On 8 April 2020, Federal Parliament passed the Coronavirus Economic Response Package (Payments and Benefits) Bill 2020 and the Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020. Michael Byrnes, Partner and Emily Capener, Solicitor explains what this means for you and how your business can access these benefits.
THE JOBKEEPER PAYMENT
What is the JobKeeper Payment?
In response to the COVID-19 crisis and the significant economic downturn faced by many businesses, the Australian Government has recently passed a $130 billion plan to assist employers in retaining their staff.
Under the scheme, called the JobKeeper Payment, employers able to demonstrate a certain level of actual or expected fall in turnover will be entitled to a fortnightly payment of $1,500 (before tax) for each eligible employee. This payment will in effect act as a subsidy to enable employers to continue paying their employee’s wages.
The JobKeeper Payment provides an attractive alternative for employers who may otherwise be considering making staff redundant. Ultimately, this legislation aims to maintain the Australian workforce and assist businesses recover from the crisis. While “the devil is in the detail” might be a trite expression, elements of the scheme should be closely considered both in order to avoid risks and traps associated with it and to take full advantage of the benefits it offers.
It is expected that approximately 6 million eligible workers will receive the JobKeeper Payment, which will be available for the period between 30 March 2020 and 27 September 2020.
Significantly, the JobKeeper scheme is more than just a business subsidy. It also incorporates significant, short term changes to the Fair Work Act 2009 (Cth) (FW Act) to facilitate the objectives of the scheme, specifically to keep employees whose employment would otherwise be made redundant to remain connected to their employer throughout this pandemic crisis. As well as enabling workers to keep employed, that connection will help facilitate the economic “snapback” the government hopes to achieve once the crisis is over (or has at least abated).
Is my business or not-for-profit eligible?
Employers will be eligible if:
- their business has an annual turnover of less than $1 billion (or is part of a consolidated group for income tax purposes with turnover of less than $1 billion) and it is estimated that their turnover has or is likely to fall by at least 30 percent; or
- their business has an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with a turnover of $1 billion or more) and it is estimated that their turnover has or will likely fall by at least 50 percent; and
- their business is not subject to the Major Bank Levy.
Those who are self-employed (such as sole traders and gig economy workers) will also be eligible where they meet the above requirements.
ACNC registered charities will be eligible to receive the JobKeeper Payment where it is estimated their turnover has or is likely to fall by 15 percent.
In order to establish that your business or not-for-profit meets the required fall in turnover, most employers will need to show that their turnover has or is likely to fall in the relevant month or quarter relative to their turnover in a corresponding period a year earlier. (The reporting period will be dependent on your Business Activity Statement). However, it is important that employers closely consider the evidentiary requirements for their specific type of business. For example, different reporting requirements apply to those businesses which were not in operation a year earlier or to those where the previous year’s turnover is not an indicative representation of their usual turnover.
Notably, a number of employers are excluded from accessing the JobKeeper Payment, including:
- Australian government and agencies;
- State and Territory governments and agencies;
- Local governments;
- State-owned corporations;
- Foreign governments and agencies;
- Those businesses in liquidation, or a partnership, trust or sole trader in bankruptcy.
Are all my employees eligible for the payment?
Not all employees will be eligible for the JobKeeper Payment.
To be eligible, employees must:
- be currently employed by the eligible employer (this includes employees who have been stood down or re-hired);
- have been employed by their employer as at 1 March 2020;
- be full time, part time, or long-term casuals (i.e. those casual employees who are employed on a regular and systemic basis for longer than 12 months as at 1 March 2020);
- be at least 16 years of age as at 1 March 2020;
- as at 1 March 2020, be an Australian citizen, permanent resident visa holder, or hold a Special Category (Subclass 444) Visa;
- be a resident for tax purposes as at 1 March 2020; and
- not be in receipt of a JobKeeper Payment from another employer.
For eligible employees earning less than $1,500 per fortnight (before tax) (including those employees who have been stood down due to the Coronavirus), the employer must provide the employee at least $1,500 per fortnight. Employers can also use the $1,500 payment to subsidise the wages of those employees who earn more than that amount. As discussed further below, the payment can also be used to subsidise annual leave.
Notably, employers are required to continue to pay their employee’s superannuation in accordance with applicable superannuation legislation.
How to apply
Eligible employers who want to receive the JobKeeper Payment through the scheme will need to elect to do so by applying at www.ato.gov.au. Evidence of the employer’s eligibility will need to be provided, as well as relevant information pertaining to each of the eligible employees.
Once an employer successfully starts to obtain the JobKeeper payment, they will need to notify all eligible employees and ensure that each eligible employee receives at least $1,500 per fortnight (before tax). Employers will be required to provide relevant information to the ATO on a monthly basis, such as the number of eligible employees employed by the business.
JOBKEEPER FLEXIBILITY
While there has been much focus on the JobKeeper payment (which is understandable, given the staggering amounts involved), the JobKeeper scheme also gives employers who are eligible to receive the JobKeeper Payment the authority to make what are described as ‘JobKeeper Enabling Directions’ in respect of eligible employees. These directions are designed to provide eligible employers with greater flexibility with respect to managing the hours, duties and location of their workforce in the face of significant COVID-19 related economic downturn.
The JobKeeper Enabling Directions available to eligible employers include:
- standing down employees (including reducing days and hours);
- changing the duties performed by the employee; and
- changing the employee’s location of work.
We examine each of these in turn below.
JobKeeper Enabling Directions – Stand Down (JobKeeper enabling stand down direction)
There is a limited general right to stand down employees in the FW Act (section 524). This is by design – stand down is considered a drastic step to be invoked judiciously. Employees who are stood down are usually left in limbo. As a general observation there appears to be a range of situations where that limited right (which relevantly relates to a stoppage of work) has been recently applied in circumstances where it did not properly pertain. It will be interesting to see when the dust settles whether some of those stand downs are challenged in the Fair Work Commission pursuant to section 526 of the FW Act.
While it has not been openly stated, the implementation of the JobKeeper enabling stand down direction appears to be a response to the limited nature of the existing stand down provisions in the FW Act. It expands both the circumstances in which an employer can give a stand down direction and the content of such a direction. This is not, however, a new general right under the FW Act — it is only open to employers who are eligible for JobKeeper in respect of employees for whom they are receiving the payment for the duration of the scheme.
A JobKeeper enabling stand down direction is more flexible than a stand down under the FW Act. It enables the employer to direct a reduction in hours or days rather than the “all or nothing” situation in a normal FW Act stand down. That said, an eligible employer can reduce the number of days or hours to zero if it chooses to do so.
Employers can only issue a JobKeeper enabling stand down direction (including reduced hours) where the employee cannot be usefully employed for the employee’s usual hours due to the COVID-19 pandemic or any related government directives or initiatives.
In order to issue a JobKeeper enabling stand down direction, an eligible employer must comply with the following conditions:
- The employer must have qualified for the JobKeeper scheme.
- The employer is entitled to JobKeeper Payments for the employee for the period that the direction applies.
- The employee must be consulted. That is, at least three days before the direction is issued (or less where the parties mutually agree), the employer must give the employee written notice of intention to issue the direction. The employee or their representative must be given the opportunity to consult with the employer about the direction. There needs to be a written record of this consultation.
- The direction then needs to be given in writing.
- The direction and its implementation must be safe, particularly with regard to the nature of the COVID-19 pandemic.
- The direction must be reasonable in all the circumstances.
- The “Wage Condition” is satisfied. That is, the employer is entitled to receive JobKeeper Payments for the employee and complies with the relevant legislation (about which more information will be provided by the Australian Taxation Office in due course).
- The employer must meet the Minimum Payment Guarantee which is, essentially, an amount not less than the greater of the following:
- the amount of JobKeeper Payment payable to the employer for the employee for the fortnight; or
- the amounts payable to the employee in relation to the performance of work during the fortnight. (For clarity, “amounts payable” includes any applicable incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates, or leave payments.)
The employer must ensure that the employee receives a base hourly rate of pay which is not less than the rate the employee would usually receive. Under the JobKeeper scheme, this is referred to the “hourly rate of pay guarantee”.
JobKeeper Enabling Directions – Duties and Location
The JobKeeper scheme also enables eligible employers to direct employees to perform different duties to those they usually perform or perform their duties from a different location. (One obvious example in the present environment is a direction to work from home – the strict terms of many industrial instruments potentially preclude such a direction).
Once again, the intention is to confer flexibility upon eligible employers to seek to maximise the value of the work performed by employees they retain with the support of JobKeeper payments.
A number of conditions also apply to these JobKeeper Enabling Directions (relating to location and duties). These conditions include:
- The employer has information that leads them to reasonably believe that the JobKeeper Enabling Direction is necessary to maintain the employment of the employee.
- The employer must have qualified for the JobKeeper scheme.
- The employer is entitled to JobKeeper Payments for the employee for the period that the direction applies.
- The employee must be consulted (see above, as with Job Keeper enabling stand down direction).
- Any modified duties directed to be performed are within the employee’s skill and competence, and the employee holds any necessary qualifications or required licence(s) to perform those duties.
- Any alternative location from which the employee has been directed to work is suitable for the employee’s duties.
- The duties or the location, as applicable, is generally safe and safe having particular regard to the nature of COVID-19.
- The duties or the location, as applicable, is reasonably within the scope of the employer’s business operation.
- The direction is reasonable in all the circumstances.
Timeframes
Due to the nature of the circumstances surrounding this legislation, all JobKeeper Enabling Directions will cease to have effect of 28 September 2020.
REQUESTS (WITH A STING)
The JobKeeper scheme also seeks to increase employer flexibility by providing for additional ‘employer request’ arrangements.
Employers eligible for the JobKeeper scheme are able to request to make an agreement with eligible employees regarding:
- the days or times when the employee is to perform their work; and
- the employee taking annual leave (including at half pay).
Similar to the JobKeeper Enabling Directions set out above, a number of conditions must be satisfied before a request can be made to alter the days or times when an employee is to perform their work. For example, the performance of duties on those days or times is to be generally safe, with particular regard to the nature and spread of COVID-19. Relevantly, (and this is the sting in the request) an employee must consider, and cannot unreasonably refuse, the request. Given this is a request (albeit one which the employee cannot unreasonably refuse), rather than a JobKeeper enabling stand down direction, the requirements on the employer are less onerous. Employers will need to decide – request or direct? (One important caveat, however, is that the request cannot be used to reduce days or hours – that must be done by way of the JobKeeper enabling stand down direction).
With respect to annual leave, employers eligible for the JobKeeper Payment are authorised to request staff to take leave. This must be done by agreement between the employer and the employee, however, as with the request to vary days and times work is performed, the employee must consider, and not unreasonably refuse, the request. Notably, the request to take annual leave must not result in the employee having an annual leave balance of less than two weeks. The employer and employee can agree the relevant annual leave period will be at half pay for double the period. Where an employee accepts the request to take annual leave, the JobKeeper Payment can be used to subsidise their annual leave payments.
AN EVOLVING SITUATION
While the JobKeeper legislation is comprehensive, it is not exhaustive in respect of the JobKeeper scheme. It does not provide a complete understanding of the nature and operation of the JobKeeper scheme. This is because the legislation confers power on the Treasurer to make rules to give effect to the scheme. At time of writing, these rules are yet to be released. While they are expected to be released in the coming days, at present there remains some uncertainty.
As the Australian Government releases more information over the coming days, employers will need to watch this space closely to ensure they are in strict compliance with all eligibility requirements. Employers should be particularly careful before making representations or giving undertakings to government agencies in respect of JobKeeper payments.
To listen to COVID-19: A Short Guide to the JobKeeper Payment and JobKeeper Flexibility podcast by Michael Byrnes click here.
If your business has been impacted by COVID-19 and you need specialist employment law advice, please contact our Employment Partner Michael Byrnes on +61 2 9777 8340.
