Australia: COVID-19: JobKeeper scheme

Australia Publication April 2020

The Federal Government has introduced a new “JobKeeper” scheme, aimed at assisting eligible employers who have experienced a decline in turnover caused by the COVID-19 pandemic to retain jobs.

The scheme consists of:

  1. A JobKeeper payment of $1,500 per fortnight for each eligible employee, available between 30 March 2020 and 27 September 2020; and
  2. Increased flexibility in relation to a stand down, annual leave arrangements and directions about duties and location of work.

Do I qualify for the scheme?

You qualify for the scheme if you carried on a business in Australia (or in the case of not-for-profit entities, pursue objectives principally in Australia) as at 1 March 2020, and satisfy a decline in turnover test.

In most cases, the decline in turnover test will require you to establish that your projected turnover for a relevant month or quarter1 has declined by a specified percentage, when compared to the corresponding period in 2019.

The required percentage is at least 30 per cent, unless you fall within one of the categories below:

  1. For charities registered with the Australian Charities and Not-for-profits Commission (ACNC)2 – at least 15 per cent;
  2. For larger businesses (with aggregated turnover likely to exceed $1 billion in the income year in which their qualification is being tested, or with aggregated turnover exceeding $1 billion in the previous income year) – at least 50 per cent.

Turnover is calculated as it is for GST purposes, with some modifications. If you are an ACNC-registered charity or deductible gift recipient, certain donations and gifts received or which are likely to be received are also included in the calculation of turnover. This means that if you have experienced a decline in donations or gifts, you may be eligible for the scheme.

REMEMBER: Even if you do not initially qualify for the scheme, you should continue to monitor any decline in turnover as you may qualify for the scheme in a later period.

How does the JobKeeper payment work?

If you qualify, you will receive a fixed payment from the Australian Taxation Office (ATO) of $1,500 per fortnight for each eligible employee.

The payment is essentially a reimbursement, as it will be paid by the ATO in arrears and you must have already paid the eligible employee at least $1,500 (before tax) in the relevant fortnight in order to receive the payment.3 This means that the wage of employees who earn more than $1,500 per fortnight will be partly subsidised, and employees who earn less than $1,500 per fortnight will receive an uplift.

Eligible employees are those who:

  1. As at 1 March 2020, were employed by you (excluding casual employees other than long term casual employees), were aged 16 years and over, and were an Australian resident or an Australian tax resident holding a Special Category (Subclass 444) Visa; and
  2. In the relevant fortnight, are employed by you (including employees who have been stood down under the Fair Work Act 2009 (Cth)), and are not excluded from being an eligible employee.4

This means that an employee could be eligible if you terminated their employment after 1 March 2020 but then subsequently re-hired them (for example, where you did not expect to be able to pay the employee as a result of the COVID-19 pandemic, but are able to rehire the employee with the support of the JobKeeper payment).

There are some administrative requirements to the payment scheme, which include that:

  1. You must notify the ATO that you elect to participate in the JobKeeper scheme, before you can be entitled to a payment for a fortnight;
  2. You must provide information relevant to your entitlement to the ATO, including details of the eligible employees; and
  3. Eligible employees must provide a notice to you which includes their agreement to be nominated by you as an eligible employee.

What are the increased flexibilities under the scheme?

A number of flexibilities have been introduced into the Fair Work Act 2009 (Cth) if you qualify for the JobKeeper scheme. These will be in place until 28 September 2020, and will override any contradictory provisions in other parts of the Fair Work Act 2009 (Cth), a modern award, an enterprise agreement or a contract of employment.

In summary, these flexibilities include:

  1. Stand down – In certain circumstances, you can stand down an employee without needing to meet the general conditions under the existing provision for stand down in section 524 of the Fair Work Act 2009 (Cth). The threshold requirement to make a JobKeeper stand down direction is that the employee cannot be usefully employed for the employee’s normal days or hours because of changes to business attributable to the COVID-19 pandemic, or government initiatives to slow the transmission of COVID-19. This would permit a stand down in a broader range of circumstances than is permitted under section 524.
  2. Directions regarding duties and location of work – You can direct an employee to perform any duties that are within their skill/competency, provided the duties are safe and reasonably within the scope of your business operations, and the employee is licensed/qualified to perform them. You can also direct the employee to perform duties at a place that is different from their normal place of work, including their home, subject to certain requirements. For these directions to be valid, the employer must have information that leads the employer to reasonably believe that the direction is necessary to continue the employment of one or more of its employees.
  3. Annual leave - An employee must consider and must not unreasonably refuse your request that they take paid annual leave, provided the request will not result in the employee having a balance of annual leave of less than two weeks. You can also agree with the employee that twice as much annual leave be taken, at half pay.

There are general requirements that apply to the making of the directions in (1) and (2) above, including that it must not be unreasonable in all of the circumstances and you must consult with the employee (or a representative of the employee) about the direction.

Useful resources

The following are useful resources for further information:

 

These updates are applicable to Australian law only and are generic in nature. If you have any specific legal concerns relating to the impact of COVID-19 on your people or your business, please reach out to our pro bono team (ausprobono@nortonrosefulbright.com) and we will consider your pro bono legal request. If we aren’t able to help you, we will try to find someone else who can. This update is current as at 21 April 2020.


Footnotes

1

The relevant months for the decline in turnover test are March 2020 through to September 2020. The relevant quarters for the decline in turnover test are the quarter commencing on 1 April 2020, and the quarter commencing on 1 July 2020.

2

This does not apply to schools or certain higher education providers.

3

A failure to pay the eligible employee at least $1,500 (before tax) in the relevant fortnight will be a breach of the Fair Work Act 2009 (Cth), for which you may face penalties.

4

For example, recipients of parental leave pay and dad and partner pay under the Paid Parental Leave Act 2010 (Cth) are excluded from being an eligible employee.



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