The JobKeeper Payment announced by the Prime Minister on Monday has been well received by employers and employees struggling through the COVID-19 crisis. We have already had many enquiries from employers about how this scheme will operate. These employers have had many enquiries from their staff. To help everyone understand the proposed scheme, we have detailed answers below to some frequently asked questions and also identified some issues for employers to consider.
When will the JobKeeper Payment commence?
Whilst the Prime Minister announced on Monday that the JobKeeper Payment has a start date of 30 March 2020, it should be noted that:
- The JobKeeper Payment has not been legislated. This is expected to happen next week.
- Full details of the program are yet to be confirmed.
- First payments from the program will not be made to employers until the first week of May.
How do I know if my business is eligible?
Businesses with a turnover of less than $1b will be eligible, if their turnover has fallen by more than 30%. As per current guidelines, businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier.
It is our expectation that businesses will need to self-assess their eligibility by forecasting their revenue and comparing this to the prior year or a comparable prior period. Clarification is required on several aspects relating to eligibility, including:
- What happens if turnover decreases, but not by 30% (say 25%)? Does this mean the business needs to pay back JobKeeper Payments already received?
- How do growing or new businesses, whose turnover and staff levels 12 months earlier were substantially lower, demonstrate a 30% turnover reduction?
- Are businesses whose revenue does not decline by 30%, but cash flow does (e.g. from bad debts and slow paying debtors) eligible?
For any businesses who have been forced to close, eligibility will not be an issue. The eligibility of other businesses may not be as clear cut. We strongly advise all businesses to confirm their eligibility before they commence paying staff under the program.
Which staff are eligible?
For eligible businesses, staff employed as at 1 March 2020 are eligible, provided they are permanent or part time staff, or a causal employed on a regular basis for at least 12 months.
Are payments only available for staff who have been stood down?
Payments can be made to any eligible employees regardless of whether they are:
- Still employed.
- Have been stood down.
- Were employed on 1 March 2020, subsequently ceased employment, and have been re-engaged (even if stood down).
For staff who are still employed, Government guidelines specify that they should continue to be paid based on their existing workplace agreement. Should you wish to alter employment conditions for permanent staff, you must consult with your employees and obtain consent to any proposed changes, whether that be to hours, pay rates or other conditions. Minimum Award conditions must also continue to be complied with. If an agreement to alterations cannot be obtained, alternate options such as stand down and redundancy, will need to be considered. We recommend professional advice be obtained if formal variations are required or you are considering terminations.
How much will employees get through the JobKeeper Payment?
The JobKeeper Payment is $1,500 before tax. Employees currently claiming the Tax Free Threshold can expect to receive around $1,308 after tax. This may vary between employees.
Who pays the JobKeeper Payment?
The JobKeeper Payment will be paid by employers to employees. Employers will be reimbursed these amounts by the Government, with the first payment due in the first week of May. This means, employers who want to take advantage of the program this week, will need to fund all payments before being reimbursed by the Government in early May. Employers paying staff under the program from now, will need to cashflow up to 3 fortnightly JobKepeer Payments before being reimbursed.
How do we communicate this program to staff?
We have attached a template at the below link, for employers to use when communicating with staff about the JobKeeper Payment. This should be amended to suit each individual employer’s situation.
What are the key considerations for employers?
We believe the key considerations for employers who want to take advantage of this program for their employees are:
- Before committing to the program for employees, make sure you are eligible; and
- Ensure you are able to cashflow the required payments to employees.
If you want to discuss the JobKeeper Payment in more detail, please contact Darren, Shaun or one of our team