The Australian government has announced a $130 billion JobKeeper payment package to support affected businesses and their employees through the COVID-19 pandemic. The economic impact of the pandemic has been felt widely across Australia with hundreds of thousands of individuals being made redundant, stood down or experiencing reduced work. 

It’s expected that around 6 million Australians will be eligible for this payment. Eligible employers will receive a $1,500 payment per fortnight, per eligible employee for the next 6 months to assist with the economic impact caused by COVID-19. This package has been announced to lessen the financial pressures on businesses and their employees, and ultimately allow them to easily start over when we’re on the other side of this crisis. 

Since the announcement, we know there has been confusion around who is and isn’t eligible, how you can apply, and when it comes into effect. We’ve pulled together some common questions and answers to help you navigate the JobKeeper package and what it means for your business and team. 

To register your interest in receiving the JobKeeper payment, follow this link to the ATO. 

The legislation has passed through Parliament however what is yet to be fully defined is the concept of what it means for an employer to ‘qualify for the JobKeeper scheme’.

Details of eligibility for particular payments as well as the amount of payments and the time when they are to be paid are to be set out in rules to be released by the Treasurer, which we expect to see next week. We will update you as soon as there is clarification on these matters from the Treasurer.

For now, we recommend a pause on any additional payments to employees until we have further clarity next week. 

Disclaimer: 

The information provided is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation, we recommend you contact Alluvia Financial for further advice. 

Overview: summary of key terms

In simple terms, the JobKeeper allowance is paid to employers to help them pay employees at least $1,500 per fortnight. Once you have established eligibility for the employer’s business and identified eligible employees (see below), the key terms are:

• Employer will receive $1,500 per fortnight per eligible employee.

• Employer must pay each individual employee for which they’re claiming the JobKeeper allowance AT LEAST $1,500 per fortnight (before tax) during the period the employer is claiming the JobKeeper allowance, even if the employee was earning less than that amount (eg casuals & part-timers). 

• Employees earning more than $1,500 will continue to receive their normal wage or salary entitlement. If the employer is paying more than $1,500 per fortnight, the JobKeeper payments are simply a part-subsidy of their normal wage bill. 

• PAYG withholding taxes continue to apply (rates applicable to Gross Amount paid, even if it’s the minimum $1,500)

• Once a business has determined eligibility, JobKeeper applies from the 30th of March 2020

How is a business eligible for the JobKeeper Support?

Businesses (including not-for-profits) with less than $1B in turnover who have lost or expect to lose at least 30% of turnover (of at least one month), and businesses (including not-for-profits) with more than $1B in turnover who have lost or expect to lose at least 50% of turnover are eligible to apply.  The employer completes an application from 30 March 2020 with the ATO online which is subject to assessment. 

For charities registered with the Australian Charities and Not-For-Profit Commission (ACNC), they will be eligible for the subsidy if they estimate their turnover has or will likely fall by 15 per cent or more relative to a comparable period.

The Tax Commissioner will also consider other scenarios. For an updated fact sheet, you can view the Treasury website here. 

JobKeeper Direction

Any employer who qualifies for the JobKeeper Payment subsidy will also be able to give a JobKeeper Direction to an employee which have the effect of varying the employee’s terms of employment on a unilateral basis.

This can include a broad discretion in relation to hours of work, timing of work, location of work, the taking of annual leave, and the allocation of work tasks.

Importantly, JobKeeper directions will prevail over any existing employment terms under a contract, award, or enterprise agreement.

What is the benefit for employers?

Employers will receive $1,500 gross per eligible employee per fortnight. Reimbursements from the ATO will only commence from the first week of May 2020. 

What is an eligible employee?

The employer must have been in an employment relationship with eligible employees as at 1 March 2020. This includes full-time, part-time or long-term casual employees.  Each eligible employee must continue to be engaged by the employer in order to receive JobKeeper payments.  The ATO will be using Single Touch Payroll to assess employee eligibility.

How much does an eligible employee get paid?

Employees earning more than $1,500 per fortnight should continue to receive their usual salary even if an employer is claiming the JobKeeper allowance. If an employee earns less than $1,500, the employer must pay them at least $1,500 per fortnight (before tax) if they are claiming the JobKeeper allowance for that employee. 

Can I reduce an Employee’s salary to $1,500 per fortnight?

Employment laws and regulations relating to changes of employment contracts still apply. There are options available to employers to reduce employee hours and salaries in certain circumstances however this is a complex area that can give rise to employer liabilities if not handled correctly. Please contact us if you would like to clarify anything here.

Is the payment to employees taxable?

Yes, however the tax treatment of payments needs further clarification.

Are employers required to pay superannuation on the $1,500 per fortnight?

Superannuation is not required to be paid for the amount supplemented by the Government if the employee is not working. If the JobKeeper Payment is supplementing a salary or wages for work performed, super is payable on the salary or wages – as it would normally be.

When will employers receive these payments?

The government will start reimbursing employers from the first week of May 2020 backdating eligible payments to the first full eligible pay period of March 2020 and paying the employer on a monthly basis for up to six months or until the business doesn’t qualify.

When will employees receive these payments?

Employers are not required to pay employees the JobKeeper payments until they receive payments as an employer and shouldn’t make any payments until their eligibility is confirmed. When eligibility is confirmed for the employer, they can elect to commence payments to eligible employees immediately.

Are employees eligible for JobKeeper payments if they commence in a business after 1 March?

No, these employees would need to apply for benefits separately through Centrelink. 

 Are employees required to do anything to receive the JobKeeper payments?

No, once the employer is deemed eligible, payments will be made in accordance with the benefit. Employees are only entitled to receive JobKeeper payments from one employer and they are not entitled to collect Job Seeker payments from Centrelink at the same time. Therefore employees should notify an employer if they are already receiving JobKeeper payments from another employer and must not collect Job Seeker payments once they are notified by an employer they are receiving a JobKeeper payment. 

Will employees who receive this benefit still be eligible for the JobSeeker and/or Coronavirus Supplement?

No. For employees that have received either of these payments and then become eligible for the JobKeeper payment, they will need to advise Centrelink.

Please note: If an employee double-dips on JobSeeker and JobKeeper, they may be required to it pay back.

What if I have employees who have been stood down without pay?

You have the option to register and process the JobKeeper Payment to employees stood down from work without pay. However, eligible employers will not receive the $1,500 gross per eligible employee per fortnight until the first week of May 2020. This can include backdated payments to cover the period commencing from the 30th March 2020.

Employers are required to make payments to eligible stood down employees throughout April (i.e. before the employer has in fact received any payment from the Government), however it is also possible to backpay the employees from when the scheme commenced on the 30th March 2020.

It has been indicated that eligible employers will continue to report monthly to the ATO in order to receive the subsidy for the previous month.

Am I obliged to register if I am an eligible employer?

No. It may not be practicable for your business to commit to the above obligations.

If an eligible employee is on any form of paid leave do I still receive the full subsidy for the employee?

Yes.

Can I re-hire an eligible employee who was employed at the 1st March 2020 that I terminated since?

Yes. The scheme is designed to encourage employers to re-hire employees that may have been terminated, such as those made redundant.

If I have eligible employees earning less than $1,500 a fortnight, before tax, should I be topping the employee’s pay up to $1,500 a fortnight, before tax under this arrangement?

Yes. However, the top-up amount will not be subject to superannuation.

If I have eligible employees earning less than $1,500 per fortnight, before tax, can I increase their hours to match the minimum payment?

You do have that flexibility for eligible casual employees however in regards to part-time employees this would be subject to specific terms in the Award or employment contract and it may require agreement with the employee to enforce.

When do JobKeeper Payments cease?

At this stage, JobKeeper Payments will cease on the 28th September 2020 to eligible employees.

Which employees am I able to make JobKeeper Direction in relation to?

All employees that you receive the JobKeeper payment in relation to. 

Can I reduce the hourly rate of pay for my employee under a JobKeeper Direction?

No. The employee’s rate of pay cannot be reduced, for the hours which they actually work once a direction has been given. 

Can I reduce or change the hours that an employee works under a JobKeeper Direction?

Yes. You can give an “enabling stand down direction” to work fewer hours or days when they cannot be usefully employed for their normal hours due to business changes caused by the pandemic or government initiatives.

Employees will not be entitled to be paid for the times where they are not working, subject to the rule that they must be paid at least $1,500 per fortnight before tax (i.e. the amount of the JobKeeper payment).

Employees and employers under JobKeeper will also be able, “despite any limitations in a designated employment provision” (e.g. an award) to come to an agreement about working different days and times outside of ordinary hours. 

Does the calculation of the minimum amount to be paid to employees ($1,500 per fortnight) included payments for leave?

Yes – so long as the employee is paid at least $1,500 per fortnight, through leave payments, overtime payments, allowances, etc the employer will have met their obligation. 

Can I direct an employee to perform different duties or perform work in a different location?

Yes. You can direct employees to undertake different duties and perform work in a different location (including work from home), so long as the directions are reasonable, safe and within the employee’s ability. 

How do I go about enforcing a JobKeeper Direction?

Employees must be consulted with about any proposed changes and employees must be given a written direction of the changes with at least 3 days’ notice.  

What is considered a “reasonable” JobKeeper Direction?

The employer can only give a direction if the affected employee cannot usefully be employed for their normal hours and normal activities during the period of the direction. The direction must ensure work can be performed safely, and within the employee’s skills and competencies. 

Does a JobKeeper Direction include forcing an employee to take annual leave?

Yes. An employer can ask the employee to take annual leave and the employee cannot unreasonably refuse. However, if leave is taken the employee must retain a leave balance of at least 2 weeks.

Employees and employers under JobKeeper will also be able , “despite any limitations in a designated employment provision” to come to an agreement about taking double the amount of annual leave, paid at half pay. 

What happens to accrual rules if an employee has any employment arrangements changed under these new rules?

The employee continues to accrue as if no direction or agreement has been made under these new rules. 
Can I reduce the hourly rate of pay for my employee under the JobKeeper Direction?

No. The employee’s rate of pay cannot be reduced, for the hours which they actually work once a direction has been given.