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Norman Waterhouse

JobKeeper Payments (COVID-19)

Due to the rapidly changing impacts of the COVID-19 virus, on 30 March 2020, Prime Minister Scott Morrison stated that the Federal Government would provide $130 billion wage subsidy program, known as the JobKeeper Payment. A business’ eligibility to this wage subsidy provides a further consideration in respect of how a business should manage its employees due to the uncertainty caused by COVID-19.

What is the JobKeeper Payment

The JobKeeper Payment is a temporary scheme available to businesses impacted by COVID-19. The Government has announced that it will provide $1,500 (before tax) per fortnight per employee for up to 6 months.

The key purposes of the JobKeeper Payment can be summarised as follows:

  • Allow employers to cover wages of employees while businesses continue to be impacted by COVID-19;
  • Allow employees to retain their jobs and make it easier to restart once the impacts of COVID-19 (such as self-isolation and social distancing) are over;
  • Allow employees to continue to earn an income even though their hours have been reduced.

An additional benefit is that employees and employer will remain connected during this period.

The Federal Government intends to make $130 billion available across 2019-2020 and 2020-2021 financial years for the purpose of the JobKeeper Payments.

Who is eligible to JobKeeper Payment?

Businesses (including non-for-profits) will be eligible for the subsidy if:

  • their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
  • their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 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 (in other words, not a bank).

If a business believes that they are eligible for JobKeeper Payments then in first instance the business should first register their interest with the Australian Taxation Office, which you can access here.

Employers will need to provide relevant information to demonstrate their down-turn in business.

If employers are determined to be eligible for JobKeeper payments for employees that were on their books on 1 March 2020 and continue to be engaged. This expressly includes employees currently being stood down, this includes employees who have been stood down prior to the announcement of the JobKeeper payment due to COVID-19.

If an employee is already receiving other benefits due to being stood down or having hours reduced, if the employer is eligible for JobKeeper Payments, then the employee must inform Centrelink.

How are JobKeeper Payments made?

The $1,500 (before tax) per fortnight per employee will be paid monthly in arrears by the ATO.

If an employer is determined to be eligible for the JobKeeper Payment, the Government has advised that employees will receive the payment as such:

  • If an employee ordinarily receives $1,500 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(s) with the JobKeeper Payments.
  • If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
  • If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
  • If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight, before tax.

It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.

We understand that depending on the businesses’ operations employers are able to top-up the payment to employees.

We understand that while the subsidy will commence from 30 March 2020, employers should expect that first payments will only be received in the first week of May.

Other considerations

While many businesses continue to be impacted by the effects of COVID-19, this is a further avenue to explore to assist employees during these uncertain times.

Furthermore, if your business is still continuing to operate, albeit on reduced functions, your ability to access JobKeeper Payments will most likely be a relevant consideration as how to manage your employees specifically whether you reduce employees’ hours or have them stood down.

Should you have any further queries, please do not hesitate to contact Lincoln Smith on 8210 1203 or lsmith@normans.com.au or Ganesh Krishnan on 8217 1395 or gkrishnan@normans.com.au.

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