The content of this publication has been prepared based on material available to date (27 July 2020). The material in this guide is of a general nature and should not be regarded as legal advice or relied on for assistance in any particular circumstance or situation. In any important matter, you should seek appropriate independent professional advice in relation to your own circumstances. Master Builders Australia or any of its State or Territory Association Members (collectively ‘Master Builders’) accepts no responsibility or liability for any damage, loss or expense incurred as a result of the reliance on information contained in this guide.
What conditions must be satisfied regarding JobKeeper payments to employees?
There are three things to satisfy
- The “wage condition” guarantee: which requires all employees to be paid at a minimum $1,500 per fortnight before tax.
- The minimum payment guarantee: An employer must ensure that the amount payable to a particular employee each fortnight is the greater of:
- The $1,500 JobKeeper amount; or
- The total amount owed to the employee for the performance of work during the fortnight (in full).
- Note: The “total amount” includes any of the following that may have become payable during the fortnight:
- Incentive-based payments and bonuses.
- Monetary allowances.
- Overtime or penalty rates.
- Leave payments.
- The hourly rate of pay guarantee: this requires that any reduction to the hours/days of an employee cannot reduce an employee’s “hourly base rate of pay” (the hourly rate the employee earned before the reduction in hours/days). An employee must still be paid their “hourly base rate” for any work they perform during the fortnight. An employee’s “hourly base rate” does not include any additional allowances, loadings or penalties added.
EXAMPLE: Employee stood down for 20 hours, JobKeeper payment is less than normal pay.
Boris runs a painting business. He has qualified for JobKeeper and has been receiving payments of $1,500 for his employee Dominic, who usually works full-time, 38 hours a week (76 hours a fortnight).
Due to the Government restrictions, work is slower than usual on new residential builds and Boris has a lot less work on. As a result there are now only 18 hours of work for Dominic to perform per week (36 hours per fortnight), Boris cannot usefully employ Dominic for the remaining 20 hours a week (40 hours per fortnight).
Boris therefore decides to use the new JobKeeper stand down provisions to direct Dominic to stand down for the 20 hours per week he cannot be usefully employed. Dominic continues to work 18 hours a week.
Dominic is usually paid $2,508 (before tax) a fortnight, for 76 hours of work (equating to $33 per hour). As his hours have been reduced to 36 hours, Boris would normally pay Dominic $1,118 (before tax) for the fortnight. This amount however is below the $1,500 JobKeeper amount. So, Boris instead must pay Dominic the full $1,500 (before tax) for the 36 hors he works a fortnight but doesn’t have to pay any more than that.
Boris is only required to pay superannuation on what he would normally pay Dominic for 36 hours (the $1,188 (before tax)).
What rate do I pay if an employee is working different duties?
For an employee performing new duties their hourly base rate is either:
- The employee’s new hourly rate for the new duties being performed if they attract a higher rate of pay; or
- The employee’s old hourly rate if the new hourly rate for the new duties is lower than the old rate (prior to the direction to change duties)
What happens to employee entitlements and accruals during JobKeeper?
Employees subject to a JobKeeper enabling direction will continue to accrue and take service-related entitlements as if the direction had not been issued.
This means that employees will continue to accrue annual and personal leave at their usual rate and will be entitled to service related entitlements such as redundancy pay and payments in lieu of notice as if they were working their usual hours of work.
Can a stand down direction issued by an employer apply when an employee is on leave (annual, personal etc.)?
No, a stand down direction does not apply to an employee during a period when the employee is taking paid or unpaid leave.
This means that when an employee is stood down (partial or full) and they subsequently go on leave, their rate of pay will return to what it was prior to the direction to stand down.
If an employee is stood down as a result of JobKeeper direction from an employer what happens to the accrual of their leave entitlements?
The employee accrues leave entitlements as if the direction to stand down had not been given.
Does the period when an employee is stood down count towards continuity of service?
Yes, it counts for the purpose of continuity of service.
Will tax and superannuation apply to JobKeeper payments?
JobKeeper payments to employees are taxable like other payments to employees, and PAYG withholding obligations will apply. The $1500 payment is before tax.
For payments made to cover an employee’s usual wages, superannuation is payable according to the ordinary rules for payments to employees for ordinary time earnings.
For payments (or parts of payments) to employees in excess of an employee’s usual wages, superannuation is not required to be paid. This situation may arise where:
- an employees’ usual wages are less than $1500 per fortnight (i.e. superannuation would be payable on the part of the $1500 payment necessary to cover the employee’s wages, but not on any windfall balance); or
- employees have been stood down without pay (i.e. superannuation will not be payable on the $1500 JobKeeper payment paid to employees as it is not paid as ordinary time earnings for work that has been undertaken).
Where can I register?
Eligible businesses can apply for the payment online and are able to register their interest via www.ato.gov.au.