Understanding the proposed JobKeeper Payment: a lifeline for businesses

As part of its economic response to COVID-19, the Australian Government has announced a subsidy plan that is intended to act as a lifeline for businesses who have been highly impacted by the pandemic. While the plan has been announced, the details are yet to be confirmed and the legislation has yet to be passed by Parliament.

Known as the “JobKeeper Payment” this wage subsidy plan will provide eligible employers a flat rate subsidy of $1,500 per fortnight for existing, stood down and re-hired employees for the next six months.

Before acting too quickly to change existing staffing arrangements however, employers should remember that:

  • The wage subsidy plan has not been legislated yet, therefore employers should not risk implementing changes, or agree to implement changes, before legislative conditions and restrictions are confirmed.
  • Despite the unprecedented nature of this package, normal employment law still applies.
  • Australians who are already benefitting from the Job Seeker allowance may still be eligible for the JobKeeper payment, however individuals can only benefit from one at a time.

Based on information released by the Australian Treasury, here is what we do know about the proposed JobKeeper payment.

Employer obligations

To receive the JobKeeper Payment, employers must:

  • Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline (see employer eligibility below).
  • Provide information to the ATO on the number of eligible employees.
  • Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax, while for employees earning more than this amount, the employer is able to provide them with a top-up to their salary.
  • Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.

Employer eligibility

Employers will be eligible for the subsidy if:

  • Their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 percent relative to a comparable period a year ago (of at least a month); or
  • their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 percent relative to a comparable period a year ago (of at least a month); and
  • the business is not subject to the Major Bank Levy.

Employee eligibility

Employees who are eligible for the proposed subsidy are employees who:

  • Are currently employed by the eligible employer (including those stood down or re-hired).
  • Were employed by the employer at 1 March, 2020.
  • Are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March, 2020).
  • Are at least 16 years of age, are an Australian citizen or the holder of an approved visa.
  • Are not in receipt of a JobKeeper Payment from another employer.

It is important to remember that this subsidy will not override pre-existing employment law implications. Employers who may be more likely to stand down employees in light of the generous safety net afforded by the new wage subsidy plan must not stand down employees unless they have a basis to do so under either the Fair Work Act, or any applicable Enterprise Agreement or employment contracts. For example, an employer who can be “usefully employed” must not be stood down.

As previously mentioned, there are still details that will likely have significant implications that are yet to be outlined. For example:

  • Will the payment apply for each separate ABN within a business or on a group level?
  • What guidance will be provided around rehiring retrenched employees (payback of termination/redundancy payments, status of continuous service, in a different role, etc.)? 
  • What defines “regular basis” for an eligible casual worker?

It is also currently unclear how employers will need to prove the employment relationship between themselves and the nominated employee, and what the consequences will be for employers if payments are claimed incorrectly, including whether the Australian Taxation Office (who will administer this scheme) will have the right to take back JobKeeper payments from employers who abuse the system.

Until the details of this wage subsidy are confirmed and it has been officially legislated, it is recommended that employers refrain from making decisions which could put them at risk of breaking any employment laws, and until they have received any legal advice.

This is a challenging time for businesses, with new initiatives and legislation being passed quickly due to the COVID-19 situation. Bayside Group Workplace Relations can offer you strategic advice that can help mitigate your risks and protect your business during this period. Contact us today and we can assist with your workplace queries.