JobKeeper is a wage subsidy available to businesses that are seriously impacted by COVID-19. The objective is simple – to ensure that as many Australians as possible remain employed during the COVID-19 pandemic. To this end, the Federal Government is providing Australian businesses with $130 billion in financial support in the form of a wage subsidy for an estimated six million workers. 

The JobKeeper payment is AUD$1,500 (gross) per fortnight – and is available for each eligible employee for up to six months (see Understanding the COVID-19 'JobKeeper Payments'). 

An eligible employee must receive at least this amount from their employer - even if their usual wage is less. If the employee is entitled to a higher payment for the work they perform, the employer must pay that and will receive the JobKeeper payment as a subsidy - the employee does not get both.

To be eligible for JobKeeper payments, employers must be able to demonstrate a decline in GST turnover – details of which are described below. 

In keeping with the overall objective of the JobKeeper payments, the government, the opposition and unions have also agreed to some significant amendments to the FW Act – but only in respect of employers and employees who are eligible to receive JobKeeper payments.  As a result, the amendments described below do not apply to employers who are not eligible for JobKeeper payments (e.g. if their turnover has not reduced by the relevant amount) or to ineligible employees (e.g. those who commenced after 1 March 2020).  Of course, employers can continue to rely on the other provisions of the FW Act – or seek to reach agreement with employees.

Is our business an eligible employer for JobKeeper – what is the test?

Only entities that carry on business in Australia and non-profit entities principally based in Australia can qualify for JobKeeper payments.

To be eligible for JobKeeper payments, an employer must also have a reduction in GST turnover compared to a prior period of:

• 50%, if aggregated turnover for the current year is likely to exceed $1billion, or did so last year;
• 15% for some charities; and
• 30% for other eligible employers.

GST turnover is determined broadly in the same manner as it is for GST purposes, but on a monthly basis rather than the 12 month rotating test relevant for GST purposes.   

Aggregate turnover is as defined for income tax purposes and includes not only the annual turnover of the entity, but the aggregated turnover of the entity and its 'connected entity'.

Government bodies (local, state and federal), foreign government entities, major banks, and companies where a liquidator has been appointed are not eligible for the JobKeeper payment.  

How will a decline in turnover be calculated in the context of a group of entities?

The exposure draft of the rules released on 8 April 2020 suggests that each employing entity is to be assessed individually. This appears to be inconsistent with fact sheets previously released by Treasury - which suggested that the rules might treat an income tax consolidated group as one 'entity'. It is not uncommon for large corporate groups to have one entity in the group responsible for employing personnel while other entities in the group own and operate businesses in which these personnel are engaged.  Operating entities in a group may experience a significant reduction in turnover without that reduction impacting the financial position of the employing entity - meaning it could therefore be ineligible to participate in the JobKeeper scheme. 

We expect further guidance will be provided by  the Treasurer or in further regulatory guidance from the ATO (as at 1.00pm on 9 April 2020, this has not occurred). 

How does timing of payments affect eligibility?

The exposure draft of the payment rules also suggest that an employer will only be eligible for a JobKeeper payment in respect of an employee for a fortnight where they have made a payment to the relevant employee in respect of that fortnight. This means that eligible employers should make arrangements to make relevant payments during April 2020 if they wish to receive JobKeeper payments in May 2020.  Employers also have strict record keeping obligations in respect of payments made to employees.

It remains to be seen how the ATO applies the eligibility criteria in practice, but the legislation provides that if an entity is not eligible for some or all of a payment that it receives, then the relevant amount will be a debt due to the ATO.

How has the FW Act changed?

Employers who qualify for JobKeeper payments will be able to:

• Direct employees receiving JobKeeper payments to work reduced hours or days (or not at all), perform different duties, or work at a different location; and/or
• Make an agreement with employees about the days and times the employee will work (without reducing their hours) or take annual leave, including on half pay.

Does there need to be a stoppage of work before I can issue a 'JobKeeper enabling direction' – and how does it work?

No. Unlike stand down under section 524 of the FW Act, there is no requirement that there be a stoppage of work. However, you need to demonstrate a reduction in turnover and otherwise be an eligible employer to receive JobKeeper payments – and be issuing a direction to an eligible employee.

If changes to your business caused by the COVID-19 pandemic (or Government initiatives to slow the pandemic) mean you cannot usefully employ an employee for their normal days and hours, you can direct the employee:

• Not to work on day/s that they usually work;
• To work fewer hours on a day/s they usually work; or
• To work fewer than their ordinary hours of work, or no hours at all.

A direction must be safe and will only be lawful and effective if:

• It is reasonable in all the circumstances; and
• You consulted with the employee (and any representative) after notifying them in writing of your intention to make a direction at least three days before the direction is given (or a lesser period where the employee genuinely agrees).

A direction does not apply during any period an employee is taking paid or unpaid leave, or is otherwise authorised to be absent.

Instead of reducing an employee's hours, can I change their duties or work location? 

Yes. Eligible employers can direct employees who will receive JobKeeper payments to:

• Perform alternative duties - provided they are safe, within the employee’s skill and competence, the employee is licenced or qualified to perform them (if required) and they are within scope of the employer's operations; or
• Work at a different location, including an employee's home, providing it is suitable and reasonable.

A direction will only be lawful and effective if:

• It is necessary to continue the employment of one or more employees (based on a reasonable belief formed by the employer based on information available to it);
• It is reasonable in all the circumstances;  and
• You have consulted with the employee as described above.

What do I have to pay my employees if I have changed their hours or duties?

You must pay an employee working reduced hours for all work performed, including any loadings, allowances or overtime. If this is less than the JobKeeper payment, you must top up the pay to the total JobKeeper payment.

You must pay an employee who is performing different duties the higher of their usual base rate of pay and the rate applicable to the new duties – or the JobKeeper payment if higher.

How do agreements about annual leave work? 

Employers can request an employee to take paid annual leave, and provided the employee's leave balance will not be less than two weeks, an employee cannot unreasonably refuse such a request. 

You can also agree with an employee that they take annual leave at half pay.

Of course, despite these new provisions, it is still open to you to reach agreement with employees to use up all of their leave.   

In addition, the existing annual leave direction rules continue to apply – including the right to direct an award/agreement free employee to take annual leave where the direction is reasonable.

The Jobkeeper payment is $1,500 per fortnight – I pay monthly – can I continue doing that?

You can continue to pay monthly provided that you pay at least the equivalent $1,500 per fortnight.

Do employers receive the JobKeeper payment if an employee is on paid leave?

Generally, yes. If the employee's pay when on leave is less than $1,500 per fortnight, the employer must top up their leave payment to the full JobKeeper amount.

JobKeeper payments are not available for any fortnight that an employee is receiving Government parental leave pay, and certain workers compensation payments.

We are passing the JobKeeper payments on to our employees. Do we have to make superannuation contributions on those payments? 

Superannuation is only payable on Ordinary Time Earnings. This means superannuation does not have to be paid on the JobKeeper payment where an employee is not performing any work, or on the top up amount where they are working reduced hours.

Of course, employers can choose to make superannuation contributions on JobKeeper payments (but cannot deduct superannuation from the payments).

There has been a lot of debate about the eligibility of casual employees for JobKeeper. What is the position?

Only long term casual employees (that is, those who have been employed on a regular and systematic basis) with more than 12 months' service are eligible. Where there has been a transfer of business, service with the previous employer counts.

We employ a number of temporary visa holders.  Are they eligible for JobKeeper?

No – unless they are citizens of New Zealand. The only temporary visa holders who are eligible for JobKeeper are New Zealanders working in Australia on a temporary visa.

For more details about the JobKeeper payments and how they apply to your business, please contact us.