Covid-19 business support: JobKeeper Payment – Who is eligible & answers to frequently asked questions

The $130 billion JobKeeper Payment scheme to support businesses significantly affected by the coronavirus to help keep more Australians in jobs has been passed by the Parliament.

But who is eligible and what do they need to do? 

Shaun Schmitke, Master Builders Australia’s National Director of Safety, Contracts & Workplace Relations has prepared this guide which includes answers to frequently asked questions. 

Employers should always be conscious of their particular circumstances, legal obligations applicable under the Fair Work Act 2009, respective State and Territory WHS legislation and workers compensation legislation, as well as enterprise agreements, awards, contracts and policies and should seek further advice where necessary. Please contact your local State or Territory Master Builders office for more information.

The JobKeeper Scheme: General, Payments & Eligibility 

What is JobKeeper scheme?

The JobKeeper Payment scheme is wage subsidy to assist businesses that are significantly impacted by COVID-19.  The purpose of the scheme is to assist businesses to pay and retain their staff.

Under JobKeeper, eligible businesses that have suffered significantly reduced turnover will be paid $1500 per fortnight (before tax), per qualifying employee, for up to six months.

The payments will commence from 1 May 2020 and will be backdated to 30 March 2020.

Which businesses are eligible?

Employers must meet these conditions to be eligible for the JobKeeper Payment scheme:

• For businesses with annual aggregated turnover less than $1 billion, the turnover of the business has reduced (or will reduce) by more than 30% (of at least one month).
• For businesses with annual aggregated turnover greater than $1 billion, the turnover of the business has reduced (or will reduce) by more than 50% (of at least one month).
• For not-for-profits and charitable organisations registered with the Australian Charities and Not-for-profits Commission (ACNC), other than certain educational charities, the annual turnover of the organisation has reduced (or will reduce) by more than 15% (of at least one month).

Turnover for the purposes of a business’ eligibility is the entity’s projected GST turnover for a test period, and this is compared to the entity’s GST turnover for a relevant comparison period.

Eligible employers will be able to apply for the JobKeeper Payment through the ATO.

How is ‘turnover’ defined?

Turnover is calculated as it is for GST purposes and is reported on Business Activity Statements (BAS). It includes all taxable supplies and all GST free supplies but not input taxed supplies. Only Australian based sales are included and therefore, only Australian based turnover is relevant for this test. A decline in overseas operations will not be counted in the turnover test.

How do I establish a reduction in turnover?

Most businesses are expected to be able 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 in 2019. However where a business’s turnover a year earlier is not representative of their usual or average turnover, (e.g. because there was a large interim acquisition or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of COVID-19.

The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will also be some tolerance where employers, in good faith, estimate a greater than 30 % (or 50%) fall in turnover but actually experience a slightly smaller fall.

What if I’ve been trading for less than 12 months?

Where a business has not been in operation for a year and therefore will have an issue showing that turnover has fallen relative to a year earlier, the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of COVID-19.

What if my turnover has not yet decreased, but I believe it will in the coming month?

Employers can apply for the JobKeeper Payment if they reasonably believe their turnover will fall by 30% (or 50%) relative to turnover in a corresponding period a year earlier.

My turnover is likely to decrease later this year – can I apply then?

Businesses can apply for the JobKeeper Payment at a later time once the turnover test has been met. In this scenario, the JobKeeper Payment is paid from the date an employer becomes eligible (not backdated to the commencement of the scheme). JobKeeper Payments can be received up to 27 September 2020.

Which employees are qualified?

JobKeeper payments will be available for all employees that are employed by an eligible employer and who were employed on 1 March 2020.  This includes full-time, part-time and long-standing casual employees.

To be qualified, employees must meet the following criteria:

• Employees must currently be employed by an eligible employer. (Note that this includes employees who have been stood-down, or employees who were terminated but have been re-hired by the employer).
• Employees must have been employed by the employer on 1 March 2020.
• Employees must be employed full-time, part-time or as a ‘long-term’ casual (being a casual employee that had been employed on a regular and systematic basis for longer than 12 months as at 1 March 2020).
• Employees must be at least 16 years old.
• Employees must be an Australian citizen or permanent resident, or hold other specified classes of visa. 
• An employee can only have one employer receive JobKeeper Payments with respect to them (ie multiple employers cannot receive JobKeeper payments in respect of one individual, even if the individual is employed by multiple employers).

Employees are not qualified for JobKeeper payments:

• For periods in which they are in receipt of parental leave pay under the Paid Parental Leave Act 2010 (Cth) (Note that employees may receive JobKeeper payments if they are in receipt of paid parental leave from their employer pursuant to an enterprise agreement, contract of employment or similar instrument.)
• For periods in which they are totally incapacitated for work and an amount is payable to them under workers’ compensation laws.

Is there an employee ‘income cap’ or similar?

There is no income cap on eligibility for employees. Therefore, an eligible employer may receive the subsidy in respect of any eligible employees including its highest paid employees.

Are apprentices and trainees covered?

Yes. But only if they meet all of the relevant employee eligibility requirements.

Are employers eligible to receive both the JobKeeper Payment and the Supporting Apprentices and Trainees wage subsidy?

No. The JobKeeper Payment is considered ‘equivalent’ for the purposes of Supporting Apprentices and Trainees wage subsidy, as it is designed to help businesses cover the costs of their employees’ wages. Therefore, an employer will not be allowed to claim both payments simultaneously. For any period where the employer elects to claim the JobKeeper Payment they will not be able to claim the Supporting Apprentices and Trainees wage subsidy.

Where an employer is not eligible for the JobKeeper payments, can they still be assessed as eligible for Supporting Apprentices and Trainees subsidy?

Yes. Employers should contact their Australian Apprenticeship Support Network Provider for assistance.

How do employers receive the JobKeeper Payment?

In order to receive the JobKeeper payment employers must do the following:

• Employers must elect to participate in the scheme.
• Employers can register their interest online now at the ATO website.
• Employers will subsequently need to apply for the JobKeeper Payment through an online application (this is not yet available). In applying for JobKeeper employers will need to provide information to the ATO on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
• The ATO will need to assess whether an employer has experienced the required turnover decline (employers will need to provide supporting information demonstrating the necessary downturn in their business).
• Once approved, ensure that each eligible employee receives at least $1,500 per fortnight (before tax).
• Notify all eligible employees that you have nominated them as an eligible employee for the purposes of JobKeeper Payments.
• Provide monthly updates to the ATO on the number of eligible employees employed by the business.

What must be paid to employees who qualify for JobKeeper?

A JobKeeper qualifying employers are required to meet minimum payment obligations for those employees who are subject to a JobKeeper direction or request.

These include ensuring that at least the value of JobKeeper payments an employer receives is passed on to employees each fortnight, or the amount they would receive for the work they have performed, whichever is greater.

Employees who are usually paid less than $1500 per fortnight will be entitled to the full $1500 payment, so may actually receive more under JobKeeper than they might ordinarily earn.

Employees usually paid more than $1500 per fortnight and who are required to work for hours that would result in earnings higher than $1500 per fortnight should be paid the balance of their wages by the employer.

What are the eligible periods for reimbursement?

Employers will need to satisfy payment requirements in respect of each 14-day period covered by the scheme. The first period starts on Monday, 30 March 2020 and ends on Sunday, 12 April 2020.

Employers must pay their eligible employees a minimum of $1,500 per fortnight in the scheme payment periods.

What if I pay my employees monthly?

Where an employer pays their staff monthly, the ATO will be able to reallocate payments between periods. However, overall an employee must have received the equivalent $1,500 per fortnight.

How long will the JobKeeper Payments last?

For up to six months, running from 30 March 2020 to 27 September 2020. The final period will start on Monday 14 September and end on Sunday 27 September 2020.

Are employers who have already stood down employees without pay eligible for the JobKeeper Payment?

Yes, employers who have stood down their employees (in part or full) are still eligible for the JobKeeper Payment. Employees who have been stood down must be paid at a minimum the $1,500 JobKeeper Payment per fortnight, before tax for the payment periods of the JobKeeper Scheme. It will be up to the employer in this circumstance to decide if they want to pay superannuation on the JobKeeper Payment to their employees.

What if an employee who was stood down after 1 March has since applied for income support through the JobSeeker payment?

Employers who nominate for JobKeeper must advise their eligible employees. A person receiving the JobKeeper Payment cannot also receive the JobSeeker Payment. Employees who have already applied for JobSeeker can notify Services Australia (formerly Centrelink) to withdraw and shift to the JobKeeper Payment if their employer notifies them that they have nominated for JobKeeper.

What if my employee who was stood down after 1 March 2020 has since got another job?

Employees can only receive the JobKeeper payment once.

If an employee was stood down (after 1 March 2020) and has subsequently obtained alternative employment (and have not resigned from their employer who stood them down), they are still eligible for the JobKeeper payment with their employer who has stood them down. This means their employer can apply and can pay them $1,500 per fortnight before tax.

The employees’ new employer will not be eligible for the JobKeeper Payment for them as they have been employed after 1 March 2020 and are therefore not an eligible employee with that employer. If the employer who stood the employee down registers and applies for the JobKeeper Payment they should notify that employee.

Can I direct my employee to now do work, if they had previously been stood down (under the conventional section of the Fair Work laws) but are now eligible to receive JobKeeper?

Not while they are still stood down under section 524 of the Fair Work Act. A stand down by its very definition means that an employer’s employees cannot be “usefully employed” by the employer because of a stoppage of work for which the employer cannot reasonably be held responsible.

However, if circumstances change and an employer decides that they can now “usefully employ” an employee, an employer can take an employee off stand down. An employer may then seek to utilise the new JobKeeper enabling stand down provisions, which allow more flexibility in terms of a reduction of hours (including a complete reduction to nil). The notice and consultation requirements under these new provisions should be followed.

In these circumstances, employers need to be mindful of and weigh up the risk of a potential claim that the initial stand down was unlawful (e.g. that the employee could have in fact been “usefully employed”) as they could be ordered to back pay their employees.

Disclaimer

This content has been prepared based on material available to date (14 April 2020). The material in this guide is of a general nature and should not be regarded as legal advice or relied on for assistance in any particular circumstance or situation. In any important matter, you should seek appropriate professional advice in relation to your own circumstances. Master Builders Australia or any of its State or Territory Associations (collectively known as ‘Master Builders’) accepts no responsibility or liability for any damage, loss of expense incurred as a result of the reliance on information contained in this guide.