JobKeeper enabling stand down
An employer who has qualified to receive the JobKeeper payment will now have the ability to enact a ‘JobKeeper enabling stand down’.
a) How does a JobKeeper enabling stand down work?
An employer will have the ability to direct an employee to:
- not work on a day or days on which the employee would usually work; or
- work for a lesser period than the period which the employee would ordinarily work on a particular day or days’ or
- work a reduced number of hours (compared with the employee’s ordinary hours of work).
b) Do I need to have my employee’s agreement to enact the above?
No, the JobKeeper enabling stand down provision allows you to direct your employees to work any of the above-mentioned variations to their ordinary contracted hours.
c) What are the requirements under section 789GDC for a JobKeeper enabling stand down?
The requirements include:
- the employer is an eligible employer who qualified for the JobKeeper scheme;
- the employee cannot be usefully employed on their normal days or hours because of COVID-19 or government initiatives to slow transmission of COVID-19; and
- the implementation of the stand down direction is safe, having regard to (without limitation) the nature and spread of COVID-19.
d) How does payment work?
If a JobKeeper enabling stand down applies the employer is not required to make payments in respect of the stand down period, that is the period the employee is no longer required to work.
The employer must ensure that the hours an employee is required to work is remunerated at the employee’s base rate which would have been payable had the direction not been given. That is, the employer must not reduce the employee’s ordinary base rate of pay.
e) How does leave accrue during a JobKeeper enabling stand down?
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.
f) When is the JobKeeper enabling stand down unable to apply?
During a period where an employee is taking paid or unpaid leave that is authorised by the employer or during times where they are otherwise authorised to be absent from employment.
g) What is the minimum number of reduced hours I am able to direct employees to work?
There is no limit. The reduced number of hours can be nil if this is what suits the business.
h) What happens if my employee requests to find secondary employment during the JobKeeper enabling stand down period? Do I have to agree to this?
An employee not only has the right to request to engage in reasonable secondary employment during this period, but they also have the right to request for training and development. As an employer, you must consider the request and not unreasonably refuse.
2.2 Section 789GE – 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.
a) What are the requirements to enact section 789GE?
- the employer must ensure that the duties employees are directed to perform are safe having regard to the nature and spread of COVID-19;
- 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.
- the duties must be reasonably within the scope of the business’s operations.
2.3 Section 789GF – 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.
a) What are the requirements of section 789GF?
- the place is suitable for the employee’s duties;
- if the place is not the employee’s home – the place does not require the employee to travel a distance that is unreasonable in all the circumstances (including the COVID-19 pandemic);
- the performance of the employee’s duties at the place is safe having regard to (without limitation) the nature and spread of COVID-19;
- the place is reasonably within the scope of the business operations.
b) What is considered to be an unreasonable distance to make employee’s travel to?
No definition is given. However, the personal circumstances of each employee should be taken into account on a case by case basis.
2.4 Section 789GG – Days of Work etc.
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.
a) Is an employee obliged to accept the request?
When an employee receives a request, the employee must:
- consider the request and
- must not unreasonably refuse the request.
b) What if an employee refuses the request, what recourse do I as an employer have?
An employer may make an application to the Fair Work Commission (FWC) to deal with the dispute. In dealing with the dispute, the FWC will take into account fairness between both parties.
3. What constitutes a ‘JobKeeper enabling direction’?
A ‘JobKeeper enabling direction’ includes a direction made under the following provisions:
- Section 789GDC – JobKeeper enabling stand down;
- Section 789GE – Duties of Work; and
- Section 789GF – Location of Work
4. Before I make a JobKeeper enabling direction, is there anything I should be aware of?
Yes. There are several rules you should consider before making a JobKeeper enabling direction. These include the following:
4.1 Section 789GK – Reasonableness
A JobKeeper enabling direction given by an employer does not apply if the direction is unreasonable in all of the circumstances.
a) What does unreasonable mean?
The FW Act does not provide a definition of what ‘reasonable’ or ‘unreasonable’ is, and whether a direction is reasonable will turn on the circumstances of each case.
4.2 Section 789GL – Continuing Employment
This rule only applies to a JobKeeper enabling direction under section 789GE (duties of work) and section 789GF (location of work).
a) What does this rule mean for me?
This means that you will be unable to make a direction in regards to an employee’s duties of work or location of work unless you are able to show that the direction is necessary in order to continue the employment of the employee or other employees in your business.
4.3 Section 789GM – Consultation
An employer must consult with an employee before a JobKeeper enabling direction is given otherwise the JobKeeper enabling direction will be invalid.
a) What are my obligations in terms of consultation?
- before giving the direction consult with the employee (or a representative of the employee) about the direction. Note: The employer must keep a written record of this consultation.
- give written notice of the employer’s intention to give the direction with at least 3 days’ notice (unless the employee has agreed to a lesser period).
5. Have any changes been made to an employer’s ability to request employees to take annual leave?
Yes. An employer may request an employee to take paid annual leave and when such a request is made, the employee must not unreasonably refuse it. However, the employer must ensure that the request will not result in the employee having an annual leave balance of fewer than two weeks.
6. Can employees take annual leave at half-pay?
Yes, if this is agreed to in writing between both parties.
7. Are there any consequences if an employer misuses the ability to make a JobKeeper enabling direction?
Yes. If an employer knowingly gives a direction which is not authorised by the legislation, they will be subject to civil remedy provisions.
8. Do I still need to provide my employees with the JobKeeper payment?
Yes, if the employee is eligible to receive the JobKeeper payment. Employees who have been stood down or working on reduced hours must still receive $1500 per fortnight. Where an employee works hours in excess of $1500 per fortnight, they are entitled to be paid for all hours worked.
9. When do these amendments to the Fair Work Act cease to be in effect?
The changes are only in place for a temporary period of six months.
During this unprecedented and distressing time for all, the Australian Government’s primary focus is on keeping Australians healthy and protected from COVID-19. However, closely behind this follows the Government’s interest in protecting the Australian economy and providing a stable foundation for all of us to come out the other side together. This is what the JobKeeper payment is intended to do and why the amendments to the Fair Work Act are so important.
If you have any further queries, please don’t hesitate to contact the team at HR Assured.