JobKeeper is the federal scheme that assists businesses during the COVID-19 pandemic. Eligible businesses receive an amount to subsidise the wages of their eligible employees. In addition to the subsidy, the JobKeeper scheme includes changes to the Fair Work Act, which create flexibility for employers to manage employees. These changes will not extend past 27 September 2020 (including with respect to employers' ability to stand down employees).
Recently, the federal government announced it will extend the JobKeeper subsidy from 28 September 2020 to March 2021, but with some changes. There are two extension periods:
- Extension 1: 28 September 2020 to 3 January 2021; and
- Extension 2: 4 January 2021 to 28 March 2021.
This article outlines:
- the changes to JobKeeper;
- what the two key extension periods include; and
- answers some common questions related to the scheme.
What Are The Changes to JobKeeper?
The Eligibility Test
The eligibility test for businesses is broadly the same. Businesses now only need to demonstrate the effect of COVID-19 on their revenue in the period of three months before the relevant extension period (rather than for two consecutive quarters before the relevant extension period).
To receive JobKeeper, businesses will need to show their actual GST turnover has fallen during:
- Extension 1: in the period July to September 2020.
- Extension 2: in the period October to December 2020.
On that basis, you could be ineligible for Extension 1 but eligible for Extension 2 (or vice versa).
The Subsidy Amount
The amount of the subsidy has been reduced from the original $1,500 amount.
- For Extension 1: employees who are employed for 20 hours or more per week on average receive $1,200 per fortnight. Other eligible employees receive $750 per fortnight.
- For Extension 2: employees who are employed for 20 hours or more per week on average receive $1,000 per fortnight. Other eligible employees receive $650 per fortnight.
Which Employees Are Eligible for JobKeeper Payments?
Under the first iteration of JobKeeper, employees were eligible to receive payment if:
- they had been working in the business as at 1 March 2020 as a permanent employee; or
- as a casual employee on a regular and systematic basis for the 12 months before March 2020.
Under the new iteration of JobKeeper, the same eligibility criteria applies except the relevant date is 1 July 2020.
The same eligibility criteria otherwise applies under the first and second iteration, including (without limitation) whether the employee:
- is receiving parental leave pay or dad and partner leave pay;
- nominated the relevant employer; and
- whether they are an Australian resident or a resident for tax purposes and hold a special category visa.
Q: Can JobKeeper Cover Staff Annual Leave?
A: Yes, the employer can use JobKeeper to pay for annual leave. The employer still remains eligible to receive JobKeeper in respect of the period and payments it has made to the employee on annual leave.
Q: Do We Pay Superannuation on the JobKeeper Payments?
A: In short (and as a general rule), the employer must pay superannuation on the employee's ordinary time earnings. That is, the amount the employee receives for their ordinary hours of work.
For example, if the employee works 38 hours and receives $2,000, the employer must pay super on $2,000.
With respect to JobKeeper, the employer may still receive the JobKeeper amount to subsidise payment of wages.
This means that if the employee ordinarily receives an amount less than the JobKeeper amount, super is not strictly payable on the 'top-up' amount (i.e the difference between their wage component and the JobKeeper amount).
For example, if the employee is stood down and currently works zero hours, then the employee has zero hours of work and so the employer pays no super.
Q: Do We Pay PAYG Tax on the JobKeeper Payment?
A: Yes. As an employer, you pay PAYG tax on the amount you pay to your employee (as per normal).
Q: Can Workers on Short-Term Skilled Visa Receive JobKeeper?
A: In short, no. Oversees employees on a TSS 482 Short-Term Skilled Visa (Formerly 457 Work Visa) are not eligible for JobKeeper.
An eligible employee must either be as at 1 March 2020 (or the new eligibility dates outlined above):
- an Australian resident; or
- a resident of Australia for the purposes of the Income Tax Assessment Act 1936 and was the holder of a special category visa. A special category visa generally refers to a New Zealand citizen who holds an New Zealand passport and is not a behaviour concern non-citizen, nor a health concern non-citizen.
Q: At What Point Can an Employer Make a JobKeeper Enabling Direction?
A: Subject to meeting certain conditions, you can make a JobKeeper-enabling stand down direction before receiving confirmation that you are eligible for JobKeeper. However, make sure you are confident that you are eligible.
It is best practice to wait until your employee has confirmed that they nominated you as their employer before making the direction. However, you can choose to commence the consultation process before the employee has confirmed who they have nominated.
Q: Can I Reduce Employee Hours to Match Their JobKeeper Payment?
For example, if a full time employee is earning $3000 per fortnight can I reduce the hours down to meet the $1500 (or lesser amount) per fortnight?
A: As a starting point, a permanent employee is must receive payment in accordance with their employment contract.
If eligible, the employer will receive and must pay:
- the JobKeeper amount to the employee;
- the balance owed to the employee under the terms of their employment.
For example, the employer will pay $3,000 (before tax) for 38 hours per week and receive $1,500 (before tax) to subsidise the employee's salary.
To reduce the hours down to meet the JobKeeper amount i.e. $1,500 (or a lesser amount), the employer has the following options:
Option 1 – The employer can reduce the employee's hours under a JobKeeper-enabling stand down direction. However, the employer must meet certain conditions, including that:
- the employee cannot be usefully employed; and
- the employer has complied with its consultation obligation.
For example, if your business' operating hours have decreased resulting in the employee's hours being halved and the employee cannot be usefully employed in other parts of the business, the employee:
- cannot be usefully employed; and (subject to meeting other conditions)
- the employer can likely rely on the JobKeeper enabling stand down direction.
Option 2 – The employer could vary the employee's hours of work by agreement.
Note: as an employer, you cannot coerce the employee into agreeing to this variation.
Q: If An Employee Has Two Part-Time Jobs, Are They Eligible for Two JobKeeper Payments?
A: No, the employee can only nominate one employer to receive the JobKeeper payment.
Q: Are Employees Who Take Leave Without Pay Eligible For JobKeeper?
A: If, prior to the JobKeeper amendments being introduced, you agreed to the employee being on unpaid leave, the employee may still be eligible if the conditions are met.
If you have made a JobKeeper-enabling stand down, resulting in your employee having zero hours' work, the employee is still entitled to receive payment.
Q: If I am Both the Business Owner and Employee, Am I Eligible For JobKeeper?
A director or co-founder of a company may still be an employee and therefore may be an eligible employee subject to the conditions.
The situation is different for other business structures including where the person is a partner in a partnership, for example.
The federal government's JobKeeper supplement has been very important to the survival of many businesses during the COVID-19 pandemic. However, there are some complexities around how it is applied and who is eligible to receive it.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.