Eligible employers will be entitled to a wage subsidy of $1,500 per fortnight for employees covered by the JobKeeper Payment scheme.
On 30 March 2020, the Australian Government announced that businesses significantly affected by COVID-19 will be eligible to participate in the new “JobKeeper” Payment scheme. The JobKeeper Payment is intended to provide wage subsidies to eligible employers for a maximum period of 6 months from 30 March 2020. The payment is a $1,500 (gross) fortnightly payment per employee, which is approximately 70% of the median wage. It is intended to provide income to, and assist with the retention of, employees during the COVID-19 pandemic.
We have summarised the key elements of the JobKeeper Payment scheme here.
Who is an eligible employer?
Employers will be eligible for the JobKeeper Payment scheme if they can show:
- for businesses with a turnover of less than $1 billion: that 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,
- for business with a turnover of $1 billion or more: that their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); or,
- For charities registered with the Australian Charities and Not-For-Profit Commission (ACNC): that their turnover will be reduced by 15 per cent or more relative to a comparable period.
The reduction of turnover is to be self-assessed by employers. For most employers it will be established by comparing a business’ turnover in the preceding month or three-month period (depending on the reporting period of that business) against the business’ turnover in a comparable period in the last 12 months.
There may be some businesses that are significantly affected by COVID-19 but do not satisfy the eligibility criteria. In these circumstances, the Tax Commissioner will have discretion to:
- consider additional information which would establish that a business has been significantly affected by the impacts of COVID-19; or
- set out alternative tests to establish eligibility in certain circumstances (e.g. where a business has ceased or significantly curtailed its operations).
Notably, employers that are subject to the Major Bank Levy are not eligible for the scheme.
In the coming weeks legislation will be passed to implement the JobKeeper Payment scheme, which we anticipate will provide further clarity regarding the eligibility criteria.
Who is an eligible employee?
The following employees will be eligible to receive the JobKeeper Payment:
- employees currently employed by an eligible employer (including employees that have been stood down or re-hired);
- employees who were employed by an eligible employer at 1 March 2020; and
- full-time, part-time, or casual employees employed on a regular basis for longer than 12 months as at 1 March 2020.
Eligible employees must not be receiving a JobKeeper Payment from another employer, must be at least 16 years of age and an Australian citizen or the holder of a qualifying visa holder.
Employers will be required to identify employees eligible for the JobKeeper Payment and must provide monthly updates to the ATO. Employers must pay employees at least $1,500 per fortnight (before tax), noting:
- if an employee remains employed and earns more than $1,500 per fortnight, the employee is still entitled to be paid their ordinary wage or annual salary;
- if an employee remains employed and earns less than $1,500 per fortnight (before tax), the employee is entitled to receive at least $1,500 per fortnight (however the employer is only required to make superannuation contributions in respect of the employee’s ordinary wage or salary); and
- if an employee is stood down or on unpaid leave, the employee is entitled to receive at least $1,500 per fortnight (however the employer is not required to make superannuation contributions in respect of this payment).
The JobKeeper Payment will apply from 30 March 2020 and will be paid to eligible employers in arrears each month. It is anticipated that the first payment will be received by employers in the first week of May, however it is at the discretion of employers to commence making payments to employees before this date.
Registration for JobKeeper Payments
Employers can register their interest in applying for the JobKeeper Payment on the ATO website from 30 March 2020. Employers are not required to self-assess their eligibility at this stage. Further details regarding the online application process will be provided on the ATO website in due course.
Eligible employers should consider their eligibility for the JobKeeper Payment scheme, and the payroll processes and communications strategies required to commence making JobKeeper Payment to eligible employees.
Consideration should also be given to how the JobKeeper Payments might impact existing or future strategies for managing the workforce, including stand down arrangements, leave and, potentially, the re-hiring of employees whose employment was terminated after 1 March 2020.
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2021