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JobKeeper payment: A guide for employers

15 April 2020

#Workplace Relations & Safety, #COVID-19

JobKeeper payment: A guide for employers

Changes are now in force to the Fair Work Act 2009 (Cth) (FW Act) to support the JobKeeper payment wage subsidy scheme in response to the COVID-19 pandemic and economic downturn. 

The principle changes are contained in the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (Act), accessible here, which received Royal Assent on 9 April 2020. The amendments are subject to Parliamentary review and the dispute resolution powers and oversight of the Fair Work Commission (FWC).  

In addition to the Act, the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Rules), which supplements the Act and provides further details and eligibility criteria for receipt of the JobKeeper payment, has been released here.

Important: As at the date of our publication, the ATO has released some forms required for the operation of the JobKeeper scheme.

To assist employers navigating through this process, we answer key questions on who is eligible, how to register and the rules around a JobKeeper enabling stand down direction, duties to be performed or location of work.

What is a JobKeeper payment and why is it relevant to my business?

The objective of the JobKeeper payment is to provide a general economic stimulus to the economy and direct financial support in the form of a wage subsidy to businesses that have been directly impacted by COVID-19. The JobKeeper payment provides for a wage subsidy of $1,500 paid to the employer, who then passes this onto their employee. Eligibility criteria apply, as detailed below. 

Does your business qualify for the JobKeeper payment?

The Rules provide that an employer will be eligible for the JobKeeper payment for each eligible employee if it satisfies the following preliminary criteria.

1. Decline in turnover test

As of 1 March 2020, the employer carried on a business in Australia, or in the case of non-profit bodies, pursued its objectives principally in Australia, and either:

  • the business has an annual turnover of less than $1 billion and the turnover will be reduced by more than 30 per cent relative to a comparable period of a year ago (of at least a month); or
  • the business has an annual turnover of $1 billion or more and the turnover will be reduced by more than 50 per cent relative to a comparable period of a year ago (of at least a month); or
  • the business is an ACNC-registered charity or a school and its turnover will be reduced by 15 per cent relative to a comparable period of a year ago (of at least a month).

The Commissioner of Taxation will have the discretion to consider additional information and extend eligibility for businesses who were not in operation a year ago or whose turnover a year ago was not representative of their average turnover.          

Several organisations are exempt from the JobKeeper payment scheme, including entities subject to a Major Bank Levy, Australian government agencies, local governing bodies, organisations owned by any Australian government agency or local governing body, sovereign entities, a company in liquidation or an individual in bankruptcy.

2. Employee eligibility test

The organisation’s relevant employees must meet the employee eligibility test. Please see section on “Which employees will it cover?” for more details.

3. Employer satisfies the wage condition

Employers must ensure the fortnightly wage condition of $1,500 is satisfied with respect to each eligible employee by the end of each fortnight. Put briefly, the employer must ensure it passes on the subsidy in each fortnight, even where the employer usually runs a monthly pay run, and if additional payments of superannuation are due, then those payments are made.

4. Notification in the relevant form to the ATO

The relevant form has not yet been released, but we outline what is required below.

Which employees will it cover?

Employees who satisfy the following criteria will be eligible for the JobKeeper payment:

  • as of 1 March 2020, the employee was:
    • 16 years or older
    • an employee of an eligible employer
    • employed either on a full-time basis, a part-time basis, or a casual basis (but only where the casual employee had been employed on a regular and systematic basis for a period of at least 12 months before 1 March 2020).
  • the employee is:
    • an Australian resident; or
    • a resident of Australia for income tax purposes and holds a Subclass 444 (Special Category) visa.
  • the employee is not:
    • receiving parental leave pay in the relevant fortnight to which a payment relates; or
    • receiving paid dad and partner pay during the relevant fortnight; or
    • totally incapacitated for work throughout the relevant fortnight and receiving workers’ compensation for a period overlapping with the fortnight.

The Rules also contemplate certain eligible business participants (such as sole traders) as qualifying as an eligible employee.

In addition, the Act also contemplates circumstances where a business is purchased or sold.

How do I know if I have employed a long term casual?

As mentioned, an eligible employee includes a “long term casual” but it can be difficult to determine if your casual employees satisfy the definition under the Rules. The Rules provide that a long term casual means a casual employee who was employed by an entity on a regular and systematic basis during the 12 months leading up to 1 March 2020.

Determining if your casual employees are employed on a regular and systematic basis will depend on the individual circumstances of your business. Employed on a regular and systematic basis has been understood to mean there has been a repetitive pattern of casual employment between the employee and employer and this repetitive pattern was part of a system, method or plan of employment organised and set out by the employer. If you have systems in place such as rosters that make it clear to your employees that their shifts are no longer considered as occasional or irregular then this may result in your casual employee being considered as employed on a “regular and systematic” basis. It is important to assess whether there have been any changes in work practices that would mean that the engagement could not be considered regular and systematic, including substantial periods of absence in the 12-month period.

Do you need to nominate all employees for the JobKeeper payment?

The Rules provide for separate notification requirements on employers and employees.

The first step is for the employee to notify their employer of their eligibility to receive the JobKeeper payment. This requirement appears to indicate that an employee must provide their eligibility declaration to their employer prior to the employer claiming the JobKeeper payment in respect of that employee.

Employee requirements

The Rules require an employee to give their employer a notice in a form approved by the ATO (accessible here) which states that:

  • on 1 March 2020, the individual was:
    • 16 years or older
    • employed either on a full-time basis, a part-time basis, or a casual basis (but only where the casual employee had been employed on a regular an systematic basis for a period of at least 12 months before 1 March 2020)
    • an Australian resident or a holder of a subclass 444 special visa (which allows New Zealand citizens to work in Australia) who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936.
  • the individual agrees to be nominated by the employer as an eligible employee of the employer for the purpose of the employer receiving a JobKeeper payment in relation to the employee.

Employees with multiple employers will need to select and nominate one employer who they will then provide them the JobKeeper payment.

Employer requirements

An employer is required to notify an employee in writing within seven days of notifying the ATO of the details of the employee when seeking payment under the JobKeeper payment scheme for a particular fortnight. It remains unclear whether this requirement means an employer must seek to reconfirm the employee’s details with the employee each fortnight.

What happens if you fail to nominate an eligible employee?

Where an employee’s eligibility for JobKeeper payments is in dispute, there are risks for an employer participating in the JobKeeper scheme if they fail to nominate the employee for JobKeeper or if they wrongly nominate an ineligible employee.

If an employer nominates an employee for JobKeeper and it is later determined by the ATO that the employee was not an ‘eligible employee’, the ATO may consider there has been an overpayment and the employer will be required to correct the overpayment (plus interest). On the other hand, if the employer does not nominate the employee for JobKeeper and it is later determined by the ATO that the employee is an eligible employee, the employer may be in breach of their obligation under the Fair Work Act to satisfy the wage condition and risk having to ultimately pay the employee their entitlement without being reimbursed by the ATO.

Of course, participation in the JobKeeper scheme is optional. Employers who do not register for the JobKeeper scheme will not be subject to these obligations or exposed to these risks.

What information do you need to provide to the ATO and when?

An employer needs to notify the ATO in the approved nomination form, indicating:

  • that it elects to participate in the scheme
  • the relevant fortnights for its participation, for example:
    • for those fortnights commencing 30 March 2020 or 13 April 2020, by no later than 26 April 2020
    • for other applicable fortnights, before then end of that fortnight.
  • other information as required by the ATO for the relevant fortnight, such as details regarding an eligible employee. It remains unclear whether this requirement means an employer must reconfirm the employee’s details with the ATO each fortnight.

For the duration of the JobKeeper payment scheme, the business will need to report monthly turnover information to the ATO.

How much do you need to pay your employees?

Payments to an eligible employee must be the greater of:

  • $1,500 per fortnight, being the amount of the JobKeeper payment; or
  • the amount payable to the employee in relation to their work performed during the fortnight (that is, their ordinary wage). This amount also includes any incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates or leave payments if they become payable in respect of that fortnight.

If employers ordinarily pay their employees less frequently than fortnightly (i.e. monthly), the payment can be allocated between fortnights in a reasonable manner. For example, if employees are paid on a monthly pay cycle, they must receive the monthly equivalent of $1,500 per fortnight.

For the first two JobKeeper fortnights (30 March – 26 April), the ATO will accept the minimum $1,500 payment for each fortnight has been paid, even if it has been paid late, provided it is paid to the employee by the end of April. This means that employers can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April in respect of the first two JobKeeper fortnights.

What are the rules around a JobKeeper enabling stand down direction, duties to be performed or location of work?

In addition to providing for the JobKeeper payment, the Act provides for significant practical changes to the FW Act to permit additional flexibility to JobKeeper-eligible employers to manage their JobKeeper-eligible employees during the COVID-19 pandemic.

The amendments provide powers that, when enacted, give employers eligible for JobKeeper payments the right to make directions to, request or to reach agreement with, their JobKeeper payment eligible employees. These new provisions enhance flexibility in the employment relationship, subject to an overarching reasonableness criteria, which means that an employee is not required to comply with the direction if it is “unreasonable in all the circumstances”. 

JobKeeper enabling directions

1. JobKeeper enabling stand down direction

The amendments supplement the usual requirements for a stand down direction. Where an employee cannot be usefully employed for their normal days or hours because of changes to the business attributable to a government direction or restriction imposed by the government in response to the COVID-19 pandemic, an employer may ‘stand down’ that employee. These changes could include, for example, a downturn in business due to social distancing rules. 

As an example, an employer may issue a JobKeeper enabling stand down direction that requires an employee to not work on particular days, or to work for a lesser period or for fewer hours than the employee would ordinarily work (including nil hours). 

Employees subject to a JobKeeper enabling stand down direction will be paid the greater amount of the $1,500 per fortnight JobKeeper payment or their earnings in the event they have worked hours to earn greater than $1,500.00 over that fortnight.  

Please note this stand down direction is unique and separate to the usual stand down provisions contained in section 524 of the FW Act.

2. Direction to perform certain duties

An employer may direct an employee to perform any duties in the course of their day-to-day employment within their skill and competency in the event that the duties are safe, the employee is licenced and qualified to perform the duties (in the event that a licence or qualification is necessary) and the duties are reasonably within the scope of the employer’s business operations. If an employee is directed to perform other duties of work, the employee’s hourly rate cannot be less than the greater of their usual base rate of pay, had the direction not been given, or the base rate of pay applicable to the duties the employee is performing as a result of the direction.

3. Location of work direction

An employer may direct an employee to perform their duties at a place (including the employee’s home) that is different from the employee’s normal workplace. This direction can be made in the event that the place is suitable for the employee’s duties, does not require the employee to travel a distance that is unreasonable in all the circumstances and performance of the employee’s duties at the place is safe.

JobKeeper enabling directions – additional requirements

The Act provides a number of rules regarding the issuing of JobKeeper enabling directions. We note that, as drafted, these rules do not apply to a request or agreement in respect of taking annual leave, an agreement to take twice as much annual leave at half pay, or a request and agreement in respect of when work is performed.

Employers will need to be mindful to ensure that any JobKeeper enabling direction is issued in strict compliance with the FW Act as it will otherwise have no effect. Specifically:

  • directions must be in writing and regulations may require the direction to be in a prescribed form
  • duration of a direction – JobKeeper enabling directions will cease to have affect at the start of 28 September 2020 unless before that date the direction is withdrawn or revoked by the employer, the employer replaces it with a new JobKeeper enabling direction or by an order of the FWC
  • reasonableness, notice and consultation requirements – a direction will have no effect if:
    • it is unreasonable in all the circumstances, for example, where the JobKeeper enabling direction will have an unreasonable impact on caring responsibilities
    • the employer has not complied with the notice and consultation requirements, by (i) providing written notice of the employer’s intention to issue the direction at least three days before giving the direction (except where the employee otherwise agrees) and (ii) consulting with the employee or a representative of the employee about the direction. These requirements do not apply where the employer has complied with this consultation process (and such compliance is recorded in writing) in giving another JobKeeper enabling direction and the employee expressed views to the employer and the employer considered those views in deciding to give the relevant direction
    • the employer must have actual information before them that leads them to believe the JobKeeper enabling direction is necessary to continue the employment of one or more of their employees. This information is undefined in the legislation. However, we imagine any genuine review of your business’ operations will be sufficient. In assessing if a JobKeeper enabling direction is relevant to continue the employment of an employee, it is irrelevant if another, alternative JobKeeper enabling direction could have been exercised.

The amendments also specifically require employees to comply with a JobKeeper enabling direction issued by an employer.

Stand down direction – additional requirements

Where an employee has received a JobKeeper enabling stand down direction, the employee’s base rate of pay (worked out on an hourly basis) cannot be less than the base rate of pay (worked out on an hourly basis) that would have applied to the employee if the direction had not been given (Hourly Rate of Pay Guarantee).

If an employee is paid otherwise than on an hourly basis and an industrial instrument applies, then the base rate of pay is the amount specified in the workplace instrument or the amount worked out using the method set out in the workplace instrument as the case requires.

During a JobKeeper directed stand down, an employee’s leave entitlements will continue to accrue as if the direction had not been given and any redundancy pay or payment in lieu of notice of termination will be calculated as if the leave direction had not been given.

Where an employee is directed to be stood down, the employee can make the following requests:

    • a request to engage in reasonable secondary employment
    • a request for training
    • a request for professional development.

The employer is then required to consider the request and cannot unreasonably refuse the request.

What impact does a JobKeeper stand down direction have on service?

An employee’s service will continue to be calculated in the ordinary way, as if the JobKeeper enabling direction had not been given.

What are the rules around a JobKeeper enabling annual leave request?

An employee must consider and must not unreasonably refuse an employer’s request for the employee to take paid annual leave, provided it would not reduce the employee’s accrued annual leave balance to less than two weeks. 

An employer and employee may also agree to take twice as much paid annual leave at half the employee’s rate of pay (e.g. five days of annual leave is taken over 10 days at half pay) during any period that the employer is eligible for a payment in respect of that employee for a JobKeeper payment. 

If an employee agrees to take twice as much annual leave at half the pay:

    • the employee continues to accrue leave entitlements
    • redundancy pay and payments in lieu of notice of termination (both being service–based employment entitlements) will be calculated, as if the agreement had not been made.

What are the rules around a JobKeeper enabling days and times of work request?

An employer may request, and the employee must not unreasonably refuse the request, to enter an agreement that varies the employee’s ordinary days or times of work to allow the employee to perform work on different days or at different times. This agreement can only be made where it is safe to proceed with the changed days or times of work that does not reduce the employee’s number of hours of work compared with the employee’s ordinary hours of work.

What if there is a dispute?

The FWC has the power to deal with a dispute by arbitration, mediation, conciliation or by making a recommendation or expressing an opinion as per the FWC’s ordinary powers to deal with disputes.

What other changes are being made?

Separate to the Act and the Rules, the FWC has recently amended a number of modern awards.

Some recent amendments to the Clerks - Private Sector Award 2010, Hospitality Industry (General) Award 2010 and the Restaurant Industry Award 2010 introduced temporary provisions providing greater flexibility to manage the impact of COVID-19, such as the ability to direct employees to take annual leave on one week’s notice.

Most recently, the FWC has introduced a new form of leave – “pandemic leave” – into 99 modern awards, which provides for two weeks of unpaid leave for COVID-19 related self-isolation (as required by the government or health authorities or on medical advice), and the ability to take annual leave at half pay.

Authors: National Workplace Relations & Safety group

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

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