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The announcement of the $130 billion JobKeeper package by the Australian Government on 30 March 2020 has offered employers a lifeline to sustain their workforces. As a result, the employment landscape has (again) changed drastically, and this may have important implications for how employers manage their employees through the COVID-19 crisis, including employees who have already been stood down or retrenched.
The JobKeeper payment is a flat subsidy of $1500 per fortnight for every eligible worker. Eligible employers are expected to continue paying employees through their existing payroll system and will then receive a reimbursement from the ATO. Reimbursements from the ATO will not begin until May this year, but payments will be backdated to 30 March 2020 so that employers are encouraged to immediately begin paying their employees accordingly.
The motivation behind this package is to preserve employment connections and utilise existing payroll systems in order to reduce stress on social welfare infrastructure.
For employees earning more than the JobKeeper subsidy, information provided by Treasury to date indicates ‘the employer is able to provide them with a top-up’.
Eligibility for the subsidy depends on the size of the business and the changes they have experienced in their revenue. Businesses with less than $1 billion in annual revenue must see a 30% decrease in revenue to be eligible for the payments. Meanwhile, businesses with over $1 billion in annual revenue must be crippled by a 50% decrease in revenue.
Eligibility extends to charities and not-for-profit organisations. However, businesses subjected to the Major Bank Levy will not be eligible.
In order to receive payments, businesses must ensure they register with the ATO. This can be done via the JobKeeper payment page on the ATO website. Employers also need to advise employees that they have been nominated as an eligible employee to receive the payment.
The JobKeeper payment can then be claimed for an employee provided that:
If an employee qualifies under the scheme, then they are entitled to the full $1500 payment even if they were not previously making $1500 per fortnight. The reimbursement is available for all eligible employees, regardless of whether they have been stood down or seen their pay reduced. It is also available for employees who have been retrenched where their employer elects to rehire them. Where an employee has agreed remunerations of more than $1500 per fortnight, it is up to the employer to meet the additional payments.
Superannuation is not incorporated into the $1500, so employers will need to continue to make superannuation contributions on everything they pay to employees, including amounts subsidised by the JobKeeper payment. The exception is where an employee normally earns less than $1500 per fortnight, then the employer is under no obligation to pay superannuation on the additional amount the employee receives above their normal fortnightly payment.
Employees who have been stood down are still eligible for the payment. Therefore employers have the ability to pay their eligible workers $1500 per fortnight even if workers are still unable to be engaged in work. This is particularly pertinent for businesses that have been ordered to shut down by government directives such as businesses within the retail, hospitality and tourism sectors. They may now keep employees on their books by paying them the $1500 fortnightly payment, despite not having any meaningful work for them to do.
Employees who were retrenched on or after the 1 March 2020 cut-off will also be eligible for the $1500 payment if they are re-engaged by the same employer. This means that companies should reconsider any retrenchments they have made in response to the COVID-19 pandemic and consider re-employing affected employees. This will ensure the business has scalability for when the situation changes. However, employers need to be act diligently to ensure that redundancy payments the employee is no longer entitled to are recovered.
Given the haste of developing and launching the JobKeeper payment, ‘much of the devil will be in the detail’ of the draft Bill. In the circumstances, however, eligible employers who have suffered a significant decline in revenue and struggled to meet staffing costs should now consider and obtain advice on the following:
The above content is commentary rather than legal advice and was prepared on the basis of applicable legislation, government programs and initiatives that were in place as of the date of publication. Given the ongoing evolution of both the COVID-19 pandemic and frequent consequential changes to the various laws and programs within all Australian states and territories, readers should seek legal advice on the current situation as applicable to their specific circumstances before taking any action in relation to the above.
Further information / assistance regarding the issues raised in this article is available from the author, Nick Duggal, Partner and National Workplace Group leader or any of your usual workplace law contacts at Moray & Agnew.