The JobKeeper Payment and Fair Work changes are now law. What does the law actually say?

At the time of publishing our first article about options available for managing employees during the COVID-19 crisis, the Government announced the JobKeeper payment, which enables eligible employers to receive a wages subsidy to pay their eligible employees $1,500 per fortnight. We summarised what was known at the time in our second article, before any legislation had been introduced to parliament. The JobKeeper payment has now become law.

This article features the following important current topics relating to the law, as well as critical links to our previous articles, the Fair Work Act and Treasury and Government Legislation. Essentially it is a One Stop Shop for businesses and professionals in this current COVID19 environment.

• JobKeeper
• Two Big Changes to Fair Work
• Australian Government Fact Sheets and the Legislation
• How do I satisfy the turnover test?
• What period does the JobKeeper Scheme run for? When do I have to register?
• What do I need to register?
• Who cannot register?
• I know the minimum payment is $1500 a fortnight, but what is that made up of?
• What about Superannuation?

JobKeeper

The legislation implementing the JobKeeper payment is, as was expected, largely in keeping with the Government’s announcements and information published to date. However, the detail available is now substantially increased. For the experts and professionals, the full details are here.

Two Big Changes to Fair Work

In a step that formalises the arrangements imposed by necessity on many employers throughout the economy, employers are now permitted to give reasonable directions in regard to:

• The location that an employee carries out work for the employer; and
• The usual duties that an employee carries out.

The purpose of these changes is to eliminate any uncertainty about work from home arrangement and ensure that employers are able (within reason) to continue to utilise employees for whatever valuable activities still be available to the business before resorting to standing down employees, or other more serious options outlined in our previous article.

Australian Government Fact Sheets and the LegislationThe Treasury has revised and improved the resources that it provides with regard to the JobKeeper payments over the Easter weekend and those are available here.

We previously provided a short summary based on the information which had been released by the Government at that time. Below we have supplemented that summary with the specifics from the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the “Rules”):

How do I satisfy the turnover test?The Summary
Employers will be eligible if:

• The 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% or

• Their business has a turnover of $1 billion or more and their turnover has fallen by more than 50% and 

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

The Further Detail

The detail is in 8(7) of the Rules:

(7) For the purposes of this section:

(a) the turnover test period must be:

(i) a calendar month that ends after 30 March 2020 and before 1 October

2020; or

(ii) a quarter that starts on 1 April 2020 or 1 July 2020; and

(b) the relevant comparison period must be the period in 2019 that corresponds to the turnover test period.

     The difficulty here will be for businesses who do not have an appropriate comparison period from last year, either because their business has only recently started trading, or because the year just gone is not an appropriate comparison because it was atypical for some reason (for example agricultural businesses affected by drought).

    The Commissioner of Taxation has the discretion to apply an alternative test in such instances. Examples provided in the Explanatory Statement to the Rules suggest that in the case of newly established businesses the Commissioner will use the trading history of the business up until the turnover test periodin place of the comparison period,and in the case of businesses affected by atypical conditions in the last year, will specify an alternative period which is more representative, by reference to our earlier example, a period in which the agricultural business was not effected by drought. Businesses who believe the turnover test will not apply fairly to them should immediately seek professional advice and begin liaising with the Australian Taxation Office.

      What Period does the JobKeeper Scheme run for? When do I have to register?

      The JobKeeper scheme will run for the following fortnights totalling twenty-six (26) weeks:

•     the fortnight beginning on 30 March 2020; and
•     each subsequent fortnight, ending with the fortnight ending on 27 September 2020.

The JobKeeper scheme operates on a prospective basis only, in order to be eligible for a particular fortnight, the employer must be registered before the end of that fortnight.The only exception to this runs for the month of April 2020, employers who register prior to the end of April will remain entitled to payments for the two fortnights commencing from 30 March 2020.

What do I need to do to register?

Employers who wish to participate in the scheme are required to notify all employees that they have elected to participate in the scheme and that their eligible employees will all be covered by the scheme.

Eligible employees must then provide a notice to their employer agreeing:

• to be nominated by the employer as an eligible employee under the JobKeeper scheme as the employer with which the employee will participate;
• that they confirm they have not agreed to be nominated by another employer; and
• that they do not have permanent employment with another employer if they are employed as a casual employee with this employer.

Who cannot register?

Employees who are in receipt of Parental Leave Pay or Dad and Partner Pay under the Paid Parental Leave Act 2010, and certain recipients of workers’ compensation may be in eligible.

If you are an Australian resident you may be eligible for the scheme even if you are working overseas, as long as your employer is eligible and participating in JobKeeper.

I know the minimum payment is $1500 a fortnight, but what is that made up of?

According to the Explanatory Statement to the Rules; the component amounts that together must equal or exceed $1,500 (regardless of the amount the employee ordinarily receives) are:

• amounts paid by the employer to the employee in the fortnight by way of salary, wages, commission, bonus or allowances (less PAYG withholding);

– generally, this means the employee’s income before tax;

• amounts withheld from payments made to the employee in the fortnight under section 12-35 in Schedule 1 to the Taxation Administration Act 1953;

– generally, this means amounts withheld by the employer for income tax or a HECS-HELP loan;

• contributions made in the fortnight to a superannuation fund or an RSA (retirement savings account) for the benefit of the employee, if the contributions are made under a salary sacrifice arrangement (within the meaning of the Superannuation Guarantee (Administration) Act 1992); and

• amounts that, in the fortnight, are applied or dealt with in any way where the employee has agreed for the amount to be so dealt with in return for salary and wages to be reduced;

– generally, this means amounts forming part of salary sacrifice arrangements.

What about Superannuation?Employers are only obliged to pay superannuation at the level of the employee’s ordinary income. This means that if the JobKeeper payment results in an employee being paid more than they ordinarily would be, their superannuation contributions can stay the same as they previously were.

However as per the Explanatory Statement to the Rules:

An employer will not be required to make superannuation contributions for an employee who is stood down. This is because employers have no obligation to pay stood down employees. If an employer pays a stood down employee $1,500 to satisfy the wage condition for receiving the JobKeeper payment, then the entire amount will be disregarded for superannuation guarantee purposes.

Conclusion

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 and particular employee and circumstance as the legal position varies widely from employee to employee and is dependent on 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 today.