Tuesday, 31 March 2020

Update 4: Legislative Changes – JobKeeper Wage Support, Award Variations for COVID-19

COVID-19 continues to have significant impact on Employers. This update summarises the support being provided by the Australian Government and the New Zealand Government. It also looks at some of the urgent Award variations that have been made to help employers continue to engage employees through the crisis.

Wage Support and Subsidies - Australia

On 30 March 2020, the Morrison Government announced the JobKeeper scheme to provide assistance to businesses that are significantly affected by COVID-19 to encourage those businesses to retain staff.

JobKeeper is available for businesses that have experienced a minimum 30% decline in revenue (or minimum 50% decline for businesses with turnover of more than $1 billion) due to COVID-19.

The subsidy will be paid to businesses at a flat rate of $1,500 per fortnight for each eligible employee, which is just above Australia’s minimum wage of $1481.60 per fortnight. Businesses will need to ensure that each eligible employee receives at least $1,500 per fortnight (before tax).

  • For employees that were already receiving this amount, their income will not change.
  • For employees that have been receiving less than this amount, the business will need to top up the payment to the employee up to $1,500 (before tax).
  • For employees earning more than this amount, the business may provide a top-up their income (or allow employees to utilise paid leave entitlements).

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 or part-time, or long-term casuals (employed on a regular basis for more than 12 months as at 1 March 2020);
  • are at least 16 years of age;
  • are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
  • are not receiving a JobKeeper Payment from another employer.

The subsidy payments do not include a superannuation component, and it will be up to the employer whether it wants to pay superannuation on the subsidy amount. However if employees are working or on paid leave (rather than “stood down”) then superannuation should also be paid.

The subsidy payments will start to be issued from 1 May 2020 and will be backdated to 30 March 2020.

The scheme will be administered through the Australian Taxation Office (ATO). This means employers and workers will not have to deal with the already overburdened Centrelink network.

In the ATO’s online application process, employers will need to provide information on eligible employees, including the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business. The ATO may use Single Touch Payroll data to pre-populate the employee details.

Upon receiving the payment, eligible employees will need to be informed that they are receiving the JobKeeper Payment and businesses will need to continue to provide information to the ATO on a monthly basis.

Parliament will soon be recalled to consider the legislation to give effect to the JobKeeper scheme. In the meantime, employers can register their interest with the ATO.

At this stage it is unclear if employers will need to pay workcover premiums or payroll taxes (if applicable) on these amounts.

Wage Support and Subsidies - New Zealand

On 17 March 2020, New Zealand introduced a COVID-19 Wage Subsidy for employers in all regions of New Zealand to support their businesses if they are impacted by COVID-19 and face laying off staff or reducing their hours because of COVID-19.

For a business to qualify:

  • it must be registered and operating in New Zealand
  • its employees must be legally working in New Zealand
  • it must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month, when compared with the same month last year, and that decline is related to COVID-19
  • it must have taken active steps to mitigate the impact of COVID-19
  • it must retain the employees named in its application for the period of the subsidy

The Wage Subsidy will be paid at a flat rate of $585.80 for people working 20 hours or more per week (full-time rate), or $350.00 for people working less than 20 hours per week (part-time rate). The subsidy is paid as a lump sum and covers 12 weeks per employee.

If a business receives the Wage Subsidy, it must use its best endeavours to pay the employee named in the application, at least 80% of their usual wages. However, where a business has no activity due to the shutdown and employees are not working any hours, the business only needs to pay the employee at least the subsidy rate. If the employee’s usual wages are less than the subsidy, the business must pay them their usual wages and any difference should be used for the wages of other affected staff.

Changes to Modern Awards to deal with COVID-19

Last week, the Fair Work Commission (FWC) inserted special COVID-19 flexibility schedules into the Hospitality Industry (General) Award 2010 (Hospitality Award) and the Clerks- Private Sector Award 2010 (Clerks Award).

Similar changes are also expected to be inserted into the Restaurant Industry Award 2010 in the coming days, with other Awards to follow.

Changes to the Hospitality Industry (General) Award 2010

The new Schedule L makes the following variations to the Hospitality Award which will apply from 24 March 2020 to 30 June 2020:

  1. Duties: Employers may direct employees to perform any duties that are within their skill and competency regardless of their classification, provided that the duties are safe, and the employee is licensed and qualified to perform them. Higher duties payments will apply to employees engaged on duties carrying a higher rate than their ordinary classification.
  2. Full-time employees’ hours: Employers may direct full-time employees to work an average of between 22.8 and 38 ordinary hours per week. Employees’ wages may then be adjusted on a pro-rata basis to reflect their hours of work. However, employees will continue to accrue and be entitled to take annual leave and personal leave based on their former ordinary hours of work.
  3. Part-time employees’ hours: Employers may direct part-time employees to work an average of between 60% and 100% of their guaranteed hours per week or roster cycle. Employees given such a direction will continue to accrue and be entitled to take annual leave and personal leave based on their former ordinary hours of work.
  4. Consultation: Employers must consult with affected employees prior to any changes to rosters or hours of work and provide as much notice as practicable. If affected employees are members of the United Workers Union (‘UWU’), employers must notify the UWU of their intention to implement these arrangements.
  5. Annual Leave: Employers may direct employees to take annual leave with 24 hours’ notice. This does not prevent employers and employees agreeing to the employee taking annual leave at any time. Employers may also agree to employees taking twice as much annual leave at half the rate of pay for all or part of any period of annual leave.

Changes to the Clerks – Private Sector Award 2010

The new Schedule I makes the following variations to the Clerks Award which will apply from 28 March 2020 to 30 June 2020:

  1. Duties: Employers may direct employees to perform any duties that are within their skill and competency regardless of their classification, provided that the duties are safe, and the employee is licensed and qualified to perform them. Employers must not reduce an employee’s pay if they are directed to perform other duties.
  2. Part-time and casual employees working from home: Employers may roster part-time and casual employees working from home by agreement for a minimum of 2 consecutive hours on any shift.
  3. Ordinary hours working from home: By agreement, the spread of ordinary hours of work for employees working from home may be altered to 6.00am to 11.00pm Monday to Friday, and 7.00am to 12.30pm on Saturday. Employees will not be entitled to shiftworker penalties should the ordinary hours of work be altered in accordance with this clause.
  4. Reduction of hours: Employers and permanent employees may agree to temporarily reduce ordinary hours of work up to 75% for a specified period. At least 75% of the permanent workforce in the relevant workplace or section must approve such an agreement through a voting process. All relevant accruals and all entitlements on termination of employment will continue to be based on the employees’ former ordinary hours. Note – this clause does not impact the ability of employers and individual employees to agree in writing to reduce hours or to move the employee temporarily from full-time to part-time hours of work, with a corresponding reduction in the employee’s minimum weekly wage.
  5. Requests for secondary employment, training, professional development & study leave: Where employees’ hours have been reduced, employers must not unreasonably refuse their requests to engage in reasonable secondary employment, and all reasonable employee requests for training, professional development and/or study leave must be considered.
  6. Annual leave: Employers and individual employees may agree to employees taking up to twice as much annual leave at a proportionately reduced rate. Employers may also direct employees to take any annual leave by giving at least 1 weeks’ notice, or any shorter period of notice that may be agreed, as long as this direction does not result in the employee having less than 2 weeks of accrued annual leave remaining.
  7. Close-down: Employers may require employees to take annual leave as part of a close-down by giving at least 1 weeks’ notice, or any shorter period of notice that may be agreed. Where an employee has not accrued sufficient leave to cover part or all of the close-down, the employee may take the paid annual leave owing to them and then unpaid leave for the remainder of the close-down. Where an employee is placed on unpaid leave, the period of unpaid leave will count as service.

Conclusion

We encourage you to read our previous COVID-19 updates for more information on employer obligations during the current situation.

HR Legal can provide advice on employment strategies for standing down staff, varying employment contracts and making redundancies where necessary. We can assist with preparing documentation such as stand down letters, contract variations, individual flexibility arrangements (IFAs), and Working from Home policies.

We can be contacted after hours (and on the weekends) to assist with urgent matters.

This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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