Thursday, 9 April 2020

Update 5: JobKeeper Legislation

In our last update, we discussed the JobKeeper scheme that had been announced on 30 March 2020 by the Morrison government.

On 8 April 2020, Parliament was recalled and passed the Coronavirus Economic Response Package (Payments and Benefits) Bill 2020 and Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020.

This update summarises the new legislation that amends the Fair Work Act and enacts the JobKeeper scheme.

We also provide a Q&A on some of the employment law issues you may be grappling with.

Coronavirus Economic Response Package 6 (Payments and Benefits) Act 2020

The Coronavirus Economic Response Package 6 (Payments and Benefits) Act 2020 in effect provides the Treasurer with the power to make rules to establish the JobKeeper Payment Scheme, including:

  • which employers qualify for the subsidy;
  • the employee/s to which the payments relate;
  • the amount payable and the timing of payments; and
  • the obligations for recipients of the JobKeeper Payment.

This Act in effect sets up the machinery by which the JobKeeper Payments will be made, and includes a number of obligations including in relation to record keeping requirements.

Many of these arrangements will be subject to confirmation under the Rules, and we will provide a further update in due course.

Coronavirus Economic Response Package Omnibus 6 (Measures No. 2) Act 2020

Critically for employers, Schedule 1 of the Coronavirus Economic Response Package Omnibus 6 (Measures No. 2) Act 2020 amends the Fair Work Act 2009 by introducing Part 6–4C—Coronavirus economic response.

These changes enable an employer to make ‘JobKeeper enabling directions’, subject to certain preconditions and qualification requirements and will remain in place until 28 September 2020.

It is important to emphasise that these changes will only apply to employers who qualify for the JobKeeper scheme.

Any dispute in respect to any of these changes to the Fair Work Act can be referred to the Fair Work Commission for determination.

The main changes to the Fair Work Act that employers should be aware of are summarised below.

  1. JobKeeper enabling stand down

Under the new legislation, employers can stand down employees who are eligible for JobKeeper payments (referred to as a “JobKeeper enabling stand down”) if the employee cannot be usefully employed for their normal days or hours during the JobKeeper enabling stand down period due to:

  • changes to business attributable to the COVID pandemic;
  • or government initiatives to slow COVID transmission.

This includes a partial stand down.

Employers must give employees at least 3 days’ written notice of an intention to place them on a JobKeeper enabling stand down (or lesser period by agreement).

During the JobKeeper enabling stand down (including any partial stand down), the employee must be paid at least the amount of the JobKeeper payment (refer to point 5 below). An employee’s hourly rate cannot be reduced as a result of a JobKeeper enabling stand down.

If an employee is on paid or unpaid leave authorised by employer (e.g. annual leave) or otherwise authorised to be absent (e.g. public holiday), they are not considered to be on a JobKeeper enabling stand down for that period.

A period of JobKeeper enabling stand down counts as service, and entitlements to leave, redundancy pay, and payment in lieu of notice of termination will continue to accrue and be calculated as if the stand down had not occurred.

Employees can also request that they be allowed to engage in secondary employment, training or professional development during a JobKeeper enabling stand down. An employer cannot unreasonably refuse such a request.

  1. Changes to duties and location of work

Employers can direct employees to perform any duties within their skill and competency, as long as the duties are safe, the employee is licensed and qualified to perform the duties, and the duties are reasonably within the scope of the employer’s business operations.

Employers can also direct employees to perform duties at a place (including the employee’s home) that is different from the employee’s normal workplace if the place is suitable for the duties and it is safe. If the place is not the employee’s home, the direction must not require the employee to travel a distance that is unreasonable in all the circumstances.

An employee cannot unreasonably refuse a direction by their employer to perform other duties or work from a different location.

  1. Changes to days of work

Employers and their employees may now agree to employees performing work on different days or times than their ordinary days or times provided it is safe, and the employee’s ordinary hours of work are not reduced (this can however be done by way of JobKeeper enabling stand down). Employees cannot unreasonably refuse a request by their employer to work on different days.

  1. Annual leave

Employers can now request an employee to take paid annual leave and/or take annual leave at half pay, provided that the leave arrangement would not result in the employee’s leave balance falling below 2 weeks (unless otherwise agreed).  Employees cannot unreasonably refuse such a request.

  1. JobKeeper payments

For employees who are entitled to JobKeeper payments, their employer must pay them each fortnight the greater of:

  • the amount of the JobKeeper payment ($1500, before tax); or
  • the amounts payable to the employee in relation to the performance of any work during the fortnight.

The above will also apply if the employee is on a JobKeeper enabling stand down. A breach of this obligation carries civil remedies.

At this stage, it is unclear for employees who are stood down or receiving less than the JobKeeper payment for time worked whether JobKeeper payments will be made as a reimbursement (ie, whether the employer needs to pay the amount now and be reimbursed later) or whether the employer can wait until they receive the JobKeeper payment from the ATO and then remit this to the employee.

  1. How long do these arrangements apply?

Any JobKeeper enabling directions issued by an employer continue to apply until:

  • it is withdrawn or revoked by the employer;
  • it is replaced by a new JobKeeper enabling direction by the employer; or
  • at the start of 28 September 2020.

We outline below our responses to frequently asked questions.

  1. If employees have been stood down without pay, and the first JobKeeper payment is not due until 1 May 2020 (and backpaid to 31 March 2020), do employers need to pay employees now (i.e. before 1 May) in order to receive JobKeeper?

Given the Commissioner of Taxation has not yet issued the Rules, it remains unclear whether payment of the JobKeeper subsidy will be subject to prior payment by the employer in the relevant fortnight.

Current guidance from the Australian government Fact Sheets on JobKeepers indicates that employers will need to satisfy the payment requirements for each fortnightly period covered by the scheme (i.e. making a minimum payment of $1,500 (before tax) to each applicable employee per fortnight). This essentially suggests that an employer needs to pay first and then is reimbursed by the ATO later with the JobKeeper subsidy.

For employees currently working and receiving wages, this is not controversial. However, for employees currently stood down without pay, the situation is less clear. We suggest that employers with staff in these circumstances do not make payments pending the Rules being issued which will hopefully clarify employer eligibility and other details concerning payment arrangements/requirements.

  1. If an employee is taking authorised annual leave, will the subsidy apply?

Our understanding is that an employer will qualify for the subsidy in respect of an employee taking annual leave, and the JobKeepers payment will in effect subsidise the payment being made to the employee on annual leave. However, this may be subject to change once the Rules have been issued.

  1. Will employees on unpaid leave qualify for the JobKeeper payment?

If an employee taking a period of unpaid leave (such as personal/sick leave without pay as they have exhausted their paid entitlements), based on current information available it is our view that the employee would not be eligible to receive the JobKeeper payment.

This view may be subject to change following the issue of the Rules.

  1. What if an employee refuses to carry out work, do they still receive the JobKeeper subsidy?

An employer who qualifies for the JobKeeper subsidy can make a lawful and reasonable direction for the employee to undertake duties (including alternative duties that are within the employee’s skill and competence and/or at an alternative location) and at reduced hours.

These directions are subject to a number of qualifications, including that the duties are:

  • safe, having regard to (without limitation) the nature and spread of COVID-19; and
  • are reasonably within the scope of the employer’s business operations.

The amendments to the Fair Work Act further provide that if such a JobKeeper enabling direction is given by an employer to an employee, the employee must comply with the direction.

On this basis, an employee could in these circumstances be subject to disciplinary action if they refuse to comply with the direction, provided that the employer has met the preconditions and the direction is reasonable.

It is unclear whether this will  impact the employee’s entitlement to be paid for the relevant period under the JobKeeper scheme, the Rules may provide further guidance on this.

  1. Can employers re-engage an employee who has been made redundant, and would they then be eligible for JobKeeper payments?

Based on current commentary from the Government, where an employee is re-engaged by an employer after they were made redundant, as long as they were employed by the employer at 1 March 2020 and fulfil the other eligibility criteria, they would potentially be eligible for JobKeeper payments upon their re-engagement.

Employers would however need to come to an arrangement with employees regarding the repayment of any redundancy payment and entitlements.

Employers considering the re-engagement of employees should first ascertain whether they qualify for the JobKeeper subsidy prior to making any commitments to former employees.

We will keep you updated as matters progress, including when the Rules are issued.


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.