Update: JobKeeper Legislation Passes
On 9 April 2020, the Coronavirus Economic Response Package Omnibus (Measures No.2) Act 2020 (the Coronavirus Response Act) came into operation, which in effect allows for much discussed, JobKeeper Payments. The passing of the Coronavirus Response Act is the largest financial package in Australian history. The Coronavirus Response Act makes amendments to the Fair Work Act 2009 (Cth) (the FW Act) and other legislation to support the practical operation of the JobKeeper scheme.
Importantly, the key amendment to the FW Act is the insertion of the Coronavirus Economic Response, which sets out relevant provisions to assist employers who qualify for the JobKeeper Payments. We note that the Coronavirus Response Act should be considered in conjunction with the JobKeeper Payment Rules (the Rules) which provides specific information as to how eligibility for the JobKeeper Payments will be assessed and paid. Access to the Coronavirus Response Act can be accessed here, and the Rules can be accessed here.
We note that due to the fast changing nature of current circumstances, there are still a number of issues that are in the process of being finalised. In respect of the application process, at the time of writing, all an employer can do is register their interest for JobKeeper Payments with the Australian Taxation Office (ATO), and from that stage the ATO will provide updates and information about how and when to claim JobKeeper Payments. To register your interest with the ATO, please click here.
The JobKeeper Payments only apply to national system employers and employees. This does not include local government councils and its employees.
Purpose of the Amendments to FW Act
The amendments to the FW Act are temporary changes due to economic downturn caused by COVID-19. This is to sustain the viability of Australian businesses and to recover quickly after COVID-19 and ensure the operation of work health and safety laws during COVID-19 and government initiatives to slow transmission. Where reasonably possible, it is encouraged that employees remain productively employed or continue their employment.
The amendments to the FW Act provide for increased flexibility around employees’ hours of work, performance of duties and location of work. It also allows for employers and employees to make agreements for increased flexibility around annual leave arrangements and days and times off work.
The amendments also give the Fair Work Commission (the FWC) the authority and power to resolve disputes and issue orders for any dispute that may arise from the application of the Coronavirus Economic Response pursuant to the FW Act. For the avoidance of doubt, a benefit or obligation to an employee for the purposes of a Coronavirus Economic Response constitutes a workplace right in respect of a general protections claim.
What is the JobKeeper Payment?
The JobKeeper Payment is a temporary wage subsidy scheme available to businesses impacted by COVID-19. The Government has announced that it will provide $1,500 (before tax) per fortnight (from fortnight beginning on 30 March 2020 to fortnight ending on 27 September 2020) to eligible employers per eligible employee.
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.
The Federal Government intends to make $130 billion available across 2019-2020 and 2020-2021 financial years for the purpose of the JobKeeper Payments.
Businesses eligible for the 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); or
- the entity is an ACNC registered charity that can demonstrate a shortfall of 15% (noting that the 15% shortfall does not apply to ACNC registered charities that are public or private universities or schools); and
- they are 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 the first instance the business should register their interest with the ATO here.
Employers can apply for the JobKeeper Payment if they reasonably expect that their GST turnover will fall by 30% or more (or 50% for a business with a turnover of $1 billion or more) relative to the GST turnover in a corresponding period a year earlier.
Employers will need to provide relevant information to demonstrate their down-turn in business. For the purposes of determining how much turnover has declined by, it will be based according to the current calculation for GST purposes and is reported on Business Activity Statements. The Rules specify two ways in which a business can satisfy the decline in turnover test (the Basic test and the Alternative test).
The Basic test works by comparing the projected GST turnover for a period with its current GST turnover calculated for a relevant comparison period (i.e. comparing a month or quarter with the corresponding period in 2019).
The Alternative test applies if there is not a relevant comparison period in 2019. For example this may occur for a new business or a business that made a major business acquisition or suffered a significant event (such as bush fire or drought in 2019) and there is not an appropriate relevant comparison period. In such examples, the Basic test would not accurately reflect the downturn in activity the business has suffered.
JobKeeper payments are paid in respect of each eligible employee who was employed at 1 March 2020 and is currently employed by the business (including those who are stood down or re-hired).
Employees eligible to JobKeeper Payments
If an employer is determined to be eligible for JobKeeper payments, the payments may only be made to eligible employees. An eligible employee is an employee who:
- is currently employed by the eligible employer (including stood-down and re-hired employees);
- is a full-time or part-time employee or a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020;
- is a permanent employee of the employer, or if a casual employee, not a permanent employee of any other employer;
- 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; and
- is not in receipt of a JobKeeper Payment from another employer.
For employees 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. Further, if an individual works for more than one entity, the individual may only receive JobKeeper payments from one entity. The individual may be liable to repay any overpayment and general interest on the overpayment.
Employers will need to advise employees whether they have nominated an employee as an eligible employee for the purposes of the JobKeeper Payment.
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.
To be clear, employees must get paid for the work they have completed for the business at their same rate. If an employer is eligible for JobKeeper Payments then the employer can apply the value of the JobKeeper Payment towards the employee’s pay.
Employees must receive the full amount of the JobKeeper payment, even if they would usually receive less per fortnight for usual hours worked.
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.
JobKeeper enabling directions pursuant to the FW Act
A key part of the Coronavirus Response Act was the introduction of the “Jobkeeper enabling directions”. This allows an employer to provide a direction to stand down an employee (including reducing their hours) and vary an employee’s duties and location for a period due to the effects of COVID-19.
Section 789GDC of the FW Act authorises an employer to give a Jobkeeper enabling stand down direction to work fewer days or hours (the reduced hours can be to nil) to an employee who cannot usefully be employed for the employee’s normal days or hours during the Jobkeeper enabling stand down period because of business changes attributable to COVID-19. The employer is still required to comply with the obligation to satisfy the wage condition/minimum payment guarantee/hourly rate of pay guarantee. Hence, the employee still gets paid the Jobkeeper payments.
The Jobkeeper enabling stand down direction does not apply to the employee during a period of paid or unpaid leave or otherwise authorised to be absent from employment. As such, an employee may take paid or unpaid leave during all or part of a period during which the Jobkeeper enabling stand down direction would otherwise apply to the employee.
Importantly, the Jobkeeper enabling directions enabling stand down does not change the unpaid stand down provisions of the FW Act.
Section 789GE of the FW Act authorises an employer to give a Jobkeeper enabling direction to an employee about the nature of the employee’s duties, within their skill and competency, during a relevant period.
Section 789GF of the FW Act authorises the employer to give a Jobkeeper enabling direction to an employee to perform their duties (for a relevant period) at a location that is different from the employee’s normal place of work, including the employee’s home. The place must be 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 circumstances, including COVID-19 circumstances.
A Jobkeeper enabling direction must be in writing. The employer must give the employee at least 3 days written notice of the intention to give a Jobkeeper enabling direction, or lesser period by genuine agreement. The employer must keep a written record of consultation. The regulations may require a notice in prescribed form – noting the regulations have not been released at time of writing.
Importantly, a Jobkeeper enabling direction does not apply if the direction is unreasonable in all of the circumstances. A Jobkeeper enabling direction has no effect unless the employer has information to reasonably believe that the direction is necessary to continue the employment of one or more of the employees.
Agreements regarding Days of work
Section 789GG of the FW Act allows an employer and employee to make an agreement for the employee to perform work on different days or at different times for a relevant period, compared to the employee’s ordinary days or times of work. The employee must consider the request and must not unreasonably refuse the request.
The agreement does not reduce the employee’s number of hours of work compared with the employee’s ordinary hours of work. If an agreement cannot be reached, the FWC could settle a dispute.
Agreement regarding Annual Leave
Further, Section 789GJ of the FW Act allows an employer to give a request to an employee to take paid annual leave. The request must not result in the employee having a paid annual leave balance of less than two weeks. The employee must consider the request and must not unreasonably refuse the request.
The employee is entitled to take twice the annual leave at half the rate of pay. The agreement must be in writing.
While many businesses continue to be impacted by the effects of COVID-19, this is a further avenue worth exploring 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 for how to manage your employees specifically, whether you reduce employees’ hours or have them stood down.
We will keep you updated as further developments come to hand.
Should you have any further queries, please do not hesitate to contact Sathish Dasan on 8210 1253 or firstname.lastname@example.org or Lincoln Smith on 8210 1203 or email@example.com or Ganesh Krishnan on 8217 1395 or firstname.lastname@example.org