JobKeeper legislation news
The JobKeeper legislation: What it does and doesn’t say
On 8 April 2020, Parliament passed two Bills to give effect to the JobKeeper Payment scheme. The broad details of this scheme were first announced by the Prime Minister on 30 March 2020. The measures are expected to benefit six million Australian workers and are budgeted to cost $130 billion across 2019-20 and 2020-21.
A significant feature of the scheme is that the scheme is not mandated by legislation per se. Rather the legislation merely provides a broad framework of the scheme and then delegates all powers as to the operation of the scheme to the Treasurer. It is the responsibility of the Treasurer to develop a series of ‘rules’. A draft version of the ‘rules’ (the “Rules”). On 9 April 2020, the rules were finalised and ‘passed’ by Treasury. However, the Rules prescribe that the JobKeeper scheme is to be administered by the Commissioner of Taxation (the “ATO”).
Thus, the implementation of the JobKeeper Payment scheme can be said to involve three stages namely:
- Passing of legislation by Parliament – this occurred on 8 April 2020;
- Finalisation of the Rules by Treasury – this occurred on 9 April 2020; and
- Publication by the ATO of details as to how the scheme will be administered (the “ATO Guidelines”) – we are still awaiting these details.
The first of these measures authorises the introduction of the “JobKeeper” scheme, which will provide wage subsidies of $1500 per fortnight for up to 6 million workers whose jobs and income have been affected by COVID-19 and the measures taken to contain its spread.
The second set of measures, among other changes, amends the Fair Work Act 2009 (Cth) (the FW Act) to give employers who are eligible for JobKeeper support greater flexibility to manage employees’ hours, location and duties without their consent. It also allows those employers to more readily reach agreement with employees on the taking of annual leave.
Which businesses and organisations are eligible for JobKeeper payments?
Based upon Treasury’s guidance, employers will be eligible for the subsidy if, at the time of applying:
- their business has an annual turnover of less than $1 billion and they estimate their turnover has fallen or will likely fall by 30 per cent or more; or
- their business has an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) and they estimate their turnover has fallen or will likely fall by 50 per cent or more; or
- they are a charity registered with the Australian Charities and Not-For-Profit Commission (other than a school or university) and they estimate their turnover has or will likely fall by 15 per cent or more.
Treasury has indicated that self-employed individuals will be eligible if they meet the relevant turnover tests outlined above. The same is true for one (but only one) member of a partnership, beneficiary of a trust, director or shareholder of a company.
Treasury has also suggested that various types of employer will be ineligible to participate in the scheme. These include government agencies, local councils, businesses subject to the Major Bank Levy, and companies in liquidation.
Importantly, if a business does not meet the drop in turnover test at the time the scheme commences, Treasury has suggested that the business can apply to receive the payment at a later time once the turnover test has been met. In this case, the JobKeeper payment is not backdated to the commencement to the scheme.
It should also be emphasised that the scheme is not a compulsory one. Employers are not obliged to seek jobseeker support for their employees, even if they are eligible to do so.
Which employees are eligible for the JobKeeper payment?
Treasury has indicated that employees will be eligible for JobKeeper payments if:
- they were ‘on the books’ on 1 March 2020;
- they are currently employed by an eligible employer (this includes employees who were stood down as at 1 March 2020, or have since been stood down);
- they were aged 16 years or older at 1 March 2020;
- they were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder, as at 1 March 2020;
- they were a resident for Australian tax purposes on 1 March 2020; and
- they have not received a JobKeeper payment from another employer.
Additionally, if the employee is a casual employee, they will only be eligible if they had been employed by their employer on a regular and systematic basis for at least 12 months as at 1 March 2020.
If an employee’s position was made redundant after 1 March, the employee will be eligible if the employer re-employs the employee. The amendments to the FW Act do not appear to address what should occur when an employer re-hires a previously retrenched worker in order to make them eligible for JobKeeper support. It is unclear, for instance, whether any severance payments to the worker could be reclaimed, or whether their continuity of service will be broken.
Treasury has also suggested that a casual employee will be deemed to have met the above test if their employer has changed in the last 12 months by reason of a transfer of business.
What to take away from this message:
Employers should consider, firstly, whether they are eligible for payments pursuant to the rules (which we expect will be released in the coming days), and secondly, which employees the business assesses are eligible.
Assuming employees are eligible for JobKeeper payments, employers should also move quickly to assess whether they meet the thresholds required for varying an employee’s days, location of work, or duties, requesting an employee to take annual leave or standing an employee down (including reducing the hours of employees), noting that the Fair Work Commission is empowered to deal with disputes about many of these matters.
- The JobKeeper scheme will allow eligible employers to apply to the Australian Taxation Office to receive wage subsidies for their eligible employees. Employers will be able to claim a fortnightly payment of $1,500 before tax per eligible employee from 30 March 2020 for a period of up to 6 months.
- The scheme will be introduced by a set of rules to be made by the Treasurer. It is those rules, rather than the legislation passed by Parliament, which will set out eligibility for the scheme and deal with other aspects of its operation.
- A new Part 6-4C of the FW Act will operate until 28 September 2020. While in effect it will allow employers accessing the JobKeeper scheme to make various changes to their employment arrangements.
- Employees who are receiving jobseeker payments will not be able to unreasonably refuse a request to take annual leave. However, any such request must leave an employee with at least two weeks’ annual leave remaining.
- Eligible employers will be able to alter the usual duties, days and location of an employee’s work, provided the employee is receiving JobKeeper payments. This will be possible regardless of any award, enterprise agreement or employment contract provisions that would otherwise apply.
- Eligible employers who might not have been able to stand down employees under section 524 of the FW Act may now be able to do so.
- Penalties will apply for breaches of key aspects of the JobKeeper scheme. For example, employers will face a penalty of up to 60 penalty units ($12,600) for contravention of a new “minimum payment guarantee”.
Importantly, the JobKeeper payment rules, which will set the criteria for receiving the JobKeeper subsidy, have not yet been released. We expect them shortly. Accordingly, while we have endeavoured to flag areas of continued uncertainty throughout the article, employers should keep up to date with developments to the scheme.