JobKeeper Scheme Passes Parliament

As anticipated, on 8 April 2020, the Federal Parliament passed the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 and related legislation which establishes the JobKeeper wage subsidy scheme and introduces greater flexibility for employers by way of approved directions and agreements.

JobKeeper Payments

The JobKeeper wage subsidy is intended to support employers and employees who have been impacted by economic downturn in the wake of COVID-19. Qualifying employers will receive a payment (fortnightly in arrears) of $1,500 per fortnight for each eligible employee for a maximum of 13 fortnights. JobKeeper qualifying employers will have to meet minimum payment obligations to eligible employees, including passing on the full value of payments the employer receives each fortnight, as well as any excess amount the employee is entitled to receive for work performed.

Eligibility

The rules regarding the eligibility criteria for employers and employees as well as how applications and payments under the scheme will be made have not yet been released. However, the Government has stated that an employer will be eligible where their business:

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

Sole traders, self-employed people, partnerships and trusts will also be eligible should they meet the turnover test above. Charities registered with the Australian Charities and Not-for Profit Commission will be eligible if they estimate their turnover has, or will likely, fall by 15 per cent or more relevant to a comparable period.

The Government has stated that eligible employees are intended to be current full-time workers, part-time workers, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020) or those rehired after being made redundant, all of whom must who over 16 years of age and by Australian citizens or holders of specified visas. 

Payment Rules

The legislation will introduce a number of JobKeeper payment rules, including but not limited to the following:

• The Wage Condition Requirement: which requires that the sum of amounts paid by an employer who is entitled to a JobKeeper payment for an individual for a fortnight are to equal or exceed $1,500 in the fortnight; and
• The Minimum Payment Guarantee: which requires an employer who is eligible for the JobKeeper scheme to ensure the total amount payable to a particular employee in respect of a fortnight is either:
  • the amount of the JobKeeper payment for the employee ($1500); or
  • if a greater amount is payable to the employee for the performance of work during the fortnight, that amount (in full).

Directions and Agreements

The legislation amends the Fair Work Act 2009 to temporarily enable employers who qualify for JobKeeper Payments (Qualifying Employers) to give directions to eligible employees. These directions include:

• JobKeeper enabling stand down directions to an employee (including to reduce hours or days or times of work) who cannot usefully be employed for the employee’s normal days or hours because of a change to business attributable to COVID-19;
• directions to an employee about the duties to be performed by the employee; and
• directions to an employee about the location of the employee’s work.

The legislation also allows an employer to request that an employee make an agreement to take twice as much annual leave at half pay, but without reducing the employee’s annual leave balance below 2 weeks’ leave. An employee must consider the request, and must not unreasonably refuse the request.

These directions and agreements override any applicable term of the employee’s employment to the contrary, including terms under an enterprise agreement or award.

Conditions

Qualifying Employers will have a number of responsibilities under the legislation, including:

• giving written notice of an intention to give a JobKeeper direction at least 3 days before giving the direction (or such lesser period as an employee may agree to);
• consulting the relevant employee (or a representative of the employee) before giving a direction and keeping a record of such consultation;
• ensuring directions are not unreasonable in all of the circumstances;
• ensuring directions in relation to duties to be performed by an employee or their location of work are supported by an employer’s reasonable belief this is necessary for the continued employment of one or more employees of the employer; and
• ensuring the directions are safe having regard to the spread of COVID-19.

Hourly Rate of Pay Guarantee

A JobKeeper enabling stand down direction cannot reduce an employee’s hourly base rate of pay. Where an employer gives an employee a JobKeeper enabling stand down direction the employee’s base rate of pay worked out on an hourly basis must not be less than the base rate of pay that would have been applicable to the employee if the direction had not been given.

Where an employer gives a direction for alternative duties or work, the base rate of pay must not be less than either the base rate of pay that would have applied if the direction had not been given or the base the rate of pay applicable to the duties the employee is required to perform, whichever is greater.

Leave

A JobKeeper enabling stand down direction does not apply while an employee is taking paid or unpaid leave authorised by the employer (for example, annual leave), or is otherwise authorised to be absent (for example, on a public holiday). Employees continue to accrue annual leave and personal leave as if the stand down direction was not given.

Enforcement

Employers who breach these new provisions can be liable for criminal in certain circumstances and civil remedy penalties of up to $630,000 for a non-compliant direction.

The FWC will have jurisdiction to deal with disputes regarding the operation of these new provisions and will have power to make orders to set aside a JobKeeper direction, make any other order it considers desirable to give effect to a JobKeeper Enabling Direction, or make any other order it considers appropriate.

Employers should consider how they can take advantage of these changes to off-set the impact of COVID- 19 and seek specific advice given the various employer obligations in respect of JobKeeper directions and agreements, including where an employer has already stood down all or part of its workforce.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).