Pub­li­ca­tions

COVID-19 | A Short Guide to the Job­Keep­er Pay­ment and Job­Keep­er Flexibility

On 8 April 2020, Fed­er­al Par­lia­ment passed the Coro­n­avirus Eco­nom­ic Response Pack­age (Pay­ments and Ben­e­fits) Bill 2020 and the Coro­n­avirus Eco­nom­ic Response Pack­age Omnibus (Mea­sures No. 2) Bill 2020. Michael Byrnes, Part­ner and Emi­ly Capen­er, Solic­i­tor explains what this means for you and how your busi­ness can access these benefits.

THE JOB­KEEP­ER PAYMENT 

What is the Job­Keep­er Payment? 

In response to the COVID-19 cri­sis and the sig­nif­i­cant eco­nom­ic down­turn faced by many busi­ness­es, the Aus­tralian Gov­ern­ment has recent­ly passed a $130 bil­lion plan to assist employ­ers in retain­ing their staff. 

Under the scheme, called the Job­Keep­er Pay­ment, employ­ers able to demon­strate a cer­tain lev­el of actu­al or expect­ed fall in turnover will be enti­tled to a fort­night­ly pay­ment of $1,500 (before tax) for each eli­gi­ble employ­ee. This pay­ment will in effect act as a sub­sidy to enable employ­ers to con­tin­ue pay­ing their employ­ee’s wages. 

The Job­Keep­er Pay­ment pro­vides an attrac­tive alter­na­tive for employ­ers who may oth­er­wise be con­sid­er­ing mak­ing staff redun­dant. Ulti­mate­ly, this leg­is­la­tion aims to main­tain the Aus­tralian work­force and assist busi­ness­es recov­er from the cri­sis. While the dev­il is in the detail” might be a trite expres­sion, ele­ments of the scheme should be close­ly con­sid­ered both in order to avoid risks and traps asso­ci­at­ed with it and to take full advan­tage of the ben­e­fits it offers. 

It is expect­ed that approx­i­mate­ly 6 mil­lion eli­gi­ble work­ers will receive the Job­Keep­er Pay­ment, which will be avail­able for the peri­od between 30 March 2020 and 27 Sep­tem­ber 2020

Sig­nif­i­cant­ly, the Job­Keep­er scheme is more than just a busi­ness sub­sidy. It also incor­po­rates sig­nif­i­cant, short term changes to the Fair Work Act 2009 (Cth) (FW Act) to facil­i­tate the objec­tives of the scheme, specif­i­cal­ly to keep employ­ees whose employ­ment would oth­er­wise be made redun­dant to remain con­nect­ed to their employ­er through­out this pan­dem­ic cri­sis. As well as enabling work­ers to keep employed, that con­nec­tion will help facil­i­tate the eco­nom­ic snap­back” the gov­ern­ment hopes to achieve once the cri­sis is over (or has at least abated). 

Is my busi­ness or not-for-prof­it eligible?

Employ­ers will be eli­gi­ble if:

  • their busi­ness has an annu­al turnover of less than $1 bil­lion (or is part of a con­sol­i­dat­ed group for income tax pur­pos­es with turnover of less than $1 bil­lion) and it is esti­mat­ed that their turnover has or is like­ly to fall by at least 30 per­cent; or
  • their busi­ness has an annu­al turnover of $1 bil­lion or more (or is part of a con­sol­i­dat­ed group for income tax pur­pos­es with a turnover of $1 bil­lion or more) and it is esti­mat­ed that their turnover has or will like­ly fall by at least 50 per­cent; and
  • their busi­ness is not sub­ject to the Major Bank Levy.

Those who are self-employed (such as sole traders and gig econ­o­my work­ers) will also be eli­gi­ble where they meet the above requirements. 

ACNC reg­is­tered char­i­ties will be eli­gi­ble to receive the Job­Keep­er Pay­ment where it is esti­mat­ed their turnover has or is like­ly to fall by 15 percent. 

In order to estab­lish that your busi­ness or not-for-prof­it meets the required fall in turnover, most employ­ers will need to show that their turnover has or is like­ly to fall in the rel­e­vant month or quar­ter rel­a­tive to their turnover in a cor­re­spond­ing peri­od a year ear­li­er. (The report­ing peri­od will be depen­dent on your Busi­ness Activ­i­ty State­ment). How­ev­er, it is impor­tant that employ­ers close­ly con­sid­er the evi­den­tiary require­ments for their spe­cif­ic type of busi­ness. For exam­ple, dif­fer­ent report­ing require­ments apply to those busi­ness­es which were not in oper­a­tion a year ear­li­er or to those where the pre­vi­ous year’s turnover is not an indica­tive rep­re­sen­ta­tion of their usu­al turnover. 

Notably, a num­ber of employ­ers are exclud­ed from access­ing the Job­Keep­er Pay­ment, including:

  • Aus­tralian gov­ern­ment and agencies;
  • State and Ter­ri­to­ry gov­ern­ments and agencies;
  • Local gov­ern­ments;
  • State-owned cor­po­ra­tions;
  • For­eign gov­ern­ments and agencies;
  • Those busi­ness­es in liq­ui­da­tion, or a part­ner­ship, trust or sole trad­er in bankruptcy.

Are all my employ­ees eli­gi­ble for the payment?

Not all employ­ees will be eli­gi­ble for the Job­Keep­er Payment. 

To be eli­gi­ble, employ­ees must:

  • be cur­rent­ly employed by the eli­gi­ble employ­er (this includes employ­ees who have been stood down or re-hired);
  • have been employed by their employ­er as at 1 March 2020;
  • be full time, part time, or long-term casu­als (i.e. those casu­al employ­ees who are employed on a reg­u­lar and sys­temic basis for longer than 12 months as at 1 March 2020);
  • be at least 16 years of age as at 1 March 2020
  • as at 1 March 2020, be an Aus­tralian cit­i­zen, per­ma­nent res­i­dent visa hold­er, or hold a Spe­cial Cat­e­go­ry (Sub­class 444) Visa;
  • be a res­i­dent for tax pur­pos­es as at 1 March 2020; and
  • not be in receipt of a Job­Keep­er Pay­ment from anoth­er employer. 

For eli­gi­ble employ­ees earn­ing less than $1,500 per fort­night (before tax) (includ­ing those employ­ees who have been stood down due to the Coro­n­avirus), the employ­er must pro­vide the employ­ee at least $1,500 per fort­night. Employ­ers can also use the $1,500 pay­ment to sub­sidise the wages of those employ­ees who earn more than that amount. As dis­cussed fur­ther below, the pay­ment can also be used to sub­sidise annu­al leave. 

Notably, employ­ers are required to con­tin­ue to pay their employ­ee’s super­an­nu­a­tion in accor­dance with applic­a­ble super­an­nu­a­tion legislation. 

How to apply

Eli­gi­ble employ­ers who want to receive the Job­Keep­er Pay­ment through the scheme will need to elect to do so by apply­ing at www​.ato​.gov​.au. Evi­dence of the employ­er’s eli­gi­bil­i­ty will need to be pro­vid­ed, as well as rel­e­vant infor­ma­tion per­tain­ing to each of the eli­gi­ble employees. 

Once an employ­er suc­cess­ful­ly starts to obtain the Job­Keep­er pay­ment, they will need to noti­fy all eli­gi­ble employ­ees and ensure that each eli­gi­ble employ­ee receives at least $1,500 per fort­night (before tax). Employ­ers will be required to pro­vide rel­e­vant infor­ma­tion to the ATO on a month­ly basis, such as the num­ber of eli­gi­ble employ­ees employed by the business. 

JOB­KEEP­ER FLEXIBILITY

While there has been much focus on the Job­Keep­er pay­ment (which is under­stand­able, giv­en the stag­ger­ing amounts involved), the Job­Keep­er scheme also gives employ­ers who are eli­gi­ble to receive the Job­Keep­er Pay­ment the author­i­ty to make what are described as Job­Keep­er Enabling Direc­tions’ in respect of eli­gi­ble employ­ees. These direc­tions are designed to pro­vide eli­gi­ble employ­ers with greater flex­i­bil­i­ty with respect to man­ag­ing the hours, duties and loca­tion of their work­force in the face of sig­nif­i­cant COVID-19 relat­ed eco­nom­ic downturn. 

The Job­Keep­er Enabling Direc­tions avail­able to eli­gi­ble employ­ers include: 

  • stand­ing down employ­ees (includ­ing reduc­ing days and hours);
  • chang­ing the duties per­formed by the employ­ee; and
  • chang­ing the employ­ee’s loca­tion of work.

We exam­ine each of these in turn below. 

Job­Keep­er Enabling Direc­tions – Stand Down (Job­Keep­er enabling stand down direction)

There is a lim­it­ed gen­er­al right to stand down employ­ees in the FW Act (sec­tion 524). This is by design – stand down is con­sid­ered a dras­tic step to be invoked judi­cious­ly. Employ­ees who are stood down are usu­al­ly left in lim­bo. As a gen­er­al obser­va­tion there appears to be a range of sit­u­a­tions where that lim­it­ed right (which rel­e­vant­ly relates to a stop­page of work) has been recent­ly applied in cir­cum­stances where it did not prop­er­ly per­tain. It will be inter­est­ing to see when the dust set­tles whether some of those stand downs are chal­lenged in the Fair Work Com­mis­sion pur­suant to sec­tion 526 of the FW Act. 

While it has not been open­ly stat­ed, the imple­men­ta­tion of the Job­Keep­er enabling stand down direc­tion appears to be a response to the lim­it­ed nature of the exist­ing stand down pro­vi­sions in the FW Act. It expands both the cir­cum­stances in which an employ­er can give a stand down direc­tion and the con­tent of such a direc­tion. This is not, how­ev­er, a new gen­er­al right under the FW Act — it is only open to employ­ers who are eli­gi­ble for Job­Keep­er in respect of employ­ees for whom they are receiv­ing the pay­ment for the dura­tion of the scheme. 

A Job­Keep­er enabling stand down direc­tion is more flex­i­ble than a stand down under the FW Act. It enables the employ­er to direct a reduc­tion in hours or days rather than the all or noth­ing” sit­u­a­tion in a nor­mal FW Act stand down. That said, an eli­gi­ble employ­er can reduce the num­ber of days or hours to zero if it choos­es to do so. 

Employ­ers can only issue a Job­Keep­er enabling stand down direc­tion (includ­ing reduced hours) where the employ­ee can­not be use­ful­ly employed for the employ­ee’s usu­al hours due to the COVID-19 pan­dem­ic or any relat­ed gov­ern­ment direc­tives or initiatives. 

In order to issue a Job­Keep­er enabling stand down direc­tion, an eli­gi­ble employ­er must com­ply with the fol­low­ing conditions:

  • The employ­er must have qual­i­fied for the Job­Keep­er scheme.
  • The employ­er is enti­tled to Job­Keep­er Pay­ments for the employ­ee for the peri­od that the direc­tion applies. 
  • The employ­ee must be con­sult­ed. That is, at least three days before the direc­tion is issued (or less where the par­ties mutu­al­ly agree), the employ­er must give the employ­ee writ­ten notice of inten­tion to issue the direc­tion. The employ­ee or their rep­re­sen­ta­tive must be giv­en the oppor­tu­ni­ty to con­sult with the employ­er about the direc­tion. There needs to be a writ­ten record of this consultation. 
  • The direc­tion then needs to be giv­en in writing.
  • The direc­tion and its imple­men­ta­tion must be safe, par­tic­u­lar­ly with regard to the nature of the COVID-19 pandemic.
  • The direc­tion must be rea­son­able in all the circumstances.
  • The Wage Con­di­tion” is sat­is­fied. That is, the employ­er is enti­tled to receive Job­Keep­er Pay­ments for the employ­ee and com­plies with the rel­e­vant leg­is­la­tion (about which more infor­ma­tion will be pro­vid­ed by the Aus­tralian Tax­a­tion Office in due course).
  • The employ­er must meet the Min­i­mum Pay­ment Guar­an­tee which is, essen­tial­ly, an amount not less than the greater of the following:
    • the amount of Job­Keep­er Pay­ment payable to the employ­er for the employ­ee for the fort­night; or
    • the amounts payable to the employ­ee in rela­tion to the per­for­mance of work dur­ing the fort­night. (For clar­i­ty, amounts payable” includes any applic­a­ble incen­tive-based pay­ments and bonus­es, load­ings, mon­e­tary allowances, over­time or penal­ty rates, or leave payments.)

The employ­er must ensure that the employ­ee receives a base hourly rate of pay which is not less than the rate the employ­ee would usu­al­ly receive. Under the Job­Keep­er scheme, this is referred to the hourly rate of pay guarantee”.

Job­Keep­er Enabling Direc­tions – Duties and Loca­tion

The Job­Keep­er scheme also enables eli­gi­ble employ­ers to direct employ­ees to per­form dif­fer­ent duties to those they usu­al­ly per­form or per­form their duties from a dif­fer­ent loca­tion. (One obvi­ous exam­ple in the present envi­ron­ment is a direc­tion to work from home – the strict terms of many indus­tri­al instru­ments poten­tial­ly pre­clude such a direction). 

Once again, the inten­tion is to con­fer flex­i­bil­i­ty upon eli­gi­ble employ­ers to seek to max­imise the val­ue of the work per­formed by employ­ees they retain with the sup­port of Job­Keep­er payments. 

A num­ber of con­di­tions also apply to these Job­Keep­er Enabling Direc­tions (relat­ing to loca­tion and duties). These con­di­tions include:

  • The employ­er has infor­ma­tion that leads them to rea­son­ably believe that the Job­Keep­er Enabling Direc­tion is nec­es­sary to main­tain the employ­ment of the employee. 
  • The employ­er must have qual­i­fied for the Job­Keep­er scheme.
  • The employ­er is enti­tled to Job­Keep­er Pay­ments for the employ­ee for the peri­od that the direc­tion applies. 
  • The employ­ee must be con­sult­ed (see above, as with Job Keep­er enabling stand down direction). 
  • Any mod­i­fied duties direct­ed to be per­formed are with­in the employ­ee’s skill and com­pe­tence, and the employ­ee holds any nec­es­sary qual­i­fi­ca­tions or required licence(s) to per­form those duties. 
  • Any alter­na­tive loca­tion from which the employ­ee has been direct­ed to work is suit­able for the employ­ee’s duties. 
  • The duties or the loca­tion, as applic­a­ble, is gen­er­al­ly safe and safe hav­ing par­tic­u­lar regard to the nature of COVID-19
  • The duties or the loca­tion, as applic­a­ble, is rea­son­ably with­in the scope of the employ­er’s busi­ness operation. 
  • The direc­tion is rea­son­able in all the circumstances.

Time­frames

Due to the nature of the cir­cum­stances sur­round­ing this leg­is­la­tion, all Job­Keep­er Enabling Direc­tions will cease to have effect of 28 Sep­tem­ber 2020.

REQUESTS (WITHSTING)

The Job­Keep­er scheme also seeks to increase employ­er flex­i­bil­i­ty by pro­vid­ing for addi­tion­al employ­er request’ arrangements. 

Employ­ers eli­gi­ble for the Job­Keep­er scheme are able to request to make an agree­ment with eli­gi­ble employ­ees regarding:

  • the days or times when the employ­ee is to per­form their work; and
  • the employ­ee tak­ing annu­al leave (includ­ing at half pay).

Sim­i­lar to the Job­Keep­er Enabling Direc­tions set out above, a num­ber of con­di­tions must be sat­is­fied before a request can be made to alter the days or times when an employ­ee is to per­form their work. For exam­ple, the per­for­mance of duties on those days or times is to be gen­er­al­ly safe, with par­tic­u­lar regard to the nature and spread of COVID-19. Rel­e­vant­ly, (and this is the sting in the request) an employ­ee must con­sid­er, and can­not unrea­son­ably refuse, the request. Giv­en this is a request (albeit one which the employ­ee can­not unrea­son­ably refuse), rather than a Job­Keep­er enabling stand down direc­tion, the require­ments on the employ­er are less oner­ous. Employ­ers will need to decide – request or direct? (One impor­tant caveat, how­ev­er, is that the request can­not be used to reduce days or hours – that must be done by way of the Job­Keep­er enabling stand down direction). 

With respect to annu­al leave, employ­ers eli­gi­ble for the Job­Keep­er Pay­ment are autho­rised to request staff to take leave. This must be done by agree­ment between the employ­er and the employ­ee, how­ev­er, as with the request to vary days and times work is per­formed, the employ­ee must con­sid­er, and not unrea­son­ably refuse, the request. Notably, the request to take annu­al leave must not result in the employ­ee hav­ing an annu­al leave bal­ance of less than two weeks. The employ­er and employ­ee can agree the rel­e­vant annu­al leave peri­od will be at half pay for dou­ble the peri­od. Where an employ­ee accepts the request to take annu­al leave, the Job­Keep­er Pay­ment can be used to sub­sidise their annu­al leave payments.

AN EVOLV­ING SITUATION

While the Job­Keep­er leg­is­la­tion is com­pre­hen­sive, it is not exhaus­tive in respect of the Job­Keep­er scheme. It does not pro­vide a com­plete under­stand­ing of the nature and oper­a­tion of the Job­Keep­er scheme. This is because the leg­is­la­tion con­fers pow­er on the Trea­sur­er to make rules to give effect to the scheme. At time of writ­ing, these rules are yet to be released. While they are expect­ed to be released in the com­ing days, at present there remains some uncertainty. 

As the Aus­tralian Gov­ern­ment releas­es more infor­ma­tion over the com­ing days, employ­ers will need to watch this space close­ly to ensure they are in strict com­pli­ance with all eli­gi­bil­i­ty require­ments. Employ­ers should be par­tic­u­lar­ly care­ful before mak­ing rep­re­sen­ta­tions or giv­ing under­tak­ings to gov­ern­ment agen­cies in respect of Job­Keep­er payments. 

To lis­ten to COVID-19: A Short Guide to the Job­Keep­er Pay­ment and Job­Keep­er Flex­i­bil­i­ty pod­cast by Michael Byrnes click here.

If your busi­ness has been impact­ed by COVID-19 and you need spe­cial­ist employ­ment law advice, please con­tact our Employ­ment Part­ner Michael Byrnes on +61 2 9777 8340.