The new JobKeeper subsidy for employers was passed through parliament late last week, opening up a lifeline to many employers and employees alike.
The proposed eligibility criteria had been made widely available since the package was announced which means that many employers might have already investigated their eligibility in preparedness. However, just how the JobKeeper subsidy for employers will work with Australia’s complex employment legislation, and how it will apply in a practical sense will pose many questions to employers.
In addition to the financial eligibility requirements that employers need to get their heads around, new Fair Work legislation has also been introduced (read about it further along) which will only apply to employers who are receiving the JobKeeper subsidy. We encourage all employers who may receive the JobKeeper subsidy (or who are still uncertain as to whether they will apply), to familiarise themselves with some of the new opportunities for employers which the new temporary Fair Work legislation has brought.
One thing to keep in mind is that there will be a vast array of scenarios that employers will encounter when trying to implement JobKeeper in their businesses. Having reviewed the issues, employment relations specialists such as Industryus HR can already see that the new JobKeeper scheme will create an incredible amount of questions for employers.
We highly recommend for these employment-related questions that employers seek advice from an employment relations firm. For financial questions, employers should see the advice of their accountant.
This article will outline the basic principles of JobKeeper subsidy for employers and will also cover some 20 key questions employers might be asking right now. There is no doubt, COVID-19 has increased the amount of enquiry regarding employment-related matters that Industryus HR is receiving. For ongoing and more personalised assistance, employers may wish to consider one of our HR advice memberships.
What is the JobKeeper Payment?
The JobKeeper payment is a wage subsidy for eligible employers which is passed on to eligible employees, available in fortnightly periods between 30 March 2020 and 27 September 2020 (26 weeks). The payment is $1500 per fortnight per employee, subject to the relevant tax.
The aim of the JobKeeper subsidy is to help employers to keep the employment relationship going with employees during the COVID-19 crisis by continuing to pay them. It also aims to help businesses to recommence and scale up operations following the pandemic without the costly exercise of recruitment and re-engagement.
The scheme is managed by the Commissioner of Taxation.
Businesses (including not-for-profits and the self-employed) are eligible if at the time of applying:
- their business has an annual turnover of less than $1 billion and they estimate their turnover has fallen or will likely fall by 30 per cent or more; or
- their business has an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with a turnover of $1 billion or more) and they estimate their turnover has fallen or will likely fall by 50 per cent or more; and
- their business is not subject to the Major Bank Levy on 1 March, it is not a government body or in liquidation.
Registered Charities will need to show that their annual turnover has fallen by 15%.
Our understanding is that it’s quite an onerous process with qualifying entities required to report monthly turnover information to the Commissioner of Taxation for the duration of the scheme.
Industryus HR encourages employers who have experienced a downturn but think they might not be eligible to consider applying anyway. There are provisions within the legislation which enable the Commissioner to consider alternative information and therefore some exemptions from the standard criteria will be given.
Employees are eligible if at the time of applying:
- they were employed at 1 March 2020;
- they remain employed at the time of the fortnightly payment;
- they are at least 16 years old as at 1 March 2020;
- they are full time, part time or a casual who has been employed on a regular basis for longer than 12 months as at 1 March 2020;
- they are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder as at 1 March 2020;
- they were a resident for Australian tax purposes on 1 March 2020;
- they do not receive JobKeeper payments from another employer;
- they are not receiving Paid Parental leave, Dad and Partner Pay or workers compensation payments for being completely incapacitated and unable to work at the time of the fortnightly payment.
How do JobKeeper subsidy payments work?
Treasury has provided the following scenarios for payment:
- If an employee receives $1500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee
- If an employee would otherwise receive less than $1500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1500 per fortnight before tax.
- If an employee has been stood down, their employer must pay their employee, at a minimum, $1500 per fortnight before tax (this is where a genuine stand down has occurred – not a redundancy or termination).
New Fair Work legislation for JobKeeper employers only
JobKeeper employers can:
- direct employees to not work or to work reduced hours;
- direct employees to work alternate duties;
- direct employees to work from another location; and
- request employees to work on different days, which employees must
consider and not unreasonably refuse.
All three of the directions listed above are subject to proper consultation and notice as per the legislation, and also need to be placed in writing (Industryus Members will have access to specific letter templates for this).
The new Fair Work legislation is an opportunity for many employers to keep workers engaged in productive work that may not be their usual responsibilities, and therefore to keep engaged with the business. Employers should think about what systems and processes could be improved, tasks that need to get done but haven’t been able to, and other ancillary tasks that may support the business in preparation for better times. Health and Safety laws should always be considered.
One of the most welcome measures is the ability for eligible employers to reduce employee hours to a level they are financially comfortable with, which in turn means that pay obligations can be reduced to a level that doesn’t exceed the JobKeeper Payment amount of $1500 per fortnight.
- Do I need to obtain permission from employees to participate in the scheme?
Yes. The employer will need to obtain a ‘nomination notice’ stating that the employee satisfies the eligibility requirements and that they agree to be nominated by the employer. At the time of writing the ATO was still updating their website so no further information was available.
- Do I need to tell my employees that their employer has elected to participate in the JobKeeper scheme?
Yes. Employers must notify all employees in writing that they have elected to participate in the scheme and that eligible employees will all be covered by the scheme.
- I have an employee currently receiving Worker’s compensation payments. Can they receive JobKeeper?
Sometimes. Where the employee is incapacitated and cannot work at all and is receiving worker’s compensation in a JobKeeper fortnight, they are not eligible for the JobKeeper payment. Where the employee is only partly incapacitated and is therefore performing some duties, they are eligible if they meet the other JobKeeper requirements.
- I have an employee currently receiving Paid Parental Leave/Dad and Partner Pay from the government. Can they receive JobKeeper payments?
Where an employee might otherwise qualify for JobKeeper, they cannot receive JobKeeper for any fortnight they are receiving Paid Parental Leave/Dad and Partner Pay. Employer funded paid parental schemes are exempt.
- Can an employee nominate for JobKeeper for two separate employers?
No. They can only nominate for one employer, which should be their primary employer.
- Our employees were stood down after 1 March 2020 due to government COVID-19 restrictions. Can they receive JobKeeper?
Yes, provided the eligibility requirements are met.
- My employees were stood down and are currently on paid or unpaid annual leave. Will they qualify for payments?
Yes, if they are an eligible employee, they will still qualify for the JobKeeper payments.
- Do I need to pay superannuation on the full $1500 per fortnight where my employee ordinarily would earn less than $1500 per fortnight?
No, employers only need to pay superannuation on the work actually done. For example, if your employee works 20 hours per fortnight, superannuation is only paid on 20 hours. However, employers can choose to pay more superannuation if they wish.
- How do I pay my employees JobKeeper?
Generally, payments should be made using your payroll system and reported to the ATO via single touch payroll.
- When will employers receive the first payment?
The ATO will pay employers from the first week of May 2020.
- Some of my eligible employees earn less than $1500 per fortnight. How does payment work in this case?
All eligible employees must be paid a minimum of $1500 per fortnight before tax is withheld. This means that for employees who earn less than this amount, the employer will be required to make a top-up payment to meet the $1500 per fortnight requirement. There may be an initial period where employers will be required to make the top-up payments while not receiving any subsidy.
- I hired an employee after 1 March. Can they receive JobKeeper?
No, they need to have been employed at 1 March 2020.
- I made an employee redundant after 1 March, thinking I wouldn’t be able to afford to pay them. Can I rehire them?
Yes, but you should seek advice from an employment relations expert such as Industryus HR to discuss termination legislation and what to do about any redundancy pay or notice they received.
- I am planning to temporarily close one store but would like my employees to work in an alternative store for the time being. Is this allowed?
If your business is receiving the JobKeeper subsidy, you are able to direct employees to work in alternative locations provided consultation and notice requirements are met and health and safety laws are adhered to.
- My employees receive JobKeeper but I am finding that I don’t have enough meaningful work for them at the moment. Can I temporarily reduce their hours or ask them to do duties which they don’t ordinarily do?
Yes, if your business is receiving the JobKeeper subsidy, you are able to temporarily reduce employee hours of work and change the duties they are performing, provided consultation and notice requirements are met and health and safety laws are adhered to.
- My employee is paid above the minimum wage specified in the applicable modern award. Can I reduce their pay to be aligned to the minimum award wage?
No. The only way an employer can reduce an agreed pay rate/salary is by genuine agreement between the employee and employer.
- If I temporarily reduce the hours of my employees who are on JobKeeper, how does leave accrue?
Leave will continue to accrue on the pre-JobKeeper hours.
- I stood down all of my employees after 1 March as there was no work available. As they will soon be receiving JobKeeper, I would prefer to get some/all back to work so they aren’t receiving payment for doing nothing. Can I do this?
Employers should be very careful not to undermine the original stand down as they could be breaking the law. It may be possible to bring back employees where alternative duties are identified but employers should seek advice from an employment relations expert such as Industryus HR prior to doing so.
- I wish to direct my employees to temporarily work at an alternative location/reduce their hours/stop work. Do I need to notify employees in writing?
Yes, apart from the consultation and notice requirements, employers must place any directions related to JobKeeper legislation in writing. Industryus members will have access to letter templates for these situations.
- Can I stand down some of my employees only?
While employers are receiving JobKeeper, they are able to stand down a portion of the workforce only, provided it is not for a discriminatory reason.
This article does not constitute advice. We highly recommend our readers seek specific advice for their situation. Find out more about accessing ongoing and more personalised advice via our Industryus HR memberships. Or get in touch with an Industryus HR Consultant via the web here or call 07 5655 4047 for a confidential discussion.