JobKeepeer 2.0 – What is a ‘Legacy Employer’?

On 21 July 2020, the Federal Government announced the JobKeeper scheme, due to end on 27 September 2020, would be extended through to 28 March 2021 (JobKeeper 2.0). The extension was accompanied by a new set of JobKeeper rules involving tiered payments and a range of amendments to the eligibility criteria. Companies looking to claim JobKeeper from 28 September 2020 will have to re-qualify in order to be eligible.

Businesses that qualified and received JobKeeper in phase 1 but no longer qualify for JobKeeper 2.0 may be able to retain some scope to issue revised JobKeeper enabling directions under the Fair Work Act 2009 (Cth) as long as they can demonstrate a 10% decline in turnover. Employers that fall into this category are referred to as ‘Legacy Employers’. For many WA businesses that have been able to resume somewhat ‘normal’ business operations, access to these directions still remains essential during the on-going COVID-19 pandemic.

How to qualify

Businesses must prove the 10% decline in turnover either by:

  • Obtaining a 10% decline in turnover certificate from a financial services provider; or
  • Self-certify, where the business is a small business employer with less than 15 employees (excluding casuals who are not employed on a regular and systematic basis).

The test must be undertaken for each quarter as follows:

  • A 10% decline in turnover for the June quarter to qualify as a Legacy Employer between 28 September 2020 and 27 October 2020;
  • A 10% decline in turnover for the September quarter to qualify as a Legacy Employer between 28 October 2020 and 27 February 2021;
  • A 10% decline in turnover for the December quarter to qualify as a Legacy Employer between 28 February 2021 and 28 March 2021.

 

JobKeeper enabling directions for Legacy Employers

Legacy Employers can direct employees to:

  • Work reduced hours or days, as long as it is no less than 60% of the employee’s ordinary hours (as at 1 March 2020) and does not require the employee to work less than 2 consecutive hours each day;
  • Work at an alternative location; or
  • Undertake alternative duties.

The direction can only be issued where the employee cannot be usefully employed for the employee’s normal days or hours because of changes to the business due to COVID-19, or government initiatives relating to COVID-19. Useful work does not have to be the work the employee normally performs. If there is other productive work that the employee can perform safely, the direction cannot be issued.

Additionally, the direction must;

  • Be reasonable in all circumstances; and
  • Not reduce the hourly base rate of pay.

A Legacy Employer can request employees to work different days/times to what they ordinarily work as at 1 March 2020, but cannot direct them to do so. In other words, the employer and employee must reach an agreement, however, employees cannot unreasonably refuse a request of this kind under the Fair Work Act 2009 (Cth).

Legacy Employers will no longer be able to direct employees to take annual leave under the revised JobKeeper rules.

 

Practical considerations

Existing JobKeeper directions made by employers will automatically cease as at 28 September 2020. Employers will need to issue new directions and ensure they comply with the consultation and notice requirements in accordance with the Fair Work Act 2009 (Cth). This includes:

  • Consult with the employee/s at least 7 days before the direction is to be given;
  • Provide written notice of the intention to give the direction;
  • Provide the employee/s, or their appointed representative, if any, with information about the proposed direction;
  • Invite the employee/s or their appointed representative to give their views about the impact of the proposed direction; and
  • notify the employee/s in writing before each quarter if the direction is going to continue into the subsequent quarter.

A direction and/or request will cease to operate if the employer does not obtain a certificate for each quarter. An employer who knowingly fails to meet the 10% turnover test but proceeds with a JobKeeper enabling direction may face fines of up to $13,320 for individuals and $66,600 for body corporates.

Want to know more? Contact CCIWA’s Employee Relations Advice Centre team on 9365 7660 or email advice@cciwa.com.

The COVID-19 outbreak is rapidly evolving. We are regularly updating our online resource with a range of practical resources and insight to help you navigate the situation. Please visit covid19.cciwa.com for more information.

JOBKEEPER 2.0 – What does it mean?

The government has announced an extension of JobKeeper, along with changes to the current employee eligibility rules.

You can find full details of the announcement here.

ELIGIBLE EMPLOYEES – IMPORTANT CHANGE TAKING EFFECT IMMEDIATELY

The government has made a change to the rules around employee eligibility. For the JobKeeper fortnight starting on 3 August 2020, the date employees must meet the eligibility rules has changed to 1 July 2020 (previously 1 March 2020). This may now mean that employees who were not previously eligible will now be covered.

If this is the case, you would need to make any top-up payments to these employees for the current fortnight ending 16 August 2020 by this date.

The other employee eligibility rules apply, as at 1 July 2020 they must:

·         Be employed by the employer

·         Were either:

o   Full-time, part-time or fixed-term employee

o   Long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer.

·         Be aged 18 years or older at 1 July 2020

·         Be an Australian resident or an Australian resident for Income Tax purposes and the holder of a Subclass 444 visa.

·         Not be in receipt of parental leave or Dad and partner paid or in receipt of workers compensation payments.

FROM 28 SEPTEMBER 2020 (for period of 28 September 2020 – 3 January 2021):

To be eligible, the entity must be able to demonstrate that it has incurred a fall in turnover (as per below) for the quarter ended 30 September 2020. This time the test is solely based on ACTUAL GST turnover and no projections can be used.

The basic test compares the current year quarter vs the same quarter of the previous year.

·         Business with aggregated turnover under $1 billion, must demonstrate a fall in turnover of 30% or more

·         Australian Charities and Not for profits Commission-registered charities must demonstrate a fall in turnover of 15% or more

JobKeeper Payment Rate

The payment rates will be adjusted to the following amounts:

·         $1,200 per fortnight for all eligible employees who, in the four weeks before either 1 March 2020 or 1 July 2020, were working for 20 hours or more a week on average

·         $1,200 per fortnight for eligible business participants who were actively engaged in the business for 20 hours or more per week on average

·         $750 per fortnight for all other eligible employees and business participants.

FROM 4 JANUARY 2021 (for period of 4 January 2021 – 28 March 2021):

To be eligible, the entity must be able to demonstrate that it has incurred a fall in turnover (as per below) for the quarters ended 30 September 2020 and 31 December 2020. Again, the test is solely based on ACTUAL GST turnover and no projections can be used.

The basic test compares the current year quarter vs the same quarter of the previous year.

·         Business with aggregated turnover under $1 billion, must demonstrate a fall in turnover of 30% or more

·         Australian Charities and Not for profits Commission-registered charities must demonstrate a fall in turnover of 15% or more

JobKeeper Payment Rate

The payment rates will be adjusted to the following amounts:

·         $1,000 per fortnight for all eligible employees who, in the four weeks before either 1 March 2020 or 1 July 2020, were working for 20 hours or more a week on average

·         $1,000 per fortnight for eligible business participants who were actively engaged in the business for 20 hours or more per week on average

·         $650 per fortnight for all other eligible employees and business participants.

ALTERNATIVE TESTS:

The government has advised that as with the initial application, there will be a series of alternative tests available for businesses who either did not trade in the comparison period, or that the comparison figures are not appropriate for certain reasons.

There will also be discretion available where an employee’s hours were not usual during the February 2020 or June 2020 test period in determining whether they worked 20 hours or more per week (to claim the higher rate of payment outlined above). We still await further details on this.

JobKeeper Payment – Frequently Asked Questions

On 30 March 2020, the Australian Government announced a new JobKeeper Payment for eligible businesses, to help them retain employees during the COVID-19 crisis and recover quickly afterwards. While businesses are strongly encouraged to contact their accountants to discuss their eligibility, this is what we know so far.

Please note: The JobKeeper Payment has now passed through Parliament. There are key steps (outlined below) that small business owners need to take to be eligible for the first round of payments during the first week of May.

Which small businesses are eligible for the JobKeeper Payment?

Australian businesses that are structured as companies, partnerships, trusts and sole traders, as well as not-for-profit entities and charities, are eligible if they meet the following criteria:

  • their business turnover is less than $1 billion and it will be reduced by more than 30 per cent compared to a period (of at least a month) a year ago and the business is not subject to the Major Bank Levy
  • turnover will be defined according to the current calculation for GST purposes and is reported on Business Activity Statements (BAS)
  • if the business was not operating a year ago, or if turnover a year earlier was not representative of their usual or average turnover, the Tax Commissioner will have discretion to consider additional information that establishes the business has been adversely affected
  • eligible employees must have been employed by them as at 1 March 2020 and be currently engaged.

Eligible businesses must register online with the ATO for the JobKeeper Payment on behalf of their nominated employees (including themselves) and provide monthly updates to the ATO.

Which employees can receive the payment?

  • Employees must be an Australian citizen, holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder.
  • The payment is available for full-time, part-time or long-term casual employees (a casual employed on a regular basis for longer than 12 months as at 1 March 2020) who is 16 years or over.
  • They cannot be receiving the JobKeeper Payment from another employer.
  • It may affect their eligibility for other Services Australia payments as the JobKeeper Payment is to be reported as income.

Businesses can claim the JobKeeper Payment for employees that were stood down after 1 March 2020. To be eligible in relation to these employees, you will need to pay them a minimum of $1500 per fortnight (before tax) for the payment periods of the JobKeeper Payment. The first payment period is from 30 March 2020 to 12 April 2020.

How much is the payment and when will we receive it?

The JobKeeper Payment is $1,500 per fortnight per eligible employee for a maximum of 6 months.

Initial payments are expected to be made in the first week of May, backdated to 30 March.

If a business does not meet the turnover test at the start of the JobKeeper program on 30 March 2020, they may start receiving the JobKeeper Payment later, once the turnover test has been met. In this case, the payment is not backdated to the start of the scheme.

Businesses can receive JobKeeper Payments until 27 September 2020.

What if I am self-employed?

Sole traders are eligible for the JobKeeper Payment but must meet certain eligibility criteria. Other eligible businesses can nominate only one working director, partner, beneficiary or shareholder, as well as, any eligible employees.

People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.

Do I need to top up my employee’s pay?

If an employee usually earns more than the JobKeeper Payment ($1,500 a fortnight) the employer is expected to top up their wage payment and pay superannuation as normal. Employers will be legally obliged to pass the $1,500 payments in full to their employees. The ATO has provided the following examples:

  • If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income from their employer according to their workplace arrangements. The JobKeeper Payment acts as a subsidy.
  • If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee a minimum of $1,500 per fortnight, before tax.
  • If an employee has been stood down, their employer must pay them at a minimum, $1,500 per fortnight before tax.
  • If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then was re-engaged by the same eligible employer, they will receive a minimum of $1,500 per fortnight, before tax.

Seek advice from an HR professional and accountant for specific advice on payments to your employees.

Am I required to pay PAYG withholding and superannuation on the JobKeeper Payment?

You must pay a minimum of $1,500 (before tax) per fortnight to your eligible employees, withholding income tax as appropriate. If an employee is paid more than $1,500 per fortnight, your superannuation obligations will not change.

Where an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper Payment, it will be up to the employer if they want to pay superannuation on any additional wages paid by the JobKeeper Payment.

You cannot use the $1,500 per fortnight towards superannuation contributions.

Key steps to take now to receive the first round of payments

The ATO has advised that you’ll need to meet the following criteria in order to receive the first round of JobKeeper Payments (due during the first week of May):

  • Have paid eligible employees a minimum of $1,500 per fortnight (before tax) for the period between 30 March and the end of April. NB: The first two fortnights payments need to be made by 26 April to receive JobKeeper Payments in the first week of May. (You cannot pay your employees less than $1,500 per fortnight and keep the difference.)
  • Meet the eligibility requirements outlined by the ATO.
  • Have enrolled in the JobKeeper program when enrolments open on 20 April 2020.

Visit the ATO website for more information on the enrolment and payment confirmation process.

JobKeeper vs JobSeeker Payments

Some people who have lost work during COVID-19 may have already applied for the new expanded JobSeeker Payment (with coronavirus supplement) via Centrelink/Services Australia.

If these people subsequently become eligible for JobKeeper Payment and are advised by their employer that they have been nominated (employers are required to advise employees of this) they should notify Services Australia via the JobKeeper employee nomination notice and report their JobKeeper Payment as income. The payment may affect income support payments.

The JobKeeper Payment is not subject to partner asset tests, unlike the JobSeeker Payment.