UPDATED 29/4/2020

On 29/3/2020 the Prime Minister announced that the government would be providing a landmark JobKeeper Wage Subsidy to provide support to businesses, and their staff, that have been impacted by the COVID-19 pandemic and the containment responses the pandemic triggered.  Since then there has been a slow release of detail and a rapid stream of questions.  Businesses and staff have been striving to understand if and how this program will apply to them.  Today the legislation to effect the JobKeeper Wage Subsidy program, and further landmark changes to the operation of the Fair Work Act, have been tabled in Parliament.  ACAPMA provides the following information on the program, and how it will apply to fuel wholesale and retail businesses.

There is no question that the COVID-19 pandemic is a serious and devastating health emergency.  Australia is, at these early stages, showing a flattening of the rate of infection that is extremely encouraging.  This reduction in new cases has been achieved through unprecedented lockdown and stay home orders that have effected all Australians.  The international and State borders are closed.  People are staying home and otherwise keeping their distance.  These measures are clearly working in controlling the spread of this disease.  There is an economic cost to the control of the disease though.  The lockdowns have effected not just people, but businesses.  The long term impact on the economy is not yet clear, but the State and Federal governments have come together to take unprecedented measures to minimise the impact and to ensure that the economy is able to bounce back as quickly as possible.

While it is an Australian pastime to have a go at the Pollies, the herculean effort of our representatives and their staff, in not only Government but also Opposition positions, is something that should be applauded, and should make every Australian proud.  Has it been perfect, no, but in the last month unprecedented co-operation between traditional adversaries, and concerted efforts (and around the clock meetings) have resulted in legislative, taxation, cash flow, social security and broad support mechanisms being designed, approved and implemented on timelines that would have been completely impossible to conceive in just February.

The largest and most far reaching of these initiatives is the JobKeeper Wage Subsidy program that is was tabled in parliament today.  The $130 Billion program is more than a hand out, it is a lifeline to the economy and to the nation.  Designed to provide relief and support to businesses and their staff the program itself goes beyond the $1,500 a fortnight that eligible businesses will receive, and pass onto, their eligible staff.  Aimed at keeping businesses that are allowed to be open, open in the face of tanking sales, and keeping those businesses who have been forced to close, or pare back their operations, connected to their staff, the program is more than a wage subsidy.  A companion piece of legislation has effected changes to the Fair Work Act that create clear and simple pathways to achieve the flexibility that businesses need in order to weather the COVID-19 storm.

The fine detail of the program, and the changes to the employment landscape are likely to be further refined by advice and guidance expected from the Fair Work Commission and the Fair Work Ombudsman in the coming days, and will be folded into this article as UPDATES as they become clear.  As at now this is what is known is explored below in terms of not only the JobKeeper Wage Subsidy, but also the operational changes to the Fair Work Act and the new pathways to flexibility that have been opened to eligible businesses and staff.


JobKeeper Wage Subsidy

The JobKeeper Wage Subsidy will provide a $1,500 per fortnight payment, to all eligible businesses for all eligible staff, which will be passed onto staff, regardless of the number of hours of work they have done or if they have been stood-down.

Eligibility of the business and the staff for the JobKeeper program provides more than just the Payment, it also allows access to the JobKeeper Directions and Flexibility measures under modifications to the Fair Work Act (see the next section for more on this).

Is my business eligible?

Businesses will be eligible for the JobKeeper program if they;

a) Are a charity or not-for-profit, that are registered with the Australian Charities and Not-for-profits Commission (ACNC), that has a turnover of $1billion and has experienced, or are likely to experience, a reduction in revenue of at least 15% as a result of COVID-19 or the governments response (lockdowns etc) to COVID-19, or

b) Are a for profit business that has a turnover of under $1billion and have experienced, or are likely to experience, a reduction in revenue of at least 30% as a result of COVID-19 or the governments response (lockdowns etc) to COVID-19.  It is important to note that businesses that are grouped for payroll tax are considered, for the purposes of this program, to be a single entity, and so the combined revenue of all grouped businesses would be considered. However, each business in the group will be assessed for the 30% reduction separately and the result may be that some of the businesses in the group may be eligible for the payment while others in the group (who have not seen a 30% reduction) may not, or

c) Are a for profit business that has a turnover of over $1billion and have experienced, or are likely to experience, a reduction in revenue of at least 50% as a result of COVID-19 or the governments response (lockdowns etc) to COVID-19.  It is important to note that businesses that are grouped for payroll tax are considered, for the purposes of this program, to be a single entity, and so the combined revenue of all grouped businesses would be considered.  However, each business in the group will be assessed for the 50% reduction separately and the result may be that some of the businesses in the group may be eligible for the payment while others in the group (who have not seen a 50% reduction) may not.

Here a business includes sole traders, family trusts and partnerships, in addition to businesses and companies.

Assessment of the reduction in revenue will be carried out by the ATO’s Taxation Commissioner on criteria that they will set.  As a standard this will involve comparing the turnover (as calculated on the BAS) for the relevant month or quarter (depending on the BAS reporting frequency of the business) with the corresponding month or quarter from the previous year.  The Taxation Commission has broad discretion however, to set other criteria, particularly to address businesses that were not trading in March 2019 or have transferred to new owners.  In these cases the Taxation Commissioner will contact businesses who have registered and will set the specific criteria.

Businesses will not be eligible for the JobKeeper program if they;

  • Fall into one of the following categories; The Australian Government and its agencies; State and Territory governments and their agencies; Foreign governments and their agencies; Local council governments; Wholly-owned corporations of those listed above and any business that is subject to the Major Bank Levy, or
  • Are a business that is in liquidation, or a partnership, trust or sole trader in bankruptcy.

In addition there may be some specific sectors that will be precluded from accessing the program, as they are provided separately with other support from the Government that explicitly requires them to forgo access to the JobKeeper program.

In order to access the program businesses, who believe they are eligible, or that they will likely be eligible over the next 6 months, must register.  Go to; https://www.ato.gov.au/general/gen/JobKeeper-payment/ to register.

Once the business eligibility has been established (and the business has registered) it will need to establish which employees are eligible to receive the payments.

Are my staff eligible?

An employee will be eligible for the JobKeeper program if they;

  • Are an Australian Citizen (or holder of a permanent visa or a Subclass 444 Special visa), and
  • Are an Australian Resident for tax purposes as at 1/3/2020, and
  • Are at least 16 years of age at 1/3/2020 – UPDATE: as of 25/4/2020 the Rules were changed to state “with the exception of full time students that are 17 years or younger and who are not financially independent” , and
  • Were employed by an eligible business at 1/3/2020, and
  • Are currently employed by that eligible business (includes staff on standdown or staff rehired since 1/3/2020), and
  • Are either; a permanent full time employee, or, a permanent part time employee, or, a long term casual (engaged regularly for more than 12 months as at 1/3/2020 – includes engagement with a previous business if there has been a transfer of business), and
  • Are not receiving a JobKeeper Payment from a different employer.

Employees will not be eligible for the JobKeeper program if they;

  • Are receiving Parental Leave Pay from Services Australia (but if an employee is on maternity leave but is not receiving Parental Leave Pay from Services Australia they will be eligible if they meet the other criteria), and/or
  • Are fully incapacitated receiving full Workers Compensation payments (partial payment recipients will still be eligible if they meet the other criteria), and/or
  • Are under 16 years of age as at 1/3/2020, and/or
  • Are a casual employee who has not been engaged for more than 12 months, and/or
  • Are not an Australian Citizen (or holder of a permanent visa or Special visa Subclass 444).

The JobKeeper Payment will count as income for all other income support payments that employees may receive and they should report the receipt of the JobKeeper Payment Income to Services Australia.

It is also worth noting that for the purposes of establishing which employer should claim the employee as eligible when there are multiple employers, that the business with which the employee claims the Tax Free Threshold, should be the business that claims the JobKeeper Payment for that employee, but that employers are directed to seek confirmation from their staff in writing as to whether the employer is the employees “primary employer” for the purposes of the scheme.

Practical Process

When a business who is eligible decides to participate in the JobKeeper Program they will be required to;

  • Pay all staff that are working their normal wages, withholding normal tax, and paying normal superannuation, and
  • Include all eligible employees in the lists provided to the ATO (there is no option for some staff who are eligible to be left off the list, even at their request), and
  • Notify all eligible employees that they are going to be receiving the JobKeeper Payment
  • UPDATE: Complete, and direct all staff to complete the Employee Nomination Form – https://www.ato.gov.au/Forms/JobKeeper-payment—employee-nomination-notice/
  • Pass at least the full value of the JobKeeper Payment onto the eligible employees without delay once approved – this means payment BEFORE the business receives monies from the ATO
    • Usually earns less than $1,500 before tax per fortnight
      • For the period 30/3/2020-26/4/2020 – if the employee is working and the business paid the employees less than the $1500 per fortnight in normal wages, then, as soon as the business is approved for the JobKeeper Program, and by AT LEAST UPDATE: 8/5/2020, the business would need to process another payment to top the amount received for the disbursement period to $1,500 per fortnight, for that special transition period (30/3/2020-26/4/2020).
      • For the periods starting 27/4/2020 to the end of the JobKeeper Program – if the employee is working less than the $1,500 before tax per fortnight, they will need to be paid their normal wages for hours worked, including superannuation, AND paid a top up amount to top them up to $1,500 before tax per fortnight. The top up amount can attract superannuation at the choice of the business.
    • Usually earns exactly or more than $1,500 before tax per fortnight
      • For if the employee is working and the business paid the employee exactly, or more than $1,500 per fortnight in normal wages then there is no further action for the business to take, the business has met the minimum requirement for payment to the employee and can simply keep the disbursement as cash in the business account
    • if the employee is on paid leave the business must ensure that if the total paid as leave is less than $1,500 before tax per fortnight that the employee receives the top up payment to $1,500 before tax per fortnight, for the period that the business and the employee were eligible and approved for the JobKeeper Payment. Backpayment for the transition period of 30/3/2020-26/4/2020 is allowed, as long as it is paid to the employee by UPDATE 8/5/2020. All future payments (from 27/4/2020) must be paid in real time according to the businesses normal pay period. It is up to the business if they choose to pay superannuation on the top up amount.
    • if the employee is not working (stooddown without pay) the business must pass the full $1,500 before tax per fortnight to the employee, for the period that the business and the employee were eligible and approved for the JobKeeper Payment. Backpayment for the transition period of 30/3/2020-26/4/2020 is allowed, as long as it is paid to the employee by UPDATE: 8/5/2020. All future payments (from 27/4/2020) must be paid in real time according to the businesses normal pay period. It is up to the business if they choose to pay superannuation on the top up amount.
  • Provide regular updates, as requested, to the ATO on the list of eligible employees, and
  • Provide regular updates, as requested, to the ATO on business current and comparative turnover, and
  • Repay any amounts to the ATO that the business was not entitled to or received in error, and
  • Keep all records pertaining to the application, eligibility calculations and disbursement for at least 5 years.

Business Implications

UPDATE: It is clear that the amount received from the ATO and paid to staff will count as business revenue for the purposes of company tax.

Businesses who receive the JobKeeper Payment will need to note that it is not yet clear what the following implications will be.  ACAPMA is actively chasing answers to these questions but in the mean time advises that all businesses should assume, for now, that;

  • That the amount received from the ATO and paid to staff will count as wages for the purposes of calculating Workers Compensation gap payments and premiums, and
  • That the amount received from the ATO and paid to staff will count as payroll for the purposes of payroll tax.

Other Items to Note

Other items for the business to note regarding the JobKeeper Payment;

  • If an employee resigns the business may end up receiving more in JobKeeper Payments that it is entitled to.  If an employee resigns the business will need to let the ATO know and the ATO will advise if the business has to pay the ATO back the overpaid amount.  To avoid an overpayment situation if an employee resigns the ATO should be notified as soon as possible. 
  • What is not clear at the moment, but is likely to become clear in the coming hours, is What implication does theJobKeeper program have on the termination of staff for misconduct for example?, though they are thought to be along the lines of a resignation as above.
  • The $1,500 a fortnight JobKeeper Payment is to be paid to the employee as payroll and taxed appropriately.  Where a business uses Single Touch Payroll it should be paid through this system.
  • The first payments from the ATO will be made in the first week of May 2020 for the period of 30/3/2020-26/4/2020.  The following payments will be made monthly in arrears (so in the first week of June 2020 for the period 27/4/2020-24/5/2020 etc), until the last payment period of 27/9/2020.
  • If a business was not eligible for the JobKeeper Payment, because there had not been, for example, a 30% drop in Revenue in the March period, but there is a 30% drop in later periods, the business can apply and receive the JobKeeper Payment at that time (though it will not be backdated, it will only be paid monthly in arrears for those periods the business qualified).

Sole Traders, Trusts, Directors and other Questions

The JobKeeper Payment is available to sole traders, trusts, Directors and others.  There has been extensive Q&A done for these persons – check out Factsheet on JobKeeper Program – FAQs – https://treasury.gov.au/sites/default/files/2020-04/JobKeeper_frequently_asked_questions_0.pdf, for these Q&A

More to come

There are likely to be more questions in the coming days.  ACAPMA is chasing answers and will let members know as soon as possible.

The Wage Subsidy or JobKeeper Payment is only half of the program, the other half is the temporary changes to the Fair Work Act that facilitate flexibility and innovation in this trying time.  See the following section for more on these changes.


JobKeeper Directions and Flexibility Options

The JobKeeper Wage Subsidy will provide a $1,500 per fortnight payment, to all eligible businesses for all eligible staff, which will be passed onto staff, regardless of the number of hours of work they have done or if they have been stood-down.

Eligibility of the business and the staff for the JobKeeper program provides more than just the Payment, it also allows access to the JobKeeper Directions and Flexibility measures under modifications to the Fair Work Act (see the next section for more on this).

In changes to the Fair Work Act, brought to bare by the new companion piece of legislation the Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020, that will automatically be removed on 27/9/2020, businesses that are eligible for the JobKeeper program, will be able to access the following changed options, rights, pathways and requirements, for their eligible staff.

A note of caution – while the business may be eligible for the JobKeeper program, it may only use the following special provisions, for those staff that are also eligible to receive the JobKeeper Payment.  If the business has a student visa worker, or a causal who has worked less than 12 months for example, then the business will not be able to apply the following special provisions to those employees, because they are not eligible to receive the JobKeeker Payment.

Available to National System Employers and Employees only

In addition to being available only to those businesses and staff that are eligible for the JobKeeper Payment, there is a further restriction on the access to the special provisions.  The business must be a National System Employer. 

The following are National System Employers;

  • All businesses in Victoria
  • All businesses in the Australian Capital Territory
  • All businesses in the Northern Territory
  • All private enterprises in New South Wales
  • All private enterprises in Queensland
  • All private enterprises in South Australia
  • All private enterprises in Tasmania
  • All constitutional corporations in Western Australia (including Pty Ltd companies)

Special Provisions – Flexibility

The business can, if it and the employee is eligible for the JobKeeper Payment;

  • Issue a Direction to reduce the hours of the employee.  This reduction can be a total reduction, where hours are reduced to zero and the employee is ‘stood-down’ from work, or it can be a partial reduction.
  • Issue a Direction to change the duties of the employee, provided the duties are reasonable, safe and within the scope of the business operations.
  • Issue a Direction to change the work location of the employee, provided the location is safe and within the scope of the business operations and not an unreasonable distance from the usual business location or the employees home.
  • Issue a Direction to employees to take accrued annual leave, provided there will be at least 2 weeks left in the entitlement bank after the employee takes the leave
  • Enter into a genuine agreement with the employee to alter the days of work.
  • Allow for the staff to access annual leave at ½ pay for twice the length of the entitlement.
  • Allow for staff to access additional training or undertake work for other employers.

In order to access these Special Provisions, in addition to the overarching requirement for the business and the staff member to be eligible for the JobKeeper Payment there are also other obligations.

Special Obligations

The business is required, if it and the employee is eligible for the JobKeeper Payment;

  • To pay employees who are working their normal wage for their normal work, including superannuation, and
  • To ensure that any employee that is working and earning less than $1,500 per fortnight as their normal wage is topped up to $1,500 per fortnight with the JobKeeper Payment, and
  • To ensure that any Direction that is given is reasonable in all ways, and
  • To ensure that any Direction is given only after;
    • There has been consideration about the necessity of the Direction for the business in each individual case.  Each case (employee impacted) must be assessed completely individually, and
    • There has been a consideration of the safety and appropriateness of the Direction, and
    • There has been genuine consultation (which is documented using the official forms), and
    • There has been writing notice, after the consultation, provided at least 3 days before the Direction comes into force, and
  • To ensure that any Direction is given in writing using the official form
  • To ensure that any Direction given expires either; when it is withdrawn in writing, or when it is replaced by another Direction, or when the last payment is made under the JobKeeper Scheme, whichever comes first, and
  • To accrue annual leave and all other entitlements for any employee that is stood-down (full or partial), as if they had not been stood-down and were in fact working, and
  • To accrue annual leave and all other entitlements for any employee that is taking annual leave at ½ pay for twice the length of entitlement, as if they were not on leave and were in fact working, and
  • To consider any request for annual leave at ½ pay and not unreasonably refuse
  • To consider any request for access to additional training or to work for other employers and not unreasonably refuse

If a business fails to meet these obligations they face steep penalties under the Act.

When a Direction has been given in accordance with these obligations the employee is required to follow the Direction.  Failure to follow the Direction could result in civil penalties to the employee under the Act as well as termination of employment.

Practicalities

For those businesses that have already effected changes onsite, like reducing hours, terminations, redundancies or stand-downs, it is time to establish is the business and staff are eligible for JobKeeper, and if the Special Provisions that are available can be activated.  In some cases where businesses have already consulted and communicated with staff about changes to hours or stand-down (just as an example) the Obligations under this Act may require those businesses to commence another round of consultation and issue the proscribed forms and written notice to ensure that the Directions are valid.

It is very important that the business carefully consider and apply the special provisions and obligations, remembering that they can only be applied to the employees that are eligible for the JobKeeper Payment.

Summary

There have been changes to the options available to businesses for the setting of hours, tasks and location, as well as a framework for the agreement of additional items like days of work, annual leave and taking a second job, or more training.  It is vital that all businesses understand that these changes are not universal.  They are temporary, and they are only available to those businesses who are eligible, and to those staff who are eligible for the Job Keeper Payment. 

This means that there will be the potential for two systems to be running in the same business, where some staff are eligible and others are not.  This also means that some businesses will not, because they are not eligible for the payment, be able to access these flexibility provisions.  Those businesses will still have access to the traditional methods, including changes made by genuine agreement as well as changes made as the result of a restructure. 

ACAPMA is here to answer your questions and guide you through the complexity.  Members are reminded to reach out to employment@acapma.com.au with any questions.


More Information for Businesses and Staff

Legislation

Factsheets

To Register for the JobKeeper

Have more questions?

Contact ACAPMA via employment@acapma.com.au

Elisha Radwanowski BCom(HRM&IR)
Executive Manager for Employment and Training

ACAPMA