The Australian Government has introduced a $130 billion JobKeeper payment scheme to help employers and employees affected by COVID-19. If you’re an eligible employer this scheme will provide you with a fortnightly payment of $1,500 before tax per eligible employee. Payments will be available from 30 March 2020 and will last until 27 September 2020.
Enrolment is now open via the ATO and you must act NOW if you want to be eligible for the backdating of payments.
Are you eligible?
Eligible businesses will be businesses with a turnover of:-
- less than $1 billion (which includes combined turnover for income tax consolidated groups) and estimate their turnover has fallen or will likely fall by 30% or more relative to a comparable period; or
- $1 billion or more (which includes combined turnover for income tax consolidated groups) and estimate their turnover has fallen or will likely fall by 50% or more relative to a comparable period.
GST turnover is used for the purposes of determining the decline of a businesses’ turnover, with a few exceptions. The turnover can be assessed on a month or quarter basis and will be compared to the previous year.
If a business does not meet the turnover test at the start of the JobKeeper Scheme, the business can start receiving the JobKeeper payment at such a time when they satisfy the turnover test. The business may satisfy the turnover test at any fortnight, up until the fortnight ending on 27 September 2020. In that instance, the JobKeeper payment is not backdated to the commencement of the Scheme.
You will receive payments based on the number of eligible employees retained in employment from 1 March 2020.
You will not be eligible for any payments if your company, partnership, or trust is bankrupt or in liquidation.
Which of your employees are eligible?
As stated above you can only receive payments for employees employed from 1 March 2020. The employee must satisfy the following conditions:-
- The employee is currently employed. This includes those who have been stood down and re-hired.
- The employee is under a full time or part time contract. Casual employees can also be eligible, but they must have been on a regular and systematic basis for a period of 12 months as of 1 March 2020.
- The employee is a permanent employee. For casual employees they will be ineligible if they are a permanent employee of another employer.
- The employee is aged 16 years or older as of 1 March 2020.
- The employee is an Australian citizen or holds a permanent visa as of 1 March 2020.
- The employee was a resident for Australian tax purposes as of 1 March 2020
- The employee is not receiving a JobKeeper payment from another employer.
To claim the JobKeeper payments you will first have to pay the eligible employee $1,500 per fortnight using your payroll system and report to the ATO. The JobKeeper payment will then reimburse employers with payments starting from the first week of May and will continue to be paid monthly in arrears.
What do you have to do now to apply?
The employer must notify the ATO that it intends to participate in the Scheme in respect of each fortnight – this is a reoccurring condition which requires the notice to be given in respect of each fortnight.
The rules provide that the notice in respect of the First and Second Fortnights must be given by the end of the second fortnight i.e. 26 April 2020.
You must also have your employees complete and return the JobKeeper employee nomination notice to you by the end of April if you plan to claim a JobKeeper Payment for April and keep a copy on file.
What are the JobKeeper Enabling directions?
The Scheme includes amendments to the Fair Work Act which allow employers to give JobKeeper Enabling Directions to employees as regards employee hours, duties and the location of work, and to reach agreement with employees as regards working days and the taking of annual leave.
The amendments are only available to eligible employers and are temporary until 27 September 2020.
For the direction to be compliant, the employer must:-
- give the employee written notice of the intention to issue the JobKeeper Enabling Direction;
- consult with the employee about the JobKeeper Enabling Direction; and then,
- at least 3 days later, issue the JobKeeper Enabling Direction in writing.
The employee may agree to a lesser notice period than the 3 days listed above in number 3.
The direction may be about being stood down from work, working reduced hours, performing different duties and working from a different location.
You do not need the employees consent to issue the direction however, it must be based on information to support a reasonable belief that the direction is necessary to continue the employment of one or more employees. This belief must be:
- Based on “information”. This cannot be a simple whim, or a view based on nothing. There needs to be some form of factual material before the employer that their role cannot be performed in the expected manner due to COVID-19 restrictions; and
- The belief must be available on the information the employer has before them and needs to be reasonably available; and
- Necessary to maintain the employment of the employee, for example, but for you doing this (directing different duties or a different work location) the employee would be made redundant. This is a quite high test, and requires more than the JobKeeper direction being desirable or preferred, but “necessary” to avoid this.
Do employees have to attend work?
If for example an eligible employee has been stood down, employers can still elect to receive JobKeeper payments for this employee. To receive the payment however, the employer will have to pay that employee at least $1,500 a fortnight before receiving reimbursement from JobKeeper.
Can the employee be utilised in a different area of the business?
As discussed above the amendments to the Fair Work Act allow employers to give directions to employees that may reduce their hours, stand them down, or direct the employee to perform other duties. If you are going to direct an employee to perform other duties, you must ensure that the duties are safe for the employee to perform and that they are qualified or hold any required licence necessary to perform the work.
Do employers have to pay an employee their usual wages or just $1,500?
If you are an employer, you cannot reduce an employees hourly base pay rate. If your employees are earning more than the JobKeeper amount, the payments will help to subsidise their pay. If you were going to only pay an employee $1,500 you would have to reduce their normal working hours by making a JobKeeper Enabling Direction.
Do employers still have to pay superannuation?
As an employer you will have the same superannuation obligations to all eligible employees. If for example you’re increasing an employee wage up to $1,500 per fortnight from $1,000, you will have the option to pay superannuation on the additional $500. You will not be penalised for only paying the superannuation on the original $1,000 wage that employee normally would receive.
What do you need to do now?
You should now be taking steps to contact your trusted advisors (lawyer and accountant) to ensure that you are eligible and are taking all steps necessary to enrol in the payment. This must be done by 26 April 2020 if you want to be eligible for back dated payments as from that date all payments will be made only from the fortnight you become eligible (without any backdating).