The JobKeeper Legislation: what it means for you

The employment landscape in Australia has changed rapidly in a short period of time, as employers and employees adjust to the unprecedented circumstances that have arisen out of COVID-19.

Arguably, one of the biggest changes has been the introduction of the JobKeeper scheme. We have prepared a detailed overview of this new scheme to assist employers understand these changes.

We have also set out some helpful FAQ’s relating to these new changes.

The JobKeeper scheme

The Government has announced a $130 billion JobKeeper payment to help keep more Australians in jobs and support businesses affected by the significant economic impact caused by Coronavirus (known as COVID-19).

Parliament passed the JobKeeper legislation to give effect to the JobKeeper scheme to deliver the flat rate wage subsidy of $1,500 per fortnight per eligible employee to qualifying employers, in addition to making a number of temporary changes to the Fair Work Act 2009 (Cth) (FW Act) to address the economic impacts of the Coronavirus pandemic.

The JobKeeper payments under this scheme will commence from 1 May 2020, with eligible employers able to claim a payment of $1,500 per fortnight (per eligible employee) from 20 March 2020 until 27 September 2020.

The JobKeeper legislation is contained in three pieces of new legislation:

1. the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Payment and Benefits Act)
2. the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Payments and Benefits Rules), and
3. the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (Omnibus Act).

Payments and Benefits Act

Whilst the Payment and Benefits Act legislates that financial support is to be provided to employers affected by Coronavirus, much of its operative provisions (particularly regarding an employer’s eligibility for the JobKeeper payment) is contained in the Payments and Benefits Rules.

Employer eligibility

The Rules confirm that employers will be eligible to receive the JobKeeper payment, if at the time of applying:

1. it carried on a business in Australia (or was a non-profit body pursuing its objectives principally in Australi on 1 March 2020; and
2. before the end of the JobKeeper fortnight, it met the decline in turnover test.

A business will not be eligible if it:

1. was subject to the Major Bank Levy on 1 March 2020;
2. 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); or
3. had a liquidator or trustee in bankruptcy appointed at any time in the fortnight.

In order to be eligible for the JobKeeper scheme, a business must satisfy the “decline in turnover” test, as follows:

• for a business with an aggregated turnover of less than $1 billion, it must demonstrate a decline in GST turnover of 30% or more when compared to a comparable period (otherwise known as “turnover test period”)
• for a business with an aggregated turnover of $1 billion or more, it must demonstrate a decline in GST turnover of 50% or more when compared to the turnover test period
• for registered charities, they must demonstrate a decline in GST turnover of 15% or more when compared to the turnover test period.

Self-employed individuals (businesses without employees) will be eligible to receive the JobKeeper Payment where they meet the relevant turnover test above.

An employer can choose to assess its decline in turnover by a 1-month period (e.g. March 2020, April 2020, etc.) or a 3 month period (e.g. the quarter commencing 1 April 2020). The relevant test period is not tied to how the employer accounts for GST.

Employee eligibility

For eligible employers, their employees will be eligible to receive the JobKeeper payments if they:

• 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 regular 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, and
• are not in receipt of a JobKeeper Payment from another employer.

Importantly, employers cannot select which employees will participate and be nominated for JobKeeper payments. If an employer participates in the JobKeeper scheme, it must ensure that all eligible employees are covered.

Employers must also notify all employees in writing that they have elected to participate in the JobKeeper scheme and that all eligible employees will be covered by the scheme.

Omnibus Act and changes to Fair Work Act

The Omnibus Act amends the FW Act by inserting a new, temporary, Part 6-4C into the FW Act to support the JobKeeper scheme.

Part 6-4C provides, amongst other things, that qualifying employers who are entitled to JobKeeper payments for their employees, have a right to make ‘JobKeeper enabling directions’. In certain circumstances, this means that employers can temporarily:

• stand down an employee (including by reducing their hours or days of work)
• change an employee’s usual duties, and
• change an employee’s location of work.

These changes are temporary and will be repealed on 28 September 2020.

Summary to the key changes to the FW Act under the Omnibus Act

1. Obligation to satisfy wage conditions (Clause No. 789GD)

If an employer qualifies for the JobKeeper scheme and is entitled to a JobKeeper payment for an employee, the legislation requires that they must ensure that the wage condition has been satisfied. This means that the JobKeeper payment is paid to the employee by the end of the fortnight. This is a civil remedy provision.

2. Minimum payment guarantee (Clause No. 789GDA)

Where a JobKeeper payment is payable to an employee for a fortnight, the employer must ensure that the total amount payable in respect of the fortnight is not less than the greater of:

• the full fortnightly amount of the JobKeeper payment, or
• the amount payable in relation to the performance of work during the fortnight.

This is also a civil remedy provision.

3. Hourly rate of pay guarantee (Clause No. 789GDB)

If a JobKeeper enabling stand down direction applies to an employee, the employee’s rate of pay cannot be less than the base rate of pay (worked out on an hourly basis) which would have applied if the direction had not been given. Similarly, if a direction has been given regarding an employee’s work duties, the hourly base rate cannot be less than the greater of:

• the base rate of pay on an hourly basis which would have applied if the direction had not been given; and
• base rate of pay on an hourly basis applicable to the duties performed.

If an employee’s base rate is provided by a workplace instrument, such as an Enterprise Agreement or a Modern Award, then the base rate of pay will be the amount specified in that instrument or award. This is a civil remedy provision.

JobKeeper enabling directions

The temporary changes to the FW Act also allow qualifying employers to give a ‘JobKeeper Enabling Direction’ to an employee in respect of the following:

1. JobKeeper Enabling Stand down (Clause No. 789GDC)

This includes requiring employees:

• not to work on a day or days which they would typically work; or
• to work for fewer hours or a lesser period than they ordinary would.

Employers must qualify for the JobKeeper scheme at the time when the direction was given.

Importantly, employers can only give a JobKeeper enabling stand down direction if the employee cannot be ‘usefully employed’ for their ordinary days or hours because of changes to the business attributed to:

• the COVID-19 pandemic; or
• government initiatives to slow the transmission of COVID-19.

The direction must also be “safe” having regard to the nature and spread of COVID-19. It does not apply to employees taking paid or unpaid leave (which is authorised) or during a time an employee is authorised to be absent (i.e. public holidays).

2. Duties of work (Clause No. 789GE)

A qualifying employer can direct an employee to alter their duties of work, provided that:

• the duties are safe
• the employee is licensed and qualified to perform those duties (if necessary), and
• the duties are reasonably within the scope of the employer’s business operations.

3. Location of work (Clause No. 789GF)

A qualifying employer can direct an employee to perform duties at a place that is not their normal place of work if:

• the place is suitable for the employee’s duties
• it does not require the employee to travel an unreasonable distance, and
• the place is safe.

4. Days or hours of work (Clause No. 789GG)

A qualifying employer may also request (but not direct) an employee to perform work on different days or different times during a period. This must be by agreement and take into consideration that performance of duties on the different days or times is:

• safe, and
• does not have the effect of reducing the employee’s hours of work compared with the employee’s ordinary hours.

An employee cannot unreasonably refuse the request to make an agreement to alter days or hours.

The amending legislation further facilitates an employee to consider an employer’s request to take paid annual leave, and allows an agreement to be made for the employee to take a period of annual leave at half pay, for twice as long. However, when making this request, the employer must be mindful that if the employee accepts, that their balance of paid leave must not be less than 2 weeks (after the taking of the leave).

Requirements for JobKeeper enabling directions

To have effect, a JobKeeper Enabling Direction to an employee must satisfy the following requirements:

• a direction must not be unreasonable in the circumstances (Reasonableness Test);
• the employer must have information that leads it to believe a JobKeeper Enabling Direction is necessary to continue the employment of one or more employees (Continuing Employment); and
• the employer must consult with the employee as follows (Consultation):
  1. give 3 day’s written notice in the prescribed form of the intention to give a JobKeeper Enabling Direction, or lesser period by genuine agreement with the employee;
  2. keep a written record of the consultation; and
  3. consider any views expressed by the employee or representative of the employee regarding the proposed direction.

It is also important to note that during a JobKeeper Enabling Direction, that period counts as ‘service’ and employees continue accruing leave entitlements as if the direction had not been given.

Secondary employment / training or professional development

The amending legislation also provides that an employer must not unreasonably refuse a request from an employee subject to a JobKeeper Enabling Stand Down Direction for permission from the employer to engage in reasonable secondary employment, training or professional development. This is a civil remedy provision, which may result in penalties and compensation orders.

Disputes under the FW Act in relation to the new provisions

The FWC has been given power under this legislation to deal with (including arbitrate) disputes about the operation of the Part 6‑4C introduced into the FW Act. It is required to take into account fairness between the parties concerned.

The FWC may make orders:

• it considers desirable to give effect to a JobKeeper Enabling Direction (in this regard, any orders made will cease to have effect at the start of 28 September 2020)
• setting aside, or substituting, a JobKeeper Enabling Direction, or
• any orders it considers appropriate.

Protections of workplace rights

The legislation specifies that the following are workplace rights for the purpose of the general protections part (Part 3-1) of the FW Act:

• benefit arising because of their employer’s obligation to satisfy the wage condition for the fortnight JobKeeper Payment
• agreement or disagreement to perform duties on different days or at different times compared with the employee’s ordinary days or times of work)
• agreement or disagreement to take paid annual leave or to take annual leave at half pay, and
• requests in relation to secondary employment, training, professional development.

Adverse action must not be taken against an employee because of the employee’s workplace rights as set out above.

Specified employers excluded by regulations

The legislation provides the Minister with the right to exclude one or more employers from the operation of provisions in the legislation that authorise a JobKeeper Enabling Direction or Agreement. This can be actioned by the Minister in circumstances where an employer contravenes a civil remedy provision. It is unclear whether this contemplates a contravention of provisions of the legislation, or more generally under the FW Act.

The legislation’s relationship with other laws

This proposed new Part 6-4C of the FW Act operates subject to:

• Division 2 of Part 2-9 (payment of wages etc)
• Part 3-2 (unfair dismissal)
• Part 3-1 (general protections) and section 772 (employment not to be terminated on certain grounds) of the FW Act
• a Commonwealth, State or Territory anti-discrimination law
• a Commonwealth, State or Territory law that deals with health and safety obligations of employers or employees, or with workers’ compensation, and
• a person’s right to be represented, or collectively represented, by an employee organisation or employer organisation.

For the period of time that an employee is subject to a direction or agreement made under the Fair Work Act JobKeeper enabling provisions, the employee’s usual terms and conditions of employment (for example under a modern award, enterprise agreement or employment contract) continue to apply. However, the JobKeeper enabling direction or agreement will apply instead if the direction or agreement is different to the employee's usual terms and conditions.

Any directions or agreements made under these new provisions cannot reduce minimum pay rates and other monetary entitlements under the Fair Work Act. Any terms and conditions not related to the direction or agreement (e.g. sick and carer’s leave) continue.

This means that:

• if an employer reduces an employee’s hours or days of work under a JobKeeper enabling stand down direction, the employee needs to be paid their usual base pay rate for the work they’re still performing.
• if an employer changes an employee’s duties, the employer must pay the employee the higher of:
  • the base pay rate that applies to their previous duties, or
  • the base pay rate that applies to the new duties the employee is performing.

Conclusion

The JobKeeper scheme will allow eligible employers to apply to the Australian Taxation Office to receive wage subsidies for their eligible employees commencing 1 May 2020. Employers will be able to claim a fortnightly payment of $1,500 before tax per eligible employee from 30 March 2020 for a period of up to 6 months (ceasing on 28 September 2020).

At first instance, employers should consider whether they and their employees are eligible for payments under the new legislation.

Assuming the business and their employees are eligible for JobKeeper Payments, employers should also move quickly to assess whether they meet the thresholds set out in the FW Act required for making a JobKeeper Enabling Direction, noting that the Fair Work Commission has been given broad powers to deal with disputes about these matters.

For advice on how these changes will affect your business, please contact Corrina Dowling or Adi Kedar.