What is JobKeeper scheme?
The JobKeeper Payment scheme is a wage subsidy to assist businesses that are significantly impacted by COVID-19. The purpose of the scheme is to assist businesses to pay and retain their staff.
Under JobKeeper, eligible businesses that have suffered significantly reduced turnover will be paid $1500 per fortnight (before tax), per qualifying employee, for up to six months. Noting that as of 28 September 2020, in accordance with JobKeeper 2.0, the amount will be reduced in increments until 28 March 2021.
The payments will commence from 1 May 2020 and will be backdated to 30 March 2020.
Eligible employers seeking to obtain the payments must enrol in the scheme, and will be able to do so from 20 April 2020. Enrolment will be through the ATO website.
JobKeeper 2.0 was announced on 22 July 2020 – What does this mean for the JobKeeper scheme?
JobKeeper was originally due to end on 27 September 2020. Following the Department of Treasury’s review of the scheme, on 21 July 2020 the Government announced it would be extending the JobKeeper Payment by a further six months – to 28 March 2021.
The second phase of JobKeeper (or JobKeeper 2.0), is set to begin from 28 September 2020 and provides targeted support to businesses and not-for-profits that continue to be significantly impacted by COVID-19. JobKeeper will now continue to be available to eligible businesses (including the self-employed) and not-for profits until 28 March 2021, albeit at a lower payment rate.
JobKeeper 2.0: Will the rate of pay change?
JobKeeper 2.0 will see the current $1,500 per fortnight payment reduced over two periods. From 28 September 2020 – 3 January 2021, the two payment rates will be:
- $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
- $750 per fortnight for other eligible employees and business participants (e.g. employees who were working less than 20 hours or less a week on average throughout February).
From 4 January 2021 to 28 March 2021 the two payment rates will be:
- $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working for 20 hours or more a week on average and for business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
- $650 per fortnight for other eligible employees and business participants (e.g. employees who were working less than 20 hours or less a week on average throughout February).
Businesses will be required to nominate which payment rate they are claiming for each of their eligible employees (or business participants). More information on how this will occur will be provided when it becomes available.
Does JobKeeper 2.0 also extend the related JobKeeper flexibilities in the Fair Work Act?
No. At this stage the temporary amendments made to the Fair Work Act (applicable to those businesses eligible for JobKeeper) remain set to end on 27 September 2020. The Government has foreshadowed their intention to have these provisions extended, however this cannot be confirmed until a Bill is prepared and debated in the Federal Parliament.
Do the changes affect businesses currently using JobKeeper?
If your business currently utilises JobKeeper, the current arrangements remain in place until 27 September 2020. In order to continue receiving JobKeeper Payments beyond 27 September 2020 both an employer and employee (or business participant) must qualify and meet the eligibility criteria (set out below).
When will I receive the first payment?
The first payments by the ATO will be received by employers from the first week of May.
JobKeeper 2.0 payments are expected to continue on the same schedule, however this is yet to be confirmed.
How often will these payments be made?
The payments will be made by the ATO monthly in arrears.
Which businesses are eligible?
Employers must meet these conditions to be eligible for the JobKeeper Payment scheme:
- For businesses with annual aggregated turnover less than $1 billion, the turnover of the business has reduced (or will reduce) by more than 30% (of at least one month).
- For businesses with annual aggregated turnover greater than $1 billion, the turnover of the business has reduced (or will reduce) by more than 50% (of at least one month).
- For not-for-profits and charitable organisations registered with the Australian Charities and Not-for-profits Commission (ACNC), other than certain educational charities, the annual turnover of the organisation has reduced (or will reduce) by more than 15% (of at least one month).
- All eligible employees must be notified that the business intends to participate in the JobKeeper scheme.
- Employees must ask eligible employees if they agree to be nominated by the employer as the primary employer of the employee (as employees can only attract the payment for one eligible job). Information must be provided to the eligible employees and the ATO through the approved form (which may be updated from time to time and will be available from the ATO website).
Turnover for the purposes of a business’ eligibility is the entity’s projected GST turnover for a test period, and this is compared to the entity’s GST turnover for a relevant comparison period.
I am currently receiving JobKeeper. Will my business need to requalify for JobKeeper 2.0?
Yes. To be eligible post 27 September businesses will need to re-establish their eligibility.
Businesses and not-for-profits seeking to claim the JobKeeper Payment will be required to demonstrate that they have suffered an ongoing significant decline in turnover using actual GST turnover (rather than projected GST turnover) in the June and September quarters 2020 to be eligible for the December quarter.
Businesses will again need to reassess their eligibility for the March quarter.
Which employers are eligible for JobKeeper 2.0?
Eligible employers are businesses carrying on business in Australia (including companies, partnerships, trusts, sole traders, partnerships, unincorporated associations and individuals) and not for profits:
- With an aggregated turnover of less than $1billion (for income tax purposes), whose ongoing decline in turnover has fallen by more than 30% (in the relevant quarters); or
- With an aggregated turnover of $1billion or more (for income tax purposes), whose ongoing decline in turnover has fallen by more than 50% (in the relevant quarters).
Registered charities with the Australian Charities and Not-for-profit Commission (excluding universities and schools) are eligible employers if their ongoing decline in turnover has fallen by more than 15% in the relevant quarter.
Do employers have any reporting obligations whilst receiving JobKeeper Payments?
The ATO requires employers receiving the JobKeeper payment to report monthly to the ATO Commissioner to show payments have been made to employees and to provide information on employer turnover and other matters relevant to the entitlement and the operation of the JobKeeper Payment.
This reporting will be integrated with exiting reporting processes such as Single Touch payroll, where this is possible.
In serious cases, payments may be withheld until information provided can be verified.
Do Employers have any record keeping obligations whilst receiving JobKeeper Payments?
Employers receiving JobKeeper are required to retain records to allow any information provided to the Tax Commissioner to be verified for five years after it is provided in relation to a payment.
It is expected that these record keeping requirements will change for JobKeeper 2.0 (post-28 September) to accommodate the change in eligibility criteria (discussed more below) – however this is yet to be confirmed.
Can penalties be applied for abuse of the JobKeeper Program?
The JobKeeper Legislation includes an anti-avoidance regime which entitles the ATO Commissioner to make a subjective determination where he is satisfied of the existence of a scheme.
A scheme will arise if any entity, in effect, enters into an arrangement under which it receives a JobKeeper payment (or a larger JobKeeper payment) which, but for the arrangement, it would not receive.
More generally employers who do not comply with the obligations tied to the JobKeeper payment can be liable for a wide range of significant sanctions.
The below table sets out some of the offences and penalties linked to the misuse of the JobKeeper program.
|Administrative penalties for making a false and misleading statement||§ Financial penalty up to 75 per cent of the amount of any overpayment|
|Criminal offences for making false or misleading statements to taxation officers||
§ Imprisonment for up to 12 months AND
§ A fine of up to 50 penalty units for individual and 250 penalty units for corporate entities.
|Failure to comply with the requirements under taxation law||
§ Imprisonment for up to 12 months AND
§ A fine of up to 50 penalty units of ran individual and 250 penalty units for corporate entities
|Obtaining financial advantage||§ Imprisonment for up to 12 months|
|Obtaining financial advantage by deception||§ Imprisonment for up to 10 years|
|Conspiracy to defraud||§ Imprisonment for up to 10 years.|
What are the tax consequences of JobKeeper?
All JobKeeper payments are assessable income of the business that is eligible to receive the payments. The normal rules for deductibility apply in respect of the amounts your business pays to its employees where those amounts are subsidised by the JobKeeper payment.
JobKeeper payments are not subject to GST.
How is ‘turnover’ defined?
Turnover is calculated as it is for GST purposes and is reported on Business Activity Statements (BAS). It includes all taxable supplies and all GST free supplies but not input taxed supplies. Only Australian based sales are included and therefore, only Australian based turnover is relevant for this test. A decline in overseas operations will not be counted in the turnover test.
Projected GST turnover and current GST turnover are defined in the GST Act but have been modified for JobKeeper purposes. The amounts included in calculating projected GST turnover and current GST turnover are the same regardless of whether the business is currently GST registered.
There are four main modifications to the GST turnover calculation:
- Projected GST turnover and current GST turnover calculated for the relevant months or quarter are being tested (rather than for 12 months).
- Where an entity is a party of a GST group, the entity calculates its GST turnover as if it wasn’t part of the group. This means that supplies made by one group member to another will be included in the GST turnover for the purposes of the fall in turnover test.
- The calculation includes the receipt of tax deductable donations by a deductible gift recipient. It also includes gifts of money, property (with a market value of more than $5,000) and listed Australian shares received by an ACNC-registered charity (that is not a deductible gift recipient). However, none of these receipts are included if they are from an associate.
- External Territories (e.g. Norfolk Island) are treated as if they are formed part of the indirect tax zone (i.e. Australia).
Projected GST turnover and current GST turnover excludes the following:
GST included in sales to customers (if any)
- Sales that are input taxed sales (e.g. bank interest, sale of shares)
- Sales not connected with an enterprise that the business carries on (e.g. sale of private car)
- Sales that are not made for payment (unless a taxable supply to an associate)
- Payments for no supply (e.g. JobKeeper payments)
- Gifts and donations (except for deductable gift recipients and ACNC-registered charities)
- Sales not connected with Australia, for example sales of goods purchased and sold from a place outside Australia.
Cash or accrual basis
Businesses may use an accruals basis of accounting to calculate both the current GST turnover and projected GST turnover. However, if the business usually prepares its activity statements on a cash basis, the ATO will allow it to calculate both the current and projected GST turnovers on a cash basis.
The basis used must be the same for calculating both the current and the projected GST turnover.
How do I establish a reduction in turnover?
Most businesses are expected to be able to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier in 2019. However where a business’s turnover a year earlier is not representative of their usual or average turnover, (e.g. because there was a large interim acquisition or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of COVID-19.
The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will also be some tolerance where employers, in good faith, estimate a greater than 30 % (or 50%) fall in turnover but actually experience a slightly smaller fall.
Example – Turnover test period
Sally runs a home-maintenance business which employs two full-time staff. She applies for the JobKeeper scheme during the first fortnight the scheme starts operating (fortnight ending 12 April 2020).
The turnover test period for Sally can be:
§ The month of March 2020 or April 2020, or
§ The quarter from 1 April 2020 to 30 June 2020. The comparison period is the corresponding period in 2019.
How should I estimate projected GST turnover?
A business needs to identify the sales that it made, or is likely to make, during the turnover test period.
Given that eligibility can be tested part way through a period, the business will need to consider what it expects to happen for the remainder of the period. Relevant considerations include (but are not limited to):
- The period during which the business is not expected to trade because it has been closed due to COVID-19, or its ability to trade has been restricted.
- Recent patterns in trading that are expected to continue.
- Revised business plans or forward-looking workbooks.
The reasons for a fall or expected fall in turnover are not limited only to the direct impacts of COVID-19.
It is important to note that the Government has proposed to amend the eligibility test for JobKeeper 2.0, basing eligibility of realised reductions in turnover, rather than projected. This is addressed in more detail below.
What if I intend to make substantial changes to the structure or operations of my business? Does this impact how I should estimate projected GST turnover?
A business may intend on making substantial changes to their structure and operations, as part of responding to COVID-19. However, note that projected GST turnover excludes:
- Supplies that are made by transfer of capital assets.
- Supplies that are made as a consequence of substantially and permanently reducing in size or scale of the enterprise.
A 10% reduction is generally accepted as a ‘substantial reduction’ in size and scale (or less depending on the particular circumstances of the enterprise).
A reduction will be permanent if it is enduring but not if it is reasonable to expect the reduction will end, for example, in one or two years.
This means that, for example, where an entity closes 1 out of its 10 stores in its business, the income from selling the store or the assets used in the store would be excluded when calculating projected GST turnover.
How do I establish a reduction in turnover for JobKeeper 2.0 (i.e. the period beyond September 2020)?
In the second phase of JobKeeper there will be two periods during which an employer will need to be able to prove that their turnover has declined by the relevant percentage in order to be eligible to continue to receive JobKeeper.
- First requalification period: From 28 September 2020, businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020. They will need to demonstrate that they have met the relevant decline in turnover test in both of those quarters to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021.
- Second requalification period: From 4 January 2021, businesses and not-for-profits will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December quarters 2020 to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021.
My BAS statement for the September quarter is due to be lodged in late October. Do I have to assess eligibility and pay my employees before the BAS deadline?
Treasury has advised that as the deadline to lodge a Business Activity Statement (BAS) for the September quarter is late October, and the December quarter (or month) BAS deadline is in late January for monthly lodgers or late February for quarterly lodgers, business will need to assess their eligibility in advance of the BAS deadline in order to meet the wage condition.
The ‘wage condition’ requires employers to pay their eligible employees in advance of receiving the JobKeeper payment in arrears from the ATO.
The Commissioner of Taxation will have discretion to extend the time a business has to pay their employees in order to meet the wage condition, so that they first have time to confirm their eligibility for the JobKeeper 2.0 payments.
My business has met the current decline in turnover test, but may not meet the new turnover test. Will in-eligibility for Phase 2 affect my business prior to 28 September?
No. If a business or not-for-profit does not meet the additional turnover tests for the extension period, this does not affect their eligibility prior to 28 September 2020.
My Business has only just started, or has an inconsistent income. How can I self-assess that my turnover has fallen?
To establish that a business has faced or is likely to face a downturn in turnover that would make them eligible, businesses are expected to establish that their turnover has fallen in the relevant month or quarter (depending on the Business Activity Statement reporting period) relative to their turnover in a corresponding period a year earlier.
The ATO has established different tests for some businesses who cannot meet the standard test. These tests impact businesses who:
- Were not in operation a year earlier, or
- Believe their turnover a year earlier was not representative of their usual or average turnover because:
- Of a large interim acquisition;
- They were newly established;
- They were scaling up; or
- Their turnover is typically highly variable.
If your business does not meet the standard test, but fits, or may fit into one of these categories, you could still be eligible for JobKeeper. You should speak with a professional who can give advice on making an application to the ATO for payment.
You should also note that the Tax Commissioner has discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.
The Tax Commissioner also has discretion to set out alternative tests that would establish eligibility in specific circumstances (for example, eligibility may be established as soon as a business ceases or significantly curtails its operations).
The ATO has also stated that ‘there will be some tolerance where employers, in good faith, estimate a 30 per cent or more or 50 per cent or more fall in turnover but actually experience a slightly smaller fall’.
With respect to JobKeeper 2.0, it has been stated that the Commissioner of Taxation will have discretion to set out alternative tests in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019. We anticipate similar tests to those denoted above will be prescribed for JobKeeper 2.0.
My turnover has not decreased by 30 per cent this month, but my forecasts tell me it will in the next month. Am I eligible?
You can apply for the payment if you reasonably expect that your GST turnover will fall by 30 per cent or more (or 50 per cent or more for businesses with an aggregated turnover of $1 billion or more) relative to your GST turnover in a corresponding period a year earlier. This period does not need to be the first JobKeeper period – you can become eligible any time during the operation of the Scheme.
You should note that you do not need to establish eligibility more than once.
The ATO has guidance about self-assessment of actual and anticipated falls in turnover.
Remember though – to remain eligible after September, you must report an actual decline in revenue – not just a forecast.
It is unlikely that my turnover will decrease by 30 per cent in the coming month, but can I apply later if my turnover decreases in a subsequent month?
If a business does not meet the turnover test as at 30 March 2020, the business can start receiving the JobKeeper Payment at a later time once the turnover test has been met. Payments are not backdated to the commencement of the scheme. Businesses can receive the JobKeeper Payments up to 27 September 2020.
Which employees are qualified?
JobKeeper payments will be available for all employees that are employed by an eligible employer and who were employed on 1 March 2020. This includes full-time, part-time and long-standing casual employees.
To be qualified, employees must meet the following criteria:
- Employees must currently be employed by an eligible employer.
- Note that this includes employees who have been stood-down, or employees who were terminated but have been re-hired by the employer).
- Employees must have been employed by the employer on 1 March 2020.
- Employees must be employed full-time, part-time or as a ‘long-term’ casual (being a casual employee that had been employed on a regular and systematic basis for longer than 12 months as at 1 March 2020).
- are 16 or 17 years of age on 1 March 2020 and are independent or not undertaking full time study;
- Employees must be an Australian citizen or permanent resident, or hold other specified classes of visa; and
- An employee can only have one employer receive JobKeeper Payments with respect to them (i.e. multiple employers cannot receive JobKeeper payments in respect of one individual, even if the individual is employed by multiple employers).
Employees are not qualified for JobKeeper payments:
- for periods in which they are in receipt of parental leave pay under the Paid Parental Leave Act 2010(Cth).
- Note that employees may receive JobKeeper payments if they are in receipt of paid parental leave from their employer pursuant to an enterprise agreement, contract of employment or similar instrument.
- for periods in which they are totally incapacitated for work and an amount is payable to them under workers’ compensation laws.
Change to the Age prerequisite
On 1 May 2020 the Rules were amended to provide that, from 1 May 2020, 16 or 17 year old can only qualify as an eligible employee if on 1 March 2020 they:
- are independent (as defined by s.1067A of the Social Security Act 1991 (Cth) (including for example where they have supported themselves through work with long term full or part-time employment broadly for a two year period), or
- were not studying full time.
This change applies prospectively, which means an eligible employer that has already paid such an employee the JobKeeper payment for that fortnight could be entitled to a JobKeeper payment in arrears for that fortnight.
Will the eligibility rules for employees change for Phase 2 of JobKeeper?
The eligibility rules for employees remain unchanged for JobKeeper Phase 2.
Will JobKeeper 2.0 be open to new recipients or is it only for those already using JobKeeper?
During Phase 2 of JobKeeper, payments will continue to remain open to new recipients, provided both employers and employees meet the eligibility requirements and the decline in turnover tests during the extension period.
Other eligibility rules for businesses and not-for-profits and their employees remain unchanged.
I work in my own business – can I claim for myself?
Businesses in the form of a company, trust or partnership can also qualify for JobKeeper payments where a business owner (a shareholder, adult beneficiary or partner) is actively engaged in the business, or a director is actively engaged in the business.
This is limited to one entitlement for each entity even if there are multiple business owners or participants. It is understood that t the ATO will provide further information soon about eligibility of these businesses for the JobKeeper payment.
Is there an employee ‘income cap’ or similar?
There is no income cap on eligibility for employees. Therefore, an eligible employer may receive the subsidy in respect of any eligible employees including its highest paid employees.
Are apprentices and trainees covered?
Yes. But only if they meet all of the relevant employee eligibility requirements.
Are employers eligible to receive both the JobKeeper Payment and the Supporting Apprentices and Trainees wage subsidy?
No. The JobKeeper Payment is considered ‘equivalent’ for the purposes of Supporting Apprentices and Trainees wage subsidy, as it is designed to help businesses cover the costs of their employees’ wages. Therefore, an employer will not be allowed to claim both payments simultaneously. For any period where the employer elects to claim the JobKeeper Payment they will not be able to claim the Supporting Apprentices and Trainees wage subsidy.
Can eligible employers claim Supporting Apprentices and Trainees for any period before claiming the JobKeeper Payment?
Yes. Where an eligible employer claims the JobKeeper Payment, if they also meet the criteria for Supporting Apprentices and Trainees, they will be eligible to claim Supporting Apprentices and Trainees for wages paid up to the date they are eligible for the JobKeeper Payment.
Where an employer is not eligible for the JobKeeper payments, can they still be assessed as eligible for Supporting Apprentices and Trainees subsidy?
Yes. Employers should contact their Australian Apprenticeship Support Network Provider for assistance.
How do employers receive the JobKeeper Payment?
In order to receive the JobKeeper payment employers must do the following:
- Employers must elect to participate in the scheme.
- Employers can register their interest online now at the ATO website.
- Employers will subsequently need to apply for the JobKeeper Payment through an online application (this is not yet available).
- In applying for JobKeeper employers will need to provide information to the ATO on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
- The ATO will need to assess whether an employer has experienced the required turnover decline (employers will need to provide supporting information demonstrating the necessary downturn in their business).
- Once approved, ensure that each eligible employee receives at least $1,500 per fortnight (before tax).
- Notify all eligible employees that you have nominated your business as a JobKeeper eligible employer, and ask eligible employees to agree to be nominated by you as the primary employer for the purposes of JobKeeper Payments.
- Inform eligible employees of the steps they need to take to be nominated (including completion of the ATO nomination notice form).
- Provide monthly updates to the ATO on the number of eligible employees employed by the business.
- Notify each eligible employee for whom your business receives JobKeeper that their details have been provided to the ATO for each relevant JobKeeper payment fortnight.
What must be paid to employees who qualify for JobKeeper?
JobKeeper qualifying employers are required to meet minimum payment obligations for those employees who are subject to a JobKeeper direction or request. These include ensuring that at least the value of JobKeeper payments an employer receives is passed on to employees each fortnight, or the amount they would receive for the work they have performed, whichever is greater. You still need to withhold tax in the usual way.
You should note that the $1,500 per fortnight per employee is a before tax amount. Where an employee is paid more than $1,500 per fortnight, the employer’s superannuation obligations will not change. Where an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper Payment, it will be up to the employer if they want to pay superannuation on any additional wages paid by the JobKeeper Payment.
What if I usually pay my employees less than $1,500 per fortnight before tax?
To be able to claim the JobKeeper Payment for an eligible employee, that employee must be paid a minimum of $1,500 income per fortnight, before tax is withheld. The employer will be reimbursed $1,500 per fortnight for each eligible employee.
If you want to claim the subsidy for an eligible employee and they have not been paid $1,500 per fortnight since 30 March 2020, employers must pay a ‘top-up’ payment to employees so that they are eligible.
No business can pay their employees less than $1,500 per fortnight and be entitled to a payment for that employee.
When do I need to pay my employee’s for whom I receive JobKeeper?
Employers should pay their employees for each JobKeeper fortnight they plan to claim for. The first fortnight is from 30 March – 12 April and each JobKeeper fortnight follows after that.
If an employer’s ordinary arrangement is to pay its employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if an employer’s ordinary arrangement is to pay an employee every four weeks, it will be reasonable if the employee is paid at least $3,000 for every four-week period.
Payment for the first two fortnights (30 March 2020 – 12 April 2020)
If an employer seeks the JobKeeper payment for the first two fortnight periods, they will need to make sure that each eligible employee has at least received $1,500 in pay during this period (even if they have been on stand down during this period).
If an employee has not yet received this amount they will need to be paid any remaining difference by the end of April. Any additional payment requirement to meet the $1,500 per fortnight required can either be made as two separate payments (for each payment fortnight) or a combined payment before the end of April (for the two payment fortnights).
What happens if an employee has been paid annual leave during some or all of the two payment fortnights (30 March 2020 – 12 April 2020)?
Annual leave is treated the same as normal pay. An employer will need to ensure the amount paid to the employee including any annual leave payments meet the required $1,500 per fortnight. If the employee has not been paid the minimum $1,500 the employer will need to ensure they are paid any outstanding amount before the end of April.
Payment for fortnights commencing from 13 April 2020
Employers must pay the minimum $1,500 before tax to each eligible employee per fortnight to claim the JobKeeper payment for that fortnight.
Can I require a part-time worker who usually earns less than $1,500 per fortnight to do additional hours (for example up to the equivalent amount of hours that would see them earn $1,500 in a fortnight)?
An employer cannot require or force any such employee to do additional hours because they are receiving an increase to their income as a result of the JobKeeper payment. Employers and employees can of course agree to vary heir arrangements by consent however.
Example – Employer with different types of employees on different wages.
Sarah owns a residential construction company which largely carries out maintenance and repair works to domestic houses. She employs four people. The business is still operating at this stage but Sarah expects that turnover will decline by significantly more than 30 per cent in the coming months (if it hasn’t already). The employees are:
§ Steve, who is a permanent full-time employee on a salary of $2,500 per fortnight before tax who has been working for Sarah for 2 years and who continues working for the business;
§ Tasha, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax who has been working for Sarah for 1 year and who continues working for the business;
§ Melanie, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax who has been working for Sarah since 7 March 2020 and who continues working for the business; and
§ Alex, who is a casual employee paid on average $600 per fortnight before tax who has been working for Sarah since 1 October 2019 and who continues working for the business.
Sarah is eligible to receive the JobKeeper Payment for the following employees:
§ Steve, who was in an employment relationship with Sarah on 1 March 2020, is currently still engaged as an employee and works full-time.
§ Tasha, who was in an employment relationship with Sarah on 1 March 2020, is currently still engaged as an employee and works part-time.
Sarah is not eligible to receive the JobKeeper Payment for the following employees:
§ Melanie, as she wasn’t in an employment relationship with Sarah as at 1 March 2020, given that she was employed on 7 March 2020.
§ Alex, as she is a casual employee who had not been engaged on a regular basis for longer than 12 months as at 1 March 2020.
The JobKeeper Payment would mean the following for Sarah’s two eligible staff’s wages:
§ Sarah continues to pay Steve his full-time salary of $2,500 per fortnight before tax but receives $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Steve’s salary, meaning he only needs to pay the remaining $1,000 per fortnight before tax towards Steve’s wages with the rest covered by the JobKeeper Payment. Sarah will need to continue paying the superannuation guarantee on Steve’s $2,500 income; and
§ Sarah will receive $1,500 per fortnight before tax from the JobKeeper Payment to subside Tasha’s salary. As this is more than Tasha’s current $1,000 per fortnight salary Tasha will see an increase of $500 per fortnight before tax being paid whilst Sarah is receiving the JobKeeper Payment. Sarah must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Tasha is earning. Sarah has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Tasha under the JobKeeper Payment.
Sarah is required to advise her employees that she has nominated them as eligible employees to receive the JobKeeper Payment.
Sarah will be required to register and apply for the JobKeeper payment and to provide information to the ATO on a monthly basis. She will receive the payment monthly in arrears.
My business employs staff through a ‘special purpose employment vehicle’ or the like. This vehicle hasn’t suffered a downturn in turnover, but the entity that does the work, has – can I claim JobKeeper?
The first iteration of the JobKeeper Rules doesn’t account for this scenario – but the Government has recently made changes to the JobKeeper Rules to fix this.
The changes to the Rules were established under a new instrument – the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No.2) 2020, which works in conjunction with the original Rules.
This Amendment establishes a new turnover test for labour hire companies and entities with a special purpose employment vehicle, and focusses on whether the entity suffered a downturn in supply of labour, rather than turnover.
If your business is structured in this way, you should consult an appropriately qualified professional to discuss determination of your eligibility to claim JobKeeper.
How does the JobKeeper Payment affect an employee who is salary sacrificing wages?
Salary sacrificing arrangements can continue as is. The JobKeeper Payment may be paid to an employee in cash or as a fringe benefit or an extra superannuation contribution where the employee and employer agree.
What are the eligible periods for reimbursement?
Employers will need to satisfy payment requirements in respect of each 14-day period covered by the scheme. The first period starts on Monday, 30 March 2020 and ends on Sunday, 12 April 2020.
Employers must pay their eligible employees a minimum of $1,500 per fortnight in the scheme payment periods.
What if I pay my employees monthly?
Where an employer pays their staff monthly, the ATO will be able to reallocate payments between periods. However, overall an employee must have received the equivalent $1,500 per fortnight.
How long will the JobKeeper Payments last?
For up to six months, running from 30 March 2020 to 27 September 2020. The final period will start on Monday 14 September and end on Sunday 27 September 2020.
Once the JobKeeper 2.0 amendments are formalised, the scheme will continue, albeit with differing rates of payment and a modified turnover test, from 28 September until 28 March 2021.
Are employers who have already stood down employees without pay eligible for the JobKeeper Payment?
Yes, employers who have stood down their employees (in part or full) are still eligible for the JobKeeper Payment. Employees who have been stood down must be paid at a minimum the $1,500 JobKeeper Payment per fortnight, before tax for the payment periods of the JobKeeper Scheme. It will be up to the employer in this circumstance to decide if they want to pay superannuation on the JobKeeper Payment to their employees.
What if an employee who was stood down after 1 March 2020 has since applied for income support (JobSeeker)?
Employers who nominate for JobKeeper must advise their eligible employees. A person receiving the JobKeeper Payment cannot also receive the JobSeeker Payment. Employees who have already applied for JobSeeker can notify Services Australia (formerly Centrelink) to withdraw and shift to the JobKeeper Payment if their employer notifies them that they have nominated for JobKeeper.
What if my employee who was stood down after 1 March 2020 has since got another job?
Employees can only receive the JobKeeper payment once.
If an employee was stood down (after 1 March 2020) and has subsequently obtained alternative employment (and have not resigned from their employer who stood them down), they are still eligible for the JobKeeper payment with their employer who has stood them down. This means their employer can apply and can pay them $1,500 per fortnight before tax.
The employees’ new employer will not be eligible for the JobKeeper Payment for them as they have been employed after 1 March 2020 and are therefore not an eligible employee with that employer. If the employer who stood the employee down registers and applies for the JobKeeper Payment they should notify that employee.
Can I direct my employee to now do work, if they had previously been stood down (under the conventional section of the Fair Work laws) but are now eligible to receive JobKeeper?
Not while they are still stood down under section 524 of the Fair Work Act. A stand down by its very definition means that an employer’s employees cannot be “usefully employed” by the employer because of a stoppage of work for which the employer cannot reasonably be held responsible.
However, if circumstances change and an employer decides that they can now “usefully employ” an employee, an employer can take an employee off stand down. An employer may then seek to utilise the new JobKeeper enabling stand down provisions, which allow more flexibility in terms of a reduction of hours (including a complete reduction to nil). The notice and consultation requirements under these new provisions should be followed.
In these circumstances, employers need to be mindful of and weigh up the risk of a potential claim that the initial stand down was unlawful (e.g. that the employee could have in fact been “usefully employed”) as they could be ordered to back pay their employees.
What happens to any JobKeeper payments if an employee resigns?
An employee must be currently employed by the eligible employer in order to receive the JobKeeper Payment.
If an employee for whom an employer is receiving the JobKeeper Payment resigns, the employer is no longer entitled to receive the Payment for that employee from the date their resignation takes effect.
The employer must notify the ATO, as they may need to repay some money if the resignation takes effect in the middle of a payment fortnight.
The JobKeeper program does not affect an employer’s right to terminate a contract of employment with notice or for cause. Further, the laws relating to unfair dismissal and general protections under the Fair Work Act continue to operate.
Employers should update the ATO where the employment of an eligible employee ends and specify the exact date when the employment relationship will end.
Can I receive the JobKeeper payment for employees in receipt of WorkCover?
Employees will not be eligible for the JobKeeper Payment if they are fully incapacitated, unable to work and being supported by a workers compensation scheme.
In other cases, employees would be eligible as they are in an employment relationship with their employer, provided their employer has an obligation to pay some component of their salary or wages.
If your employee is fully compensated under your WorkCover insurance, they will be ineligible for the JobKeeper Payment.