Blog

22 April 2019 (updated August 2020)

The $130 billion JobKeeper package of support for Australian employers and their employees adversely affected by COVID-19 pandemic management in Australia became law on 9 April 2020, and has continued to be updated since including two extension periods announced on 21 July 2020. In this alert, our Workplace and Employment law team provide an overview of:

• the financial elements of the package, include eligibility requirements;

Note that eligible employers seeking to maximise the value of the package needed to take certain steps by 26 April 2020;

• temporary flexibilities for the management of eligible employees introduced into the Fair Work Act.

JobKeeper payment

The JobKeeper scheme is intended to assist qualifying employers to retain staff during the downturn caused by the COVID-19 pandemic and support business recovery when conditions improve.

JobKeeper payments are payable to qualifying employers from 30 March 2020 to 28 March 2021 (extended from the original 28 September 2020) in respect of each eligible employee on their books on 1 March 2020 who is retained by the employer. Qualifying employers will receive a payment (fortnightly in arrears) of: 

• $1,500 per fortnight up to 27 September 2020;
• a Tier 1 rate of $1,200 per fortnight and a Tier 2 rate of $750 per fortnight between 28 September 2020 and 3 January 2021; and
• a Tier 1 rate of $1,000 per fortnight and a Tier 2 rate of $650 per fortnight from 4 January 2021,

for each eligible employee with Tier 1 being all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit 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 Tier 2 being other eligible employees and business participants.

The package will be administered by the Australian Taxation Office (ATO), on whose website the most authoritative/current information can be found here. The following information is largely a reproduction of some of that material as accessed on and updated to 19 August 2020.

At the time of writing there are numerous uncertainties about various aspects of the package. However, these are the key features, noting the potential importance for employers to move quickly, if eligible, to secure the full available benefits of the package.

Eligible employers

Employers will be eligible for the JobKeeper payment if all of the following apply:

On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.

• On 1 July 2020 (originally 1 March 2020), you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia (note that registration with the Australian Charities and Not-for-profits Commission (ACNC) is not one of the requirements to qualify for JobKeeper, but does ).
• You employed at least one eligible employee on 1 July 2020 (originally 1 March 2020).
• Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired).
• Your business has faced a:
  • 30% fall in turnover (for an aggregated turnover of $1 billion or less);
  • 50% fall in turnover (for an aggregated turnover of more than $1 billion);
  • 15% fall in turnover (for ACNC-registered charities other than universities and schools); or
  • and can continue to demonstrate this for each of the two periods of extension (28 September 2020 to 3 January 2021 when compared to the June and September quarters, and 4 January 2021 to 28 March 2021 when compared to each of the June, September and December quarters) relative to comparable periods (generally the corresponding quarters in 2019).
• Your business is not in one of the ineligible categories.

Note that the decline in turnover test described above is applied to the employer entity. The JobKeeper scheme does not recognize non-profit sub-entities and the decline in turnover test must apply to the NFP entity as a whole. The entity must include the turnover of all its branches and non-profit sub-entities. A non-profit sub-entity cannot choose to participate in the JobKeeper scheme and assess its eligibility for JobKeeper payments based on the sub-entity's turnover.

If a business or not-for-profit does not meet the additional turnover tests for the extension periods (28 September 2020 onwards), this does not affect their eligibility prior to 28 September 2020.

You will be able to enrol in the JobKeeper scheme from 20 April 2020 using an online form on the ATO website. After you enrol, you will later identify your specific eligible employees and submit the information to the ATO.

While you can enrol later, enrolments submitted after 26 April will be ineligible for JobKeeper payments for prior periods. If you think you might qualify for JobKeeper support, you should seek urgent advice to maximise the available benefits.

Eligible employees

Employees are eligible for JobKeeper support if they:

• are employed by you (including those stood down or re-hired);
• were either a:
  • permanent full-time or part-time employee at 1 March 2020;
  • long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employer;
• were at least 16 years of age on 1 March 2020;
• were an Australian resident as at 1 March 2020 within the meaning of the Social Security Act 1991, which requires that they reside in Australia, and are one of an Australian citizen, the holder of a permanent visa, or a Protected Special Category Visa Holder. Your employee can also be an Australian tax resident who is a Special Category (Subclass 444) Visa Holder. Employees who are not permanent residents of Australia must notify you of their visa status to allow you to determine if they are eligible;
• were not in receipt of any of these payments during the JobKeeper fortnight:
  • government parental leave or Dad and partner pay;
  • a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work; 
• agree to be nominated by you.

You cannot claim for any employees who:

• were first employed by you after 1 March 2020; or
• left your employment before 1 March 2020; or
• have been, or have agreed to be, nominated by another employer.

Casual employees are not eligible unless they were employed by you on a regular and systematic basis for at least 12 months as at 1 March 2020.

If you decide to participate in the JobKeeper Payment scheme, you must nominate all your eligible employees. You cannot choose to nominate only some employees. However, individual eligible employees can choose not to participate.

If your employees have multiple employers, they can usually choose which employer they want to nominate through. However, if your employees are long-term casuals and have other permanent employment, they must choose the permanent employer and cannot nominate you. They cannot receive the JobKeeper payment from more than one employer.

Nominating employees

The design of the JobKeeper scheme is that all eligible employees are paid the minimum of $1,500 per fortnight and that the employer claims for each of these employees. Employers are not meant to pick and choose between their eligible employees.

Before you enrol to receive JobKeeper payments, you need to notify each eligible employee that you intend to nominate them as eligible employees under the JobKeeper scheme.

You must tell those employees that you have nominated them as an eligible employee to claim the JobKeeper payment. They must agree to be nominated by you by completing the JobKeeper employee nomination notice and returning it to you for your records. You may also choose to create your own employee nomination notice where it is not practical to have each employee complete and return the notice to you. This will allow you to use your own portal or communication channel to obtain this information. 

Your employees' signature is not required by the ATO, but can be requested by you. Employees submitting their nomination notice to their employer through their internal business process (for example, a business HR portal), or their own form of communication channel, (for example, email) is acceptable.

The nomination form does not need to be provided to the ATO however employers are required to keep a copy of the completed form as part of their legal record keeping obligations.

Employees who were stood down or on long term leave

Employees who have been stood down from work under the Fair Work Act 2009 without pay may still be eligible employees as long as they were in your employment and met the eligibility criteria on 1 March 2020.

You will need to have paid them at least the minimum amount of $1,500 for each fortnight you claim for, to receive the JobKeeper payment.

Employees who have been terminated

If you terminated an employee after 1 March 2020, you can re-engage them and they will be eligible if they met the eligibility criteria on 1 March 2020.

If you want to claim the JobKeeper payment for employees you have re-engaged, you will need to:

• confirm they want to be re-hired and participate in the JobKeeper scheme with you;
• re-engage the employees you want to claim for;
• ask them to complete the JobKeeper employee nomination notice and return it to you. You are required to keep this form as part of your legal record keeping obligations;
• start paying them a minimum of $1,500 (before tax) for each fortnight they are employed and you claim for.

You will only be paid a JobKeeper payment for employees from the fortnight they were re-engaged. You cannot claim retrospectively for employees you re-engage.

After you have worked out you and your employees are eligible

If you meet the eligibility criteria and want to start claiming the JobKeeper payment on behalf of your employees, you need to start paying them at least $1,500 per fortnight (before tax) and continue to pay them for as long as you keep claiming.

JobKeeper changes to the Fair Work Act

Overview

The changes are temporary and will, along with all workplace arrangements made under them, expire on 28 September 2020.
They complement the JobKeeper package, in the sense that they apply only to employers and employees entitled to the benefit of, and participating in, the package and only for so long as those conditions remain. The changes to the Fair Work Act are irrelevant to employers not participating in the JobKeeper arrangements.

The new provisions enable employers who qualify to give directions called ‘JobKeeper enabling directions’. In certain circumstances, this means that employers can temporarily:

• stand down an employee (including by reducing their hours or days of work, down to zero if necessary);
• change an employee’s usual duties;
• change an employee’s location of work.

The new provisions also enable employers who qualify for the JobKeeper scheme, and who are entitled to JobKeeper payments for their employees, to make agreements with their employees to change their days and times of work and take annual leave in certain circumstances.

General considerations applicable to all JobKeeper enabling directions

All such directions:

• must be given in writing, on three days’ notice (unless the employee agrees to a shorter timeframe) and following consultation. A written record must be kept of the consultation;
• must be safe;
• can’t be unreasonable taking all relevant circumstances into account e.g., the employee’s caring responsibilities;
• take precedence over other provisions of the Fair Work Act and any applicable industrial instrument or employment contract;
• are subject to review, in the event of a dispute, by the Fair Work Commission;
• will last until midnight 27 September 2020 unless earlier withdrawn, revoked or varied by the employer, or, changed by an order of the Fair Work Commission in any related dispute;
• must be complied with by any employee to whom they are validly given.

At the time of writing no specific forms have been prescribed for the giving of JobKeeper enabling directions although the legislation refers to the prospect for their introduction.

Employers must also still comply with:

• requirements to pay minimum wages;
• general protections laws;
• unlawful termination laws;
• anti-discrimination laws;
• laws dealing with health and safety obligations of employers and employees; and
• workers' compensation laws.

Unfair dismissal laws also still apply, however, the new provisions expressly declare that the giving of a JobKeeper enabling direction does not amount to a redundancy.

As following, the new provisions are quite prescriptive and subject to civil penalties for missteps, including a maximum penalty of $630,000 for serious contraventions by corporate contravenors. These include knowingly giving an invalid direction or failing to pass on the full value of the JobKeeper payment to eligible employees.

Direction to reduce hours or days of work – JobKeeper enabling stand down directions

Qualifying employers can direct an eligible employee to work fewer hours or days (including no hours) in certain circumstances.

These directions are called ‘JobKeeper enabling stand down directions’. Employers can only give an employee a JobKeeper enabling stand down direction:

• if the employee can't be usefully employed for their normal days or hours because of changes to business attributable to the COVID-19 pandemic, or
• because of government initiatives to slow the transmission of COVID-19 (for example, because of an enforceable government direction).

A stand down direction won’t apply if an employee is taking paid or unpaid leave (such as annual leave) or is otherwise entitled to be absent from work (such as on a public holiday). If the employee normally receives a leave payment that would be less than the JobKeeper payment for a fortnight, the employee is still entitled to an amount that is equal to the JobKeeper payment for the fortnight. Employees need to either be paid normally during these periods, or $1,500 (before tax) – whichever is more (this is called the wage condition).

For the duration of a stand down direction:

• employees still accrue their usual leave entitlements for the period the direction applies, as if the direction hadn't been given;
• service is considered continuous and will count as time worked upon termination of the employment, for the purposes of redundancy and pay in lieu of notice;
• employees can request to take on secondary employment, training or professional development. Employers must consider these requests and can’t unreasonably refuse them.

An employee subject to a stand down direction (to not work on certain days, to work for a lesser period, or to work for a reduced number of hours), must be paid, either, the JobKeeper payment or their usual pay for any hours worked – whichever is more. The employee’s hourly base pay rate can’t be reduced (this is called the minimum payment guarantee).

Direction to change usual duties or location of work

A qualifying employer can direct an eligible employee:

• to perform any duties that are within their skill and competency so long as:
  • the employee has any required licenses and/or qualifications to perform the duties;
  • the duties are reasonably within the scope of the employer’s business operations.
• to perform duties at a place that is different from the employee's normal place of work, including at the employee's home, provided that:
  • the location is suitable for the employee’s duties;
  • if the place is not the employee’s home - the employee is not required to travel an unreasonable distance in all the circumstances;
  • the duties and their performance at the new location are reasonably within the scope of the employer’s business operations.

A valid direction about alternative duties or work location must also be supported by a reasonable belief of the employer, supported by suitable evidence, that the direction is necessary to continue the employment of one or more employees. Implicitly, employers will need to make and keep good records of the matters they considered to establish the belief required to support such directions.

The employer must pay an employee subject to a JobKeeper enabling direction about location or duties, either, the JobKeeper payment or their usual pay for any hours that the employee works (whichever payment is higher). The employee’s hourly base pay rate cannot be reduced.

If a higher hourly base pay rate applies to any new duties an employee is performing e.g., under an applicable award or other industrial instrument, they must receive at least that higher pay rate while performing those duties.

Service is considered continuous for the purposes of redundancy and pay in lieu of notice (i.e., it counts as time worked).

Agreement to work different days and times

The new provisions also enable a qualifying employer to agree with an eligible employee that they will perform their usual duties on different days or times than usual. The employer needs to make sure that the employee’s usual work hours aren't reduced. Reducing work hours would require a JobKeeper enabling stand down direction.

If an employer asks their employee to make these changes, the employee has to consider the request, and can’t refuse it unreasonably. Any agreement must be recorded in writing.

Agreement to take annual leave

The new provisions enable a qualifying employer:

• to request an eligible employee to take paid annual leave (provided they keep a balance of at least two weeks); and
• to agree in writing with that employee for them to take annual leave at half their usual pay for twice the length of time.

Employees who make an agreement to take annual leave still accrue their usual leave entitlements for the period the agreement applies, as if the agreement hadn't been made. Service is considered continuous for the purposes of redundancy and pay in lieu of notice (i.e., it counts as time worked).

If an employer asks their employee to take annual leave, the employee has to consider the request, and can’t unreasonably refuse it.

For further assistance in relation to the JobKeeper package, please contact a member of our Workplace and Employment team.