Jobkeeper - Combatting COVID-19 Financial Impacts Jobkeeper - Combatting COVID-19 Financial Impacts

Jobkeeper - Combatting COVID-19 Financial Impacts

27 August 2020 | Employment and Safety

In response to the evolving pandemic and its detrimental effect on the economy, the government implemented the JobKeeper scheme to support affected workers and businesses.

Following an announcement by the government on 21 July 2020, the JobKeeper payment (originally due to run until 27 September 2020) has now been extended until 28 March 2021 for eligible businesses (including the self-employed) and not-for-profits. 

Current JobKeeper arrangements

The purpose of the JobKeeper payment is to assist businesses in continuing to pay their workers. Employers can choose to participate in the scheme and then nominate all the employees they are entitled to claim for.

The current legislation allows eligible employers to issue JobKeeper-enabling directions (or JEDs) to eligible employees, including:

  • to stand them down;
  • perform other duties;
  • change location of work;
  • take annual leave; and
  • reduce their hours to as little as zero.

What are the implications of the extension?

From 3 August 2020

  • The eligible employee test has been extended to include individuals who were employed on 1 July 2020 and are not currently nominated for JobKeeper by another entity.
  • For the fortnights commencing on 3 and 17 August 2020 only, employers are allowed until 31 August 2020 to meet the wage condition for all new eligible employees included in the JobKeeper scheme under the 1 July eligibility test.
  • The government’s proposed changes to JobKeeper do not impact payments until after 28 September 2020.

Changes from 14 August 2020

  • Eligible employers will receive the JobKeeper payment for each eligible employee that was employed by them as at 1 July 2020.
  • More employees can qualify.
  • A payment extension to 31 August 2020.

From 28 September 2020

  • Businesses and not-for-profits seeking to claim JobKeeper Payment will be required to re-assess their eligibility for the JobKeeper extension with reference to their actual turnover. The JobKeeper extension will be available to qualifying businesses and not-for-profits from 28 September 2020 until 28 March 2021.
  • Existing industrial flexibilities except annual leave will remain in force until March 2021 to reflect the extension of JobKeeper to qualifying employers.
  • The JobKeeper payment rates will be stepped-down and two tiers of payment will be introduced:

From 28 September 2020 to 3 January 2020, in the four weekly pay periods before the reference period

Working Arrangement Payment Rate
Were working for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week $1,200 per fortnight

Employees who were working in the business or not-for-profit for less than 20 hours a week on average and business participants who were actively engaged in the business less than 20 hours per week in the reference period.

$650 per fortnight

From 4 January 2021 to 28 March 2021, in the four weekly pay periods before the reference period

Working Arrangement Payment Rate
Were working for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week $1,000 per fortnight

Employees who were working in the business or not-for-profit for less than 20 hours a week on average and business participants who were actively engaged in the business less than 20 hours per week in the reference period.

$650 per fortnight
  • Businesses that previously received JobKeeper but do not re-qualify under the new eligibility rules will be referred to as "legacy employers".
  • Legacy employers will have continued access to most of the labour flexibilities if they can demonstrate their turnover has declined by 10% or more in relevant quarters this year compared to last year.
  • In terms of permissible working arrangements for legacy employers:
  • reductions to an employee's hours of work cannot be below 60% of the employee's ordinary hours of work (as at 1 March 2020);
  • cannot require an employee to work less than two hours on a day they work; and
  • employees must be given seven days' written notice before a JobKeeper-enabling direction is issued, up from the previous notice period of three days.

A warning to businesses

Changes to the JobKeeper legislation will include the provision of penalties for those who do not meet the 10% decline in turnover, but who:

  • knowingly or recklessly try to use the provisions,
  • or if they fail to notify employees that a JED or agreement is continuing or ending each quarter.

The penalties will range from up to $13,200 for individuals and $66,600 for body corporates or employers.

Concluding comments

Given the inevitability of financial hardship during this time, the extension to JobKeeper along with the proposed changes to the legislation will enable eligible businesses to continue operating and preserve jobs and income for employees.

Further, the 10% threshold for businesses that were on JobKeeper, but which will no longer qualify for the wages subsidy, will mean they can continue to adapt their workplaces (via flexible and permissible workplace arrangements) to maintain operability in the post-COVID context.

This article was authored by Simon Black, Laura Sowden and Theresa Au.

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Simon Black

Simon Black

Principal

Laura Sowden

Laura Sowden

Special Counsel