What you need to know about the new JobKeeper legislation – the ins and outs for employers
The Federal Government has recently passed a suite of legislation in Parliament, including the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (Act 1), the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Act 2) and its accompanying JobKeeper Rules (Rules).
(This article was updated on 4 May 2020)
This legislation provides the framework for the temporary $1500-a-fortnight JobKeeper payment, while also changing the Fair Work Act 2009 (Cth) (FW Act) to provide employers who are eligible for the JobKeeper payment with greater flexibility. Employers are encouraged to review the ATO website, Treasury website and the Fair Work Ombudsman website for up-to-date information.
Eligibility for JobKeeper
The Rules address the eligibility criteria for the JobKeeper scheme. Our previous eAlert summarises the key criteria for whether an employer is eligible.
The Australian Government and its agencies, State and Territory governments and their agencies, foreign governments and their agencies, local governments and wholly-owned corporations of these bodies will not be eligible for the JobKeeper payment under the Rules.
Non-government schools and private vocational education providers are eligible. Charities will also be eligible if they estimate their annual turnover has or will likely fall by 15% or more. Some charities can elect to exclude government revenue from their turnover.
If a business was not in operation a year prior, or turnover a year prior was not representative of their usual turnover, the Tax Commissioner has discretion to consider additional information the business provides demonstrating that it has been affected by COVID-19. If an employer applies for JobKeeper and is unsuccessful, they can seek a review.
The Treasury has also announced there will be some tolerance where employers estimate a 30% or more or 50% or more fall in turnover but actually experience a slightly smaller fall, so long as that estimate was made in good faith.
Flexibility to issue directions/reach agreement
Amendments to the FW Act (set out in Act 1) will authorise an employer who qualifies for the JobKeeper scheme to make a “JobKeeper enabling direction”. In summary, these include the ability for an employer to issue a:
- JobKeeper enabling stand down direction to an employee (including to reduce hours of work, or not work on a day/days the employee would usually work)
- direction to an employee about the duties to be performed by the employee (including duties that are different to those currently being performed by the employee, provided that they are within the employee’s skillset and competency, among other things)
- direction to an employee to perform duties at a different location (including the employee’s home).
However there are a number of conditions attached to these directions. These include (but are not limited to) an employer being required to consult with the employee (or a representative of the employee) before giving a direction, the employee cannot be usefully employed for their normal days or hours (due to business changes attributable to the pandemic), and any directions can be implemented safely and are not unreasonable in all of the circumstances. We recommend seeking advice before utilising these provisions to ensure that you comply with all of the relevant conditions.
Amendments to the FW Act (again, set out in Act 1) also authorise an employer who qualifies for the JobKeeper scheme to make an agreement with an employee about:
- the days or times when the employee is to perform work
- taking annual leave, including at half pay.
If the employer requests the employee to make an agreement, the employee must not unreasonably refuse the request. Again, a number of conditions attach to these provisions, including that the request to take annual leave cannot result in the employee having a balance of less than 2 weeks. We recommend seeking our advice before utilising them.
The JobKeeper enabling directions cease to have effect on 28 September 2020, unless revoked or withdrawn earlier.
Act 1 introduces a 'minimum payment guarantee' which requires qualifying employers to pay qualifying employees the fortnightly value of the JobKeeper payment or the amount payable to the employee for the performance of work, whichever is greater. In other words, the employer must pass the full amount of the subsidy to the employee, even if prior to the pandemic that employee was paid less than $1500 gross. Additionally, an employee’s hourly rate cannot be reduced if a JobKeeper enabling stand down direction applies.
If the Commissioner has erroneously paid an employer an amount relating to the JobKeeper payment (for example, if the employer did not qualify), the employer must repay the overpaid amount. Otherwise the employer is liable to general interest charges for the overpaid amounts that have not been repaid (sections 9 and 10 of Act 2).
There are a number of protections for employees included in the package, including:
- the hourly rate of payment guarantee – that the employer must ensure that the employee’s hourly base rate of pay is not less than the hourly base rate of pay that would have been applicable to the employee if a JobKeeper enabling direction had not been given to the employee;
- that any JobKeeper enabling direction must be reasonable in all the circumstances;
- that no JobKeeper enabling direction is effective unless the employer has information that leads the employer to reasonably believe that the direction is necessary to continue the employment of the employee;
- that JobKeeper enabling directions must be given in writing, and there must be 3 days’ notice (or a lesser period if agreed) of the direction and there must be consultation;
- that any period in which the employee is subject to a JobKeeper enabling direction counts as service;
- that all leave entitlements generally continue to accrue and redundancy pay and payment in lieu of notice are calculated as if the direction had not been given;
- that an employer must not unreasonably refuse an employee’s request to engage in reasonable secondary employment, training or professional development if they have been stood down.
Record keeping requirements
Act 2 makes it clear that there will be no entitlement to the JobKeeper payment unless record keeping requirements are met, including keeping records that enable the entity to substantiate information provided to the ATO regarding the JobKeeper payment (sections 14 – 18 of Act 2).
A large number of the provisions in Act 1 are civil remedy provisions. This means that if employers breach them, they will be liable to pay significant penalties (generally $63,000 per breach for a body corporate, and $12,600 for individuals ‘knowingly involved in’ a breach). Higher penalties of $126,000 for individuals and $630,000 for companies apply for ‘serious’ breaches of the provisions.
Maddocks has produced guides on legal issues raised by the coronavirus which may be of interest, and we encourage you to share these with colleagues who may also find them useful.
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