As you may now be aware, the Federal Government is introducing urgent amendments to the Fair Work Act 2009 (Cth), to deliver JobKeeper benefits by way of wage subsidies and increased employment flexibility, in the wake of the COVID-19 pandemic.
We have prepared the below client update to help you navigate this ever-changing space.
What is the JobKeeper Program?
The Federal Government has introduced a subsidy which allows eligible employers impacted by COVID-19 to continue to pay eligible employees. The subsidy consists of a payment of $1,500 per fortnight per eligible employee from 30 March 2020 until 27 September 2020.
The newly introduced legislation sets out the eligibility criteria for the JobKeeper Program, which we summarise below.
Employers (including not for profit and self-employed individuals) will be eligible for the subsidy if, at the time of applying:
- The business has an aggregated turnover of less than $1 billion (for income tax purposes) and they estimate their turnover has fallen by more than 30 per cent or more; or
- The business has an annual turnover of $1 billion or more (for income tax purposes) and they estimate their turnover has fallen or will likely fall by more than 50 per cent; and
- The business is not subject to the Major Bank Levy (e.g. a bank).
Charities registered with the Australian Charities and Not-For-Profit Commission are eligible if they estimate their turnover has or will likely fall by 15 per cent or more relative to a comparable period. Otherwise the above turnover test applies.
Self-employed individuals must not be permanently employed by another employer to be eligible.
NB: there are, of course, provisions that govern how to estimate turnover.
Eligible employees are employees who:
- Are currently employed by the eligible employer (including those stood down or re-hired);
- Were employed by the employer at 1 March 2020;
- Are full-time, part-time, or long-term casuals (a casual employed on a regular and systemic basis for longer than 12 months as at 1 March 2020);
- Are a permanent employee of the employer, or if a long-term casual employee, not a permanent employee of any other employer;
- Are at least 16 years of age at 1 March 2020;
- Are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
- Were a resident for Australian tax purposes on 1 March 2020; and
- Are not in receipt of a JobKeeper Payment from another employer.
How does the payment process work?
Eligible employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax per eligible employee. Payments will be made to the employer monthly in arrears by the ATO.
Where employers participate in the scheme, their employees will receive this payment as follows:
Employee usually paid MORE than $1500 a fortnight
If an employee receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income and applicable superannuation according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee.
Employee usually paid LESS than $1500 a fortnight
If an employee would otherwise receive less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight before tax.
For example, if an employee performs work to a value of $1,000 per fortnight, you need to pay their normal wage of $1,000 and the relevant superannuation on that amount, plus an additional ‘top up’ amount of $500 as a result of the JobKeeper subsidy. Employers are not legally required to pay superannuation on the ‘top up’ amount of $500 but can choose to do so.
What are the notification obligations?
Employers are legally obligated to notify all eligible employees that the employer is receiving the JobKeeper payment.
JobKeeper Enabling Directions
Significantly, an employer qualifying for JobKeeper payments will also be able to give JobKeeper enabling directions to employees, varying the employee’s terms of employment (provided a certain process is followed).
This will include a broad discretion in relation to hours of work (including to stand down entirely), timing of work, location of work, the taking of annual leave, and the allocation of work tasks.
A JobKeeper enabling direction will prevail over any existing employment terms under a contract, award, or enterprise agreement.
A qualifying employer can stand down an employee, without needing to meet the general conditions under section 524 of the Fair Work Act 2009 (Cth) for stand down.
A Job Keeper-enabled stand down will allow an eligible employer to temporarily reduce or alter an eligible employee’s:
- Days worked;
- Location of Work (where in all circumstances it is safe and reasonable to do so); and/or
- Duties (where in all circumstances it is safe and reasonable to do so).
Furthermore, it will allow employers to reach arrangements where employees take paid annual leave, including at half pay.
Employees must consider and must not unreasonably refuse a request made by a qualifying employer to take paid annual leave, provided the request will not result in the employee having a balance of paid annual leave of less than two weeks. The employee and qualifying employer can agree that twice as much paid annual leave, at half the employee’s rate of pay, be taken.
Limitations on JobKeeper Enabling Directions
The power to give JobKeeper Enabling Directions is subject to a number of limitations:
- The direction must be responsive to business changes attributable to COVID-19 or government initiatives to slow the transmission (e.g. government shut-downs of businesses or less customers);
- Employers can only give the direction if the employee cannot be usefully employed for their normal hours;
- Employers can only give the direction to an employee for whom they have received a JobKeeper payment;
- Before giving the direction, the employer must consult with the employee regarding the proposed changes, and keep a written record of the consultation process;
- The direction must be reasonable in the circumstances;
- The employee’s hourly rate of pay cannot be reduced;
- The JobKeeper payments must continue to be passed onto the employee;
- The employee must be provided with at least three days’ notice of the intention to give the direction; and
- The direction must be in writing.
The direction continues to have effect until withdrawn or revoked by the employer or replaced by a new direction. This is subject to any FWC order and to cessation of the direction on 28 September 2020 when the amendments are repealed.
Employers must be aware that misuse of the powers to give enabling directions is subject to a civil penalty of up to $63,000 for a body corporate or, in the case of a serious contravention, $630,000.
If you have any further questions in relation to the above and/or specific questions about how the JobKeeper amendment to the Fair Work Act 2009 (Cth) will impact your business, and your rights and responsibilities as an employer, please do not hesitate to contact Nick Stevens or Jane Murray.
This update is intended only as a general overview of legal issues currently of interest. It is not intended as legal advice and should be used for information purposes only. Please contact us for specific legal advice.