You have read our article for managing employees of a small business during the COVID-19 crisis. What are the options available to your medium and large businesses clients? What is the new JobKeeper Payment?

As larger employers will be aware, there are differences in employment law which apply once a business has fifteen (15) or more employees. These differences are relevant for larger employers who are considering their response to the economic crisis precipitated by the COVID-19 pandemic. The situation is dynamic to say the least, the Fair Work Ombudsman is maintaining a resource about COVID-19’s impacts on Australian workplace laws and employers and their advisors would be well served to consult that resource about further developments. The recently announced JobKeeper payment has also changed the landscape for businesses of all sizes.

The Situation for Larger Businesses

The good news is that our earlier articleexplaining the options available to small business employersalso applies to your clients in larger businesses as well. However,business with fifteen (15) or more employees, should also be aware of how the law affects them, as a larger business. The key differences are:

· New employees who have been employed for less than six (6) months can be dismissed without the risk of an unfair dismissal claim. Therefore, if your clients are considering termination, they should assess whether they have any new employees with less than six (6) months of employment.

· You may have read in our earlier article that small businesses benefit from being able to dismiss employees without the risk of an unfair dismissal application for employees who have been employed for less than twelve (12) months. Your clients should monitor their number of employees after any termination to see if they become a small business during the crisis. For example, if they have twenty (20) employees and they terminate six (6) employees, laws relating to small business employers will then become applicable to them.

· Remember that larger employers do not have access to the protections afforded to small business employers pursuant to the Fair Work Act 2009(Cth). While they do not have to comply with the Small Business Dismissal Code, their employees are likely to have more rights, for example, to warnings and performance management.

- Therefore, larger employers should have employment policies and procedures in place to mitigate the risk of unfair dismissal employee claims.

- Fair Work Australia publishes unfair dismissal resources which may assist them.

· If larger businesses make employees redundant they will not benefit from the exemption that releases small businesses from the obligation to make redundancy payments. Therefore, they should take advice about the potential financial implications of making any employees redundant. Again, please monitor the number of employees closely. In the above example, we considered an employer with twenty (20) employees who reduced their number of employees to fourteen (14). In that example, the employer would then be able to further reduce their number of employees without the obligation of making redundancy payments. Since the amount of redundancy payable increases with the employee’s applicable length of employment, they may consider retaining the longest serving employees until they become a small business, so that they are not required to pay redundancy pay if they have to terminate those employees.

· If they are interested in the new JobKeeper Payment recently announced by the Government, large business will also be treated differently to a small business. The biggest difference regarding the JobKeeper Payment for larger businesses (those with a turnover of $1 billion or more) is the higher threshold for eligibility, a 50% decrease in turnover rather than only 30% for smaller businesses.

JobKeeper

While the $1,500 a fortnight JobKeeper Payment has been the subject of substantial Government announcements and media coverage, as at the time of writing, there has been no legislation passed or even introduced to parliament to implement this measure.

JobKeeper at this stage is a policy announcement, and is subject to the considerations of politics, not law. As such, while there is no law directed to JobKeeper, there can be no legal advice on it.

That being said, the political reality in this time of crisis is that it is extremely likely that a law introducing the JobKeeper Payment will receive resounding bi-partisan support as soon as it is introduced. This follows the fact that no significant player in national politics has made any public statement that suggests it would oppose such a law.

So, what do we know so far?

Australian Government Fact Sheet

On 1 April 2020 the Australian Government released this Fact Sheet about the JobKeeper Payment. At the moment, this Fact Sheet appears to be the most authoritative resource available on the JobKeeper Payment.

In short:

· Employers will be eligible if:

- They elect to participate in the scheme;

- Their business has a turnover of less than $1 billion and their turnover has fallen by more than 30 per cent; or

- Their business has a turnover of $1 billion or more and their turnover has fallen by more than 50 per cent; and

- The business is not subject to the Major Bank Levy.

· Employees will be eligible if:

- They are an Australian Citizen, the holder of a permanent visa or Special Category (Subclass 444) Visa Holder;

- They were employed by their employer on 1 March 2020;

- They are still engaged by that employer or have been re-engaged since 1 March 2020;

- They are full-time, part-time, or a casual who has been with that employer for 12 months prior to 1 March 2020;

- They are a self-employed person, and expect to suffer at least a 30 per cent decline in turnover relative to a comparable period a year ago (of at least a month).

· If and employee has multiple employers they can only receive the JobKeeper payment from one of them; this will generally be the employer from which they claim the tax-free threshold.

· Employers should continue to pay their employees and will be reimbursed by the tax office, who will administer the scheme.

· Employers must pay employees covered by the scheme at a minimum, $1,500 per fortnight, before tax.

The big picture is that the JobKeeper Payment makes “Stand downs” which we addressed in our earlier article this week significantly more palatable to both employees and employers. As employees who were employed by a business as of 1 March 2020 will be eligible for JobKeeper if they re-engage them, businesses may wish to reach out to any key employees who have been let go since 1 March 2020.

Conclusion

This legal update was drafted for our medium and large business accountants and all the medium and large business clients of all of our accountant friends. Please share this with your colleagues, clients, associates, friends, family and anyone who may benefit from this important information.

We hope this overview has provided some useful guidance during these difficult times. However, please remember that businesses should always seek independent and specific legal advice regarding any particular employee and circumstance as the legal position varies widely from employee to employee and is dependent on the applicable facts.

Gavin Parsons and Associates can assist you with any questions you may have regarding employment law and your business or that of your clients. Contact Gavin Parsons and Associates on (02) 9262 4471 for a free no-obligation consultation today.

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Date posted: 2020-04-08