Due to the ongoing impact of COVID, on 21 July 2020, the Australian Government announced that the JobKeeper scheme would be extended to 28 March 2021.
The legislation which enacts the extension of the JobKeeper scheme was passed by the Parliament on 1 September. The legislation extends the period over which the Government can make payments authorised by the Coronavirus Economic Package (Payments and Benefits) Act to 28 March 2021 and also extends the period over which employers may use the JobKeeper flexibilities in the Fair Work Act to 28 March 2021 (instead of 28 September 2020).
In extending the JobKeeper flexibilities in the Fair Work Act, substantive changes have been made to the JobKeeper provisions by creating two broad categories of employers who can access different flexibilities after 28 September 2020:
- Qualifying Employers: Employers who are eligible for JobKeeper payments after 28 September 2020 who satisfy a new decline in turnover test (details of which have not been formally confirmed). Qualifying employers will retain full access to all JobKeeper flexibilities (except for the provisions about taking annual leave that have been changed – see details below).
- Legacy Employers: Employers who received one or more JobKeeper payments prior to 28 September 2020, but no longer qualify after 28 September 2020, but who are still experiencing a 10% decline in turnover (as determined by a financial service provider). These “Legacy employers” will have access to modified flexibility measures after 28 September 2020.
Not all of the JobKeeper 1.0 flexibilities have been extended. Most notably, the flexibilities concerning “requesting” employees take annual leave have not been extended and will be repealed on 28 September 2020 for both “qualifying” and “legacy” employers.
We discuss the changes to the JobKeeper flexibilities for both qualifying and legacy employers below.
- Changes to Duties and Location of Work
Qualifying employers can issue a JobKeeper enabling direction in relation to duties and location of work to an employee for whom they are entitled to a JobKeeper payment.
Legacy employers can also issue a JobKeeper enabling direction in relation to duties and location of work to an employee for whom they previously received a JobKeeper payment. These directions can only take effect for a period beginning on or after 28 September 2020.
It remains the case that a direction to perform other duties or work from a different location does not apply if the direction is unreasonable in the circumstances. There is an additional note which clarifies that directions reducing hours given by an employer to a category of employees may be unreasonable if they have an unfair effect on some of those employees compared to others of those employees who are also subject to those directions.
- Changes to Days and Hours of Work
Qualifying employers can reach agreements in relation to days and times of work with an employee for whom they are entitled to a JobKeeper payment.
Legacy employers can also reach agreements in relation to days and times of work with an employee for whom they previously received a JobKeeper payment. However, for legacy employers, there is a new requirement to ensure that such an agreement does not result in the employee working less than 2 consecutive hours in a day. Any agreement reached can only take effect for a period beginning on or after 28 September 2020.
- JobKeeper Enabling Stand Down Directions
Qualifying employers can continue to issue a JobKeeper enabling stand down direction (Stand Down Direction) to an employee for whom they are entitled to a JobKeeper payment to reduce that employee’s ordinary hours, including to zero, provided the relevant criteria for issuing the direction are met.
Legacy employers can also issue a Stand Down Direction to an employee for whom they previously received a JobKeeper payment. These directions can only take effect for a period beginning on or after 28 September 2020.
For legacy employers the Stand Down Direction can only reduce that employee’s ordinary hours to a minimum of 60% of the employee’s “ordinary hours of work” as assessed on 1 March 2020, provided the relevant criteria for issuing the direction are met. Also, an additional new requirement requires that the direction cannot result in the employee working less than 2 consecutive hours in a day.
The same limitations apply where a Stand Down Direction is unreasonable, like with JobKeeper enabling directions about duties and location as outlined above.
- Wage Condition
Qualifying employers must ensure employees for whom they will receive the JobKeeper payment are paid the fortnightly JobKeeper amount or the amount they earned for work performed, whichever is greater.
Legacy employers will not receive the JobKeeper payment.
There is no change to the current law that an employee’s hourly rate cannot be reduced as a result of a JobKeeper enabling direction concerning changes to duties or a Stand Down Direction.
A range of safeguards continue to apply to changes to JobKeeper enabling directions or agreements.
Legacy employers will be required to give a longer period of notice than qualifying employers before giving a JobKeeper enabling direction. For legacy employers, there will be a 7 day notice/consultation period whereas for qualifying employers the existing 3 day notice/consultation period will continue to apply. Legacy employers will also have expanded consultation requirements.
- Secondary employment, training, or professional development
Employees working reduced hours under a Stand Down Direction can continue to request to engage in reasonable secondary employment, training, or professional development.
The Fair Work Commission continues to have jurisdiction to resolve disputes about the operation of the JobKeeper provisions, including by arbitration.
- Annual Leave
As outlined above, the annual leave provisions will be repealed from 28 September 2020. Until that time, employers who qualify for the JobKeeper scheme can request employees agree to take annual leave so long as at least two weeks of annual leave remain, and employers and employees can agree to the employee taking annual leave at half pay. Beyond this time, annual leave is to be taken in accordance with the applicable industrial instrument that governs annual leave including a modern award, enterprise agreement, or the Fair Work Act.
New eligibility test and payment rates
The Government also recently announced that the JobKeeper payment rate would be reduced in stages from 28 September 2020 and from 4 January 2021. It also announced that a lower payment rate would be introduced for those who work fewer hours.
Further, there will be changes to the eligibility test for employers from 28 September 2020.
The legislation passed yesterday did not enact these changes. We anticipate these changes will be made to the JobKeeper Rules in due course and will provide an update when this occurs.
What does this mean for employers?
If you are eligible for JobKeeper and want your staff to take annual leave, you need to give this direction as soon as possible, as there will be no ability under JobKeeper to make this request after 27 September 2020. After 28 September 2020 if you want employees to take annual leave, businesses will need to rely on other mechanisms such as those in Awards or employment contracts.
Qualifying employers can take some comfort in knowing that they will continue to receive JobKeeper payments for their eligible employees, and that they will continue to have access to the JobKeeper flexibilities until 28 March 2021.
In most cases, JobKeeper enabling directions given by or agreements made with qualifying employers that are in place on 27 September 2020 will automatically carry over from 28 September 2020 if the employer remains eligible to give that direction or make that agreement in those terms.
Legacy employers, who no longer qualify for JobKeeper payments from 28 September 2020, can also continue to access some of the JobKeeper flexibility measures, although more limited than what they could do previously.
JobKeeper enabling directions or agreements to employees for whom employers previously received a JobKeeper payment can only take effect for a period beginning on or after 28 September 2020.
Legacy employers should contact their registered tax agent or BAS agent, or qualified accountant to ascertain whether they have experienced a 10% decline in turnover in order to obtain a certificate.