COVID-19: JobKeeper update – critical information and employer powers

By David Catanese, Karl Rozenbergs, Anthony Bradica, Oliver Jankowsky and Adam Dimac

Bills setting out details of the Commonwealth Government’s JobKeeper Payment scheme were introduced to the Commonwealth Parliament earlier today.

We set out below what you need to know about the JobKeeper Payment scheme.

This information is not legal advice and is based on the Bills introduced to the Commonwealth Parliament today, 8 April 2020, and the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 Exposure Draft.

What is JobKeeper?

The JobKeeper Payment scheme is a new economic subsidy to assist businesses that are significantly impacted by COVID-19.  The purpose of the scheme is to assist businesses to pay and retain their staff.

Under JobKeeper, eligible businesses that have suffered significantly reduced turnover will be paid $1500 per fortnight (before tax), per qualifying employee, for up to six months.

The payments will commence from 1 May 2020, but will be backdated to 30 March 2020.

Which businesses are eligible?

Employers must meet these conditions to be eligible for the JobKeeper Payment scheme:

• For businesses with annual aggregated turnover less than $1 billion, the turnover of the business has reduced (or will reduce) by more than 30%.
• For businesses with annual aggregated turnover greater than $1 billion, the turnover of the business has reduced (or will reduce) by more than 50%.
• For not-for-profits and charitable organisations registered with the Australian Charities and Not-for-profits Commission (ACNC), other than certain educational charities, the annual turnover of the organisation has reduced (or will reduce) by more than 15%.

Turnover for the purposes of a business’ eligibility is the entity’s projected GST turnover for a test period, and this is compared to the entity’s GST turnover for a relevant comparison period.

Eligible employers will be able to apply for the JobKeeper Payment through the ATO.

Institutions subject to the Major Bank Levy and public entities are not eligible for the scheme.

Which employees are qualified?

In short, JobKeeper payments will be available for all employees that are employed by an eligible employer and who were employed on 1 March 2020.  This includes full-time, part-time and long standing casual employees.

To be qualified, employees must meet the following criteria:

• Employees must currently be employed by an eligible employer (this includes employee’s who have been stood-down and employees who were terminated but have been re-hired by the employer).
• Employees must have been employed by the employer on 1 March 2020.
• Employees must be employed full-time, part-time or as a ‘long-term’ casual (being a casual employee that had been employed on a regular and systematic basis for longer than 12 months as at 1 March 2020).
• Employees must be at least 16 years old.
• Employees must be an Australian citizen or permanent resident, or hold other specified classes of visa; and
• An employee can only have one employer receive JobKeeper Payments with respect to them (ie multiple employers cannot receive JobKeeper payments in respect of one individual, even if the individual is employed by multiple employers).
• Employees are not qualified for JobKeeper payments for periods in which they are in receipt of parental leave pay under the Paid Parental Leave Act 2010 (Cth) (but they can receive JobKeeper payments if they are in receipt of paid parental leave from their employer pursuant to an enterprise agreement, contract of employment or similar instrument).
• Employees are not qualified for JobKeeper payments for periods in which they are totally incapacitated for work and an amount is payable to them under workers’ compensation laws.

Employees who are usually paid less than $1500 per fortnight will be entitled to the full $1500 payment, so will receive a windfall.

Employees usually paid more than $1500 per fortnight should be paid the balance of their wages by the employer, or otherwise lawful mechanisms must be utilised to reduce an employee’s entitlements.  Such mechanisms include agreements with employees to reduce salaries or hours of work, stand downs under s 524 of the Fair Work Act 2009 (Cth) (FW Act), or the use of jobkeeper enabled directions and requests as set out below.

What else does JobKeeper allow employers to do?

Quite a lot.

In addition to providing substantial subsidies to businesses to cover labour costs, the Government has amended the FW Act to provide employers with temporary powers to implement flexibility measures in order to save jobs.

On top of existing powers available to employers (eg stand down under s 524 of the FW Act, power to require an employee to take annual leave under an enterprise agreement, ability to direct an employee to work at a different location pursuant to a contract of employment, etc), the FW Act amendments allow employers to:

• issue jobkeeper enabling directions, including directions requiring to employees to:
  • work reduced hours or days (a jobkeeper enabling stand down direction);
  • undertake alternate duties; or
  • work at an alternate location;
• request employees to work reduced days or alternate hours of work;
• request employees to take accrued annual leave; and
• agree with employees for annual leave to be taken at half pay.

Jobkeeper enabling stand downs

A jobkeeper enabling stand down direction allows an employer to direct an employee to:

• not work on a day or days on which the employee would usually work; or
• work for a lesser period than the period which the employee would ordinarily work on a particular day or days; or
• work a reduced number of hours (compared with the employee’s ordinary hours of work), including reducing hours to nil.

During a jobkeeper enabling stand down, the employer must:

• pay the employee each fortnight at least the greater of:
  • the $1500 JobKeeper payment; or
  • the amounts payable to the employee in relation to the performance of work during the fortnight (including all wages, allowances, loadings, penalties, etc); and
• not reduce the employee’s ordinary hourly rate of pay for each hour of work performed.

However, a jobkeeper enabling stand down direction can only be given, among other restrictions, if the employee cannot be usefully employed for their normal days or hours of work because of changes to business attributable to:

• the COVID 19 pandemic; or
• Government initiatives to slow the transmission of COVID 19.

Also, if a jobkeeper enabling stand down direction is given to an employee, the employer must not unreasonably refuse a request by that employee:

• to engage in reasonable secondary employment; or
• for additional training or professional development.

Jobkeeper enabling directions generally

A jobkeeper enabling direction given to an employee to stand down, undertake alternate duties or work at an alternate location, will be of no effect if either:

• if the direction is unreasonable in all of the circumstances; or
• the consultation obligation has not been complied with.

The consultation obligation for jobkeeper enabling directions requires an employer to give an employee at least 3 days’ written notice of its intention to issue the direction and to consult with the employee (or their representative) prior to giving the direction.

A jobkeeper enabling direction given to an employee to undertake alternate duties or work at an alternate location, will also be of no effect unless the employer has information before them that leads them to reasonably believe that the direction is necessary to continue the employment of one or more employees of the employer.

All jobkeeper enabling directions will cease to have effect at 12.00 am on 28 September 2020 unless revoked or replaced prior to that date.

Regarding service related entitlements, employees subject to a jobkeeper enabling direction will continue to accrue and take service related entitlements as if the direction had not been issued.  This means that employees will continue to accrue annual and personal leave at their usual rate, and will be entitled to service related entitlements such as redundancy pay and payments in lieu of notice as if they were working their usual hours of work.

Jobkeeper enabling requests

Employers are able to request employees to work reduced days or alternate hours of work, and also request that employees take accrued annual leave (provided that their leave balance does not reduce to below 2 weeks).

If an employer makes such a request of an employee, the employee must not unreasonably refuse the request.

Rights of review

Employers, employees and their representatives may raise disputes with the Fair Work Commission (FWC) about jobkeeper requests and directions.

The FWC may deal with disputes in whatever way it sees fit, including by arbitration (meaning that it can make decisions that are binding on the parties).

In dealing with a dispute, the FWC must take into account fairness between the parties concerned.

Protections

An employer will contravene a civil penalty provisions if it purports to give a jobkeeper enabling direction if the direction is not properly authorised under the legislation and the employer knew that this was the case.

The maximum penalties for contravention of this provision are up to $63000 per contravention for companies and up to $12600 per contravention for an individual.

Tax and superannuation?

It is expected that JobKeeper payments to employees are taxable like other payments to employees, and PAYG withholding obligations will apply.  The $1500 payment is before tax.

For payments made to cover an employee’s usual wages, superannuation is payable according to the ordinary rules for payments to employees for ordinary time earnings.

For payments (or parts of payments) to employees in excess of an employee’s usual wages, superannuation is not required to be paid. This situation may arise where:

• an employees’ usual wages are less than $1500 per fortnight (ie superannuation would be payable on the part of the $1500 payment necessary to cover the employee’s wages, but not on any windfall balance); or
• employees have been stood down without pay (ie superannuation will not be payable on the $1500 JobKeeper payment paid to employees as it is not paid as ordinary time earnings for work that has been undertaken).