On 8 April 2020 the Australian Government passed the first phase of legislative instruments and rules relating to the JobKeeper Program. This was followed by an announcement on 21 July 2020 extending the JobKeeper Program to its second phase, and a further update on 7 August 2020 expanding the scheme’s criteria and eligibility in response to Victorian lockdowns. The key information has been summarised below.
1. What is the JobKeeper scheme?
- JobKeeper 1.0 (Phase 1): From 20 March to 27 September 2020, eligible employees can access a wage subsidy of $1,500 per fortnight. The subsidy starts on 30 March 2020, with the first payments received by employers via ATO to the relevant nominated bank account of employer in the first week of May 2020.
- JobKeeper 2.0 (Phase 2): From 28 September 2020 to 28 March 2021, eligible employees can access a wage subsidy, tiered based on employment status and hours worked, as follows:
From 28 September 2020 to 3 January 2021:
- Full time employees, or those working 20 hrs/wk or more – $1,200 per fortnight
- Part time and casual employees working less than 20 hrs/wk – $750 per fortnight
From 4 January to 28 March 2021:
- Full time employees, or those working 20 hrs/wk or more – $1,000 per fortnight
- Part time and casual employees working less than 20 hrs/wk – $650 per fortnight
2. Eligibility criteria for employers
Under JobKeeper 1. 0 (payments received 20 March – 27 September 2020), employers are eligible for the program if:
- Their business has an annual turnover of <$1B and they estimate their turnover has fallen or will likely fall by 30% or more or, for businesses with an annual turnover of >$1B, a turnover drop of 50% or more, over the “turnover test period”.
- An employer satisfies the decline in turnover test at a time if the employer’s projected GST turnover for a turnover test period in which the test time occurs is less than the employer’s current GST turnover for a relevant comparison period (see below).
- That is, turnover is calculated as it is for GST purposes and is reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies. There will be some tolerance where employers, in good faith, estimate a 30% or more or 50% or more fall in turnover but actually experience a slightly smaller fall.
- The “turnover test period” is:
- A calendar month that ends after 30 March 2020 and before 1 October 2020; or
- A quarter that starts on 1 April 2020 (April, May and June) or 1 July 2020 (July, August and September); and
- The relevant comparison period in 2019 that corresponds to the turnover test period above.
Under JobKeeper 2.0 (payments received 28 September 2020 – 28 March 2021), employers are required to demonstrate that they have suffered a decline in turnover using actual GST turnover, rather than projected GST turnover which was accepted during Phase 1. Businesses and not-for-profits are eligible for the program if:
- Their business has an annual turnover of <$1B and their turnover has fallen by 30% or more or, for businesses with an annual turnover of >$1B, a turnover drop of 50% or more, over the “turnover test period”.
- The “turnover test period” is:
- September 2020 quarter (July, August an September), as compared to the same quarter in 2019, to be eligible for JobKeeper payment from 28 September 2020 to 3 January 2021; and
- December 2020 quarter (October, November and December), as compared to the same quarter in 2019, to be eligible for JobKeeper payment from 4 January to 28 March 2021.
- The Commissioner of Taxation will have discretion to set out alternative tests that would establish eligibility 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.
- As the deadline to lodge a BAS for the September quarter or month is in late October, and the December quarter (or month) BAS deadline is in late January for monthly lodgers or late February for quarterly lodgers, businesses and not-for-profits will need to assess their eligibility for JobKeeper in advance of the BAS deadline in order to meet the wage condition (which requires them 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 an entity has to pay employees in order to meet the wage condition, so that entities have time to first confirm their eligibility for the JobKeeper Payment.
Businesses and not-for-profits will generally be able to assess eligibility based on details reported in the Business Activity Statement (BAS). Alternative arrangements will be put in place for businesses and not-for-profits that are not required to lodge a BAS (for example, if the entity is a member of a GST group).
In September 2020, the government released updated guidance on alternative tests including the period for calculating the decline. You can find full details on the ATO website here.
3. Eligible employees
Note employee eligibility was updated under JobKeeper 2.0 to extend the employment date. The current eligibility criteria is:
- Employee had to be on the employer’s books on 1 July 2020.
- Employee may be full-time, part-time or casual (the latter employed on a regular and systematic basis for longer than 12 months).
- Fixed-term contractors may also be eligible, subject to some additional criteria (visit treasury.gov.au/coronavirus/jobkeeper for details).
- Employees on paid parental leave are not eligible.
- Employee must be an Australian citizen, the holder of a permanent visa, or a Special Category (subclass 444 – New Zealand Citizen) Visa Holder.
- The reference period for employees regarding their hours worked to determine their tier of payment will be the two fortnightly pay periods prior to 1 March 2020 or, if using the later employment date under the extension, then prior to 1 July 2020. The period with the higher number of hours is to be used for employees who were eligible at 1 March 2020.
4. Employers can vary hours of work or duties of their staff
- Employers can present staff with written “stand down direction” (form not prescribed), and will be empowered to unilaterally direct employees to work for a lesser period or for fewer hours than the employee would ordinarily work (including nil hours) or perform new duties not strictly outlined in their job description, within reason. To do this, the employer must give the employer at least 3 days’ written notice of the intention to give any direction or written notice of a lesser period by genuine agreement between the parties. Importantly, this stand down direction has effect despite a designated employment contract provisions to the extent of any inconsistency.
- That is, employers can reduce their employees’ hours until their earnings equal the wage subsidy being received. The Government will provide the relevant tiered wage subsidy per fortnight before tax during the eligible payment period. Employers can elect to top-up the payment, but must pay the Government-provided subsidy amount as a minimum.
- However, any JobKeeper directions issued by the employer to the employee cannot reduce an employee’s base hourly rate of pay. That means, even if employer directs employees to change their duties, the employer must ensure that the employee’s base rate of pay (worked out on an hourly basis) is not less than the base rate of pay (worked out on an hourly basis) that would have been applicable to the employee if the written direction had not been given to the employee.
- Employers can tell their employees to work in different roles or locations as long as these are safe, within employees’ skills and not too far from their current workplace and “reasonably within scope of the business”. The employer must have information to support a reasonable belief the direction is necessary to continue the employment of one or more employees.
- Employees who lose hours will be able to apply for a second job, however they can only receive JobKeeper payments via the primary employer.
5. What about annual leave?
- An employee who is subject to a JobKeeping stand down direction accrues leave entitlements as per usual as if the direction had not been given, and any entitlement to redundancy pay and payment in lieu of notice of termination are to be calculated as if the direction had not been given.
- Under JobKeeper 1.0:
- The employer and employee can agree (despite any designated employment contract provision) to the employee taking twice as much annual leave at half the employee’s rate of pay for a period. Employers can also ask employees to change the days they work and take annual leave.
- Employees may refuse if they have a “reasonable” excuse. All employees can keep 2 weeks of leave in reserve.
- An employee who takes annual leave at half pay as agreed with their employer accrues leave entitlements as if the JobKeeping stand down direction had not been given, and any entitlement to redundancy pay and payment in lieu of notice of termination are to be calculated as if the direction had not been given.
- Under JobKeeper 2.0:
- Employers no longer have the ability to seek agreement with staff to draw down on their annual leave.
6. Can a stood down employee ask for secondary employment?
- Yes, an employee could ask their employer who qualifies for the JobKeeper payment scheme in a range of circumstances for permission to engage in reasonable secondary employment, training or professional development. If an employee who is subject to a stand down direction makes such a request, the employer should consider and not unreasonably refuse such requests.
7. No requirement to pay Superannuation Guarantee Payments
- No superannuation guarantee payments are required to be paid on any additional payment made because of a JobKeeper payment.
8. Payment mechanics from the ATO
- Payments will generally be paid by the ATO by crediting the amount of the payment to the bank account nominated for tax refunds, etc of the employer.
9. Record keeping and ATO compliance requirements
- The program will be subject to ATO compliance activities and audits. There will be a positive obligation on employers to establish their eligibility and that of their employees.
- Non-compliance such as failure to pass on the JobKeeper payment to employees could subject companies to fines of up to $126K and could also face civil penalties up to $126K if the employer knowingly misuse new powers granted to them under the legislation.
10. What recourse will eligible employees have against their employer?
- Employees will have recourse to the Fair Work Commission if they believe their employer has not followed to new rules. The JobKeeper Payment does not remove any workplace protections for employees.
Looking for more?
For more information, including the latest Fact Sheets and FAQs, visit treasury.gov.au/coronavirus/jobkeeper.
For information specifically on the JobKeeper 2.0 extension, visit www.ato.gov.au/general/jobkeeper-payment/jobkeeper-extension-announcement/.
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