To supplement our breakdown of the JobKeeper Legislation, we have set out a number of FAQ’s in relation to the new provisions.
What do I need to do, as an employer, if I want to participate in the JobKeeper scheme?
You need to:
- register your interest with the ATO and subscribe for JobKeeper payment updates
- ascertain that your business and employees meet the eligibility requirements
- continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight
- notify eligible employees of the business intention to claim the JobKeeper payment on their behalf and provide a copy of the Employee Nomination Notice
- enrol for the JobKeeper Payment using the ATO’s Business Portal. If the business plans to claim JobKeeper for April, this must be done by the end of April
Is my business eligible to receive the JobKeeper Payment?
A business will be eligible to receive the JobKeeper payment for eligible employees if:
- it carried on a business in Australia (or was a non-profit body pursuing its objectives principally in Australia) on 1 March 2020
- before the end of the JobKeeper fortnight, it met the decline in turnover test
A business will not be eligible if it:
- was subject to the Major Bank Levy on 1 March 2020
- is a government body or a wholly owned entity of such a body (including State and Territory governments, foreign governments, local governments and agencies of these entities)
- had a liquidator or trustee in bankruptcy appointed at any time in the fortnight
What is the “decline in turnover” test?
This means that employers or businesses:
- with an aggregated turnover of less than $1 billion, must demonstrate a decline in GST turnover of 30% or more when compared to a comparable period (otherwise known as “turnover test period”)
- with an aggregated turnover of $1 billion or more, must demonstrate a decline in GST turnover of 50% or more when compared to the turnover test period
What about charities or not-for-profits?
For registered charities, they must demonstrate a decline in GST turnover of 15% or more when compared to the turnover test period.
What is the turnover test period?
The turnover test period may be a 1-month period (March to September) or a 3-month period (the quarter commencing 1 April 2020 or the quarter commencing 1 June 2020).
For those who choose the monthly turnover period in the application, employers can select any month they want during the six-month life of the scheme, so that’s either March, April, June, July, August or September. However, employers will only be eligible for the payments for fortnightly cycles that start on or after their nominated month.
For example, if the business nominated a projected fall in revenue in May (against May 2019), you’ll only be eligible for payments starting the first JobKeeper pay cycle in or after May. Therefore, even if you are paying employees the minimum JobKeeper payment during April, you won’t be able to recover those wages if May is your nominated turnover period.
If you select the quarterly turnover period, employers can select 1 April 2020 to 30 June 2020, or 1 July 2020 to 30 September 2020 (compared to those corresponding periods in 2019).
What happens if my decline in turnover is not as much as I thought?
For example, your business reasonably assess its projected turnover for April 2020 as $50,000 and in April 2019 it was $75,000. It’s decline in turnover is around 33% and the business meets the decline in turnover condition at the test time. However, its actual turnover turns out to be $70,000, so its decline in turnover was actually less than 30%.
The Treasury has commented in its fact sheet for employers that there will be some tolerance where employers, in good faith, estimate a 30% or more fall in turnover but actually experience a slightly smaller fall. However, as it seems, unless that estimate has been made in “good faith” (which is not defined), there is a risk that upon an audit from the ATO, the employer may have to pay back the JobKeeper payments and interests even if the payments have been paid to employees.
It is, therefore, important to evidence how employers calculate their projected turnover.
How do I work out the turnover test?
You may need to:
- identify the turnover test period (monthly or quarterly)
- identify the relevant comparison period (the turnover test period, but in 2019)
- determine relevant JobKeeper GST turnover (actual or projected)
- determine which turnover reduction applies to you
- workout if the turnover has fallen by the required amount.
I am a self-employed business owner, do I qualify?
Self-employed business owners will be eligible to receive the JobKeeper Payment where they meet the relevant decline turnover test, and:
- they are not employed by the business at any time in the JobKeeper fortnight (because they are the owner of the business, not an employee
- a sole trader, partner in a partnership, adult beneficiary of a trust, or the director or shareholder of a company in the JobKeeper fortnight
- aged 16 years or over
- an Australian resident for social security purposes, or an Australian resident for taxation purposes and the holder of a Subclass 444 (Special Category) visa as at 1 March 2020
- not otherwise excluded from receiving the payment at any time during the JobKeeper fortnight.
Are my employees eligible?
Your employees will be eligible if they were:
- are currently employed by the eligible employer (including those who were stood down or re-hired after being made redundant)
- were employed by the employer at 1 March 2020
- are permanent employees (part-time or full-time) or long term casuals (who are employed on a regularly and systematic basis for longer than 12 months) as at 1 March 2020
- are aged 16 years or over as at 1 March 2020
- are Australian citizens, holders of a permanent visa, or the holder of a Subclass 444 (Special Category) Visa at 1 March 2020
- were a resident for tax purposes on 1 March 2020
- are not receipt of a JobKeeper Payment from another employer
Am I still eligible if I do not pay my employee(s) at least $1,500 before tax in the relevant fortnight?
The ATO has clarified that employers will not be eligible for the JobKeeper payment if they do not pay their nominated employee at least $1,500 before tax in the relevant fortnight. The ATO has emphasised that the JobKeeper payment is a reimbursement from the ATO to employers and the subsidy cannot be paid in advance.
For the first two fortnights (30 March – 12 April and 13 April – 26 April), the ATO has said it will accept the minimum $1,500 payment before tax has been paid for each fortnight even if it has been paid late, provided it is paid by the end of April.
This means that employers can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April and remain eligible for JobKeeper.
Can I re-engage an employee who has been made redundant after 1 March 2020, and would they then be eligible for JobKeeper payments?
If an employee is re-engaged by an employer after they were made redundant, as long as they were employed by the employer at 1 March 2020 and fulfil the other eligibility criteria, they would potentially be eligible for JobKeeper payments upon their re-engagement.
Employers will need to come to an arrangement with the employee regarding the repayment of any redundancy payment and entitlements and determine whether the employee’s employment will be deemed “continuous” for the purposes of statutory entitlements. It is also unclear whether they will be required to “pay back” any redundancy pay it received.
What do I need to pay an employee who ordinarily receives $1,500 or more per fortnight?
If your employees ordinarily receive more than $1,500 (gross) in wages per fortnight and they are continuing to work, the employer must pay them their regular income. Employers can then use the JobKeeper payments to subsidise all or part of the income.
What do I need to pay an employee who ordinarily receives less than $1,500 in income per fortnight?
For employees who ordinarily receive less than $1,500 (before tax) in wages per fortnight, the employer must top up their wages and pay them at least $1,500 (before tax) per fortnight in order to be eligible for the JobKeeper payment. They will then receive the JobKeeper payments as a reimbursement to subsidise all of the payment.
What do I need to pay an employee who has been stood down under the JobKeeper Enabling Stand Down Directions under the FW Act?
Employers will need to pay employees who have been stood down at least $1,500 (before tax) per fortnight to be eligible for the JobKeeper payment. They will then receive the JobKeeper payments as a reimbursement to subsidise all of the payment.
What do I need to pay an employee whose hours have been reduced because of a JobKeeper Enabling Stand Down Direction under the FW Act?
You would need to pay the employee their regular income at their reduced hours. Employers can then use the JobKeeper payments to subsidise all or part of their income.
For example, an employee works for a company who has suffered a significant reduction in turnover following Covid-19. The employer gives the employee a JobKeeper enabling stand down direction that reduces his ordinary hours from 38 to 32 hours per week. It applies from the time the JobKeeper payments are being received. The employee was previously receiving $2,500 and it was reduced to $2,000. Because the employee’s reduced fortnightly pay is still higher than the fortnightly JobKeeper payment of $1,500, he is entitled to the higher amount of $2,000 per fortnight.
Do the amendments to the FW Act apply to employers and employees who are not eligible to receive payments under the JobKeeper scheme?
No. The amendments only affect the rights and liabilities of employers and employees who are eligible for JobKeeper payments.
Do I have to participate in the JobKeeper scheme as an employer?
No, the JobKeeper scheme is not mandatory and businesses are not required to participate in the scheme.
Will employees on unpaid leave qualify for the JobKeeper payment?
Employees on unpaid leave will still be eligible for JobKeeper payments, provided that the employer has met the minimum wage condition of $1,500 (gross) per fortnight.
What about employees receiving paid government parental leave pay?
Employees who are receiving government parental leave pay are excluded from receiving JobKeeper Payments.
What about employees receiving workers’ compensation?
Employees who are receiving workers’ compensation and are totally incapacitated and not working are not eligible to receive JobKeeper payments. However, employees receiving workers compensation will be eligible for the JobKeeper Payment if they are continuing to work. For example, they might be working on reduced hours or reduced duties.
Do I need to make a direction or agreement to an eligible employee under the new provisions of the FW Act to access the JobKeeper scheme?
A qualifying employer doesn’t have to make a direction or agreement to an eligible employee under the new provisions. They can continue to give reasonable and safe directions for an eligible employee to work their normal hours of work (if they aren’t on authorised leave), and pay them either the amount of the JobKeeper payment or their usual pay for any hours that the employee does work – whichever is more.
When I can direct my employee to stand down under the new FW Act amendments?
The new provisions enable a qualifying employer to direct an employee to work fewer hours or days (including no hours) in certain circumstances. Employers can only give an employee a JobKeeper enabling stand down direction if the employee can't be usefully employed for their normal days or hours because of changes to the business that are attributable to:
- the coronavirus pandemic, or
- government initiatives to slow the transmission of the coronavirus (for example, because of an enforceable government directions).
The direction must also be implemented safely, including having regard to the nature and spread of coronavirus.
Do I need to give my employees notice of a JobKeeper enabling stand down direction?
A JobKeeper enabling stand down direction must be in writing. Employers also need to:
- notify the employee and consult the employee (or their representatives) at least 3 days before issuing the direction (unless the employee genuinely agrees to a shorter timeframe)
- keep a written record of the consultation
The FW Act refers to a direction being ‘safe’, what does this mean?
While there is no definition of ‘safe’, the objects of the legislation include ensuring the continuing effective operation of the occupational health and safety laws (OHS laws) during the Coronavirus pandemic.
It is therefore important to ensure that any directions are implemented with consideration to appropriate OHS laws or that are in line with Government directives in respect to social distancing, hygiene and work requirements.
For example, an employer directs its office staff to work from home. It must ensure that it provides appropriate equipment to address OHS laws. For example, if may include providing employees with computer monitors, first aid kits and fire extinguishers.
I previously stood down my staff under section 524 of the FW Act, can I still qualify for the JobKeeper payments?
If you stood down an employee under section 524 of the FW Act, in order to take advantage of the new Jobkeeper options (such as working reduced hours or days) under these new legislated changes, employers will need to issue new Jobkeeper stand down directions in accordance with these new changes.
This will require employers to comply with the obligations set out in the newly enacted Part 6-4C of the FW Act.
