In our previous update, we mentioned that the Treasury’s Rules regarding the JobKeeper Wage Subsidy Scheme were yet to be released and that these would provide some clarification on various employment law issues.
On 9 April 2020, the Treasury made the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Rules).
In light of these Rules, this update provides a revised Q&A for employers on the new JobKeeper scheme.
Please note that the HR Legal team is working from home and available to respond to any employment law queries you may be grappling with. We can be contacted after hours (and on the weekends) to assist with urgent matters.
Is my business eligible to receive the JobKeeper payment?
A business will be eligible to receive the JobKeeper payment for eligible employees if:
- it carried on a business in Australia (or was a non-profit body pursuing its objectives principally in Australia) on 1 March 2020; and
- before the end of the JobKeeper fortnight, it met the decline in turnover test.
A business will not be eligible if it:
- was subject to the Major Bank Levy on 1 March 2020;
- is a government body or a wholly owned entity of such a body; or
- had a liquidator or trustee in bankruptcy appointed at any time in the fortnight.
The Australian government and its agencies, State and Territory governments and their agencies, foreign governments and their agencies, local governments and wholly owned corporations of these bodies are not eligible for the JobKeeper payment.
What is the “decline in turnover” test?
In order to be eligible for the JobKeeper scheme, a business must satisfy the “decline in turnover” test, as follows:
- for a business with an aggregated turnover of less than $1 billion, it must demonstrate a decline in GST turnover of 30% or more when compared to a comparable period (otherwise known as “turnover test period”);
- for a business with an aggregated turnover of $1 billion or more, it must demonstrate a decline in GST turnover of 50% or more when compared to the turnover test period;
- for an Australian Charities and Not-for-profits Commission (ACNC)-registered charity, it must demonstrate a decline in GST turnover of 15% or more when compared to the turnover test period.
The turnover test period may be a 1-month period (e.g. March 2020, April 2020, etc.) or a 3-month period (e.g. the quarter commencing 1 April 2020).
Businesses may also be eligible if it is estimated that they will experience a fall in GST turnover by the percentages outlined above for the turnover test period.
Self-employed individuals will also be eligible to receive the JobKeeper payment where they meet the relevant turnover test outlined above.
Businesses do not need to retest turnover in later months, unless the business does not qualify for the month of April 2020 because its turnover has not been sufficiently affected.
Are my employees eligible?
Your employees will be eligible if they were:
- aged 16 years or over on 1 March 2020;
- a permanent part time or full-time employee on 1 March 2020, or a long-term casual employee (meaning that they had been employed for at least 12 months) on 1 March 2020;
- an Australian resident for social security purposes, or Australian resident for taxation purposes and the holder of a Subclass 444 (Special Category) visa on 1 March 2020;
- an employee of the employer at any time during a JobKeeper fortnight; and
- not otherwise excluded from being an eligible employee at any time during the JobKeeper fortnight.
Can I select which eligible employees will participate in the JobKeeper scheme?
No, according to the Explanatory Statement to the Rules, employers cannot select which employees will participate and be nominated for JobKeeper payments. The JobKeeper scheme is a ‘one in, all in’ scheme. If an employer participates in the JobKeeper scheme, it must ensure that all eligible employees are covered.
Employers must also notify all employees in writing that they have elected to participate in the scheme and that all eligible employees will be covered by the scheme. Employees are required to complete and return an Employee Nomination Notice, see further information below.
How does the subsidy work? Is it a reimbursement scheme?
JobKeeper payments will commence from 1 May 2020.
In our last update, we mentioned that it was unclear whether payment of the JobKeeper subsidy would only be made if the employer had already paid the employee in relevant fortnight.
The ATO has since issued guidance material that has clarified that employers will not be eligible for the JobKeeper payment if they do not pay their nominated employee at least $1,500 before tax in the relevant fortnight. In doing so, the ATO has emphasised that the JobKeeper payment is a reimbursement from the ATO to employers and the subsidy cannot be paid in advance.
For the first two fortnights (30 March – 12 April and 13 April – 26 April), the ATO has said it will accept the minimum $1,500 payment before tax has been paid for each fortnight even if it has been paid late, provided it is paid by the end of April.
This means that employers can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April and remain eligible for JobKeeper.
Can I personally receive JobKeeper payments as a business owner?
Business owners will be eligible to receive the JobKeeper payment for themselves if they were:
- not employed by the business at any time in the JobKeeper fortnight (because they are the owner of the business, not an employee. For eligibility for employees please see above);
- a sole trader, partner in a partnership, adult beneficiary of a trust, or the director or shareholder of a company in the JobKeeper fortnight;
- aged 16 years or over;
- an Australian resident for social security purposes, or an Australian resident for taxation purposes and the holder of a Subclass 444 (Special Category) visa on 1 March 2020;
- not otherwise excluded at any time during the JobKeeper fortnight.
Can we re-engage an employee who has been made redundant after 1 March 2020, and would they then be eligible for JobKeeper payments?
The ATO’s guidance indicates that 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 will need to come to an arrangement with the employee regarding the repayment of any redundancy payment and entitlements and determine whether the employee’s employment will be deemed “continuous” for the purposes of leave entitlements etc.
If you are considering the re-engagement of employees, you should first ascertain whether they qualify for JobKeeper prior to making any commitments to former employees.
What do I need to pay an employee who ordinarily receives $1,500 or more per fortnight?
For employees who ordinarily receive more than $1,500 (before tax) in wages per fortnight, if they are continuing to work the employer must pay them their regular income. Employers can then use the JobKeeper payments to subsidise all or part of the income.
What do I need to pay an employee who ordinarily receives less than $1,500 in income per fortnight?
For employees who ordinarily receive less than $1,500 (before tax) in wages per fortnight, the employer must top up their wages and pay them at least $1,500 (before tax) per fortnight in order to be eligible for the JobKeeper payment. They will then receive the JobKeeper payments as a reimbursement to subsidise all of the payment.
What do I need to pay an employee who has been stood down?
As above, employers will need to pay employees who have been stood down at least $1,500 (before tax) per fortnight to be eligible for the JobKeeper payment. They will then receive the JobKeeper payments as a reimbursement to subsidise all of the payment.
What do I need to do if I want to participate in the JobKeeper scheme?
Broadly speaking the steps that an employer should follow if they wish to participate in the JobKeeper scheme are as follows:
- If they haven’t already, register their interest with the ATO and subscribe for JobKeeper payment updates.
- Ascertain that the business and its employees meet the eligibility requirements.
- Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (as above, for the first two fortnights in April, these payments need to be made by the end of April).
- Notify eligible employees of the business’ intention to claim the JobKeeper payment on their behalf and provide a copy of the Employee Nomination Notice, available here. Employees need to complete and return this notice to the business by the end of April if the business plans to claim JobKeeper payment for April. Keep the notice on file and if appropriate, provide a copy to the business’ registered tax agent.
- From 20 April 2020, enrol for the JobKeeper payment using the ATO’s Business Portal. If the business plans to claim JobKeeper for April, this must be done by the end of April.
Do I have to participate in the JobKeeper scheme as an employer?
No, the JobKeeper scheme is not mandatory and businesses are not required to participate in the scheme.
Will employees on unpaid leave qualify for the JobKeeper payment?
Our understanding is that people on unpaid leave will still be eligible for JobKeeper payments, provided that the employer has met the minimum wage condition of $1,500 (to be reimbursed later). Please note this payment will not be considered ‘paid leave’ for the purposes of assessing the three-month threshold of a ‘temporary absence’.
If an employee is taking paid leave, will the JobKeeper subsidy apply?
Our understanding is that an employer will qualify for the JobKeeper subsidy for employees taking paid leave during the JobKeeper fortnight, and the JobKeeper payment will in effect subsidise the payment being made to the employee on leave.
What about employees receiving paid government parental leave pay?
Employees who are receiving government parental leave pay or dad and partner pay are excluded from receiving JobKeeper payments.
What about employees receiving workers’ compensation?
Employees who are receiving workers’ compensation and are totally incapacitated and not working are not eligible to receive JobKeeper payments.
However, employees receiving workers compensation will be eligible for the JobKeeper Payment if they are working, for example on reduced hours, but will generally not be eligible if they are not working.