The Federal Treasury undertook a three-month review of the current JobKeeper scheme (Current Scheme) in June 2020. The review found that whilst the Current Scheme met its initial objectives to support businesses and job survival, the labour market remains weak in Australia and in need of further macroeconomic support.
In light of the review’s findings, on 21 July 2020, the Government announced its intention to extend the Current Scheme until 28 March 2021 (Extended Scheme), targeting support to those organisations who continue to be significantly impacted by the COVID-19 pandemic. The Federal Parliament passed legislation to this effect on 1 September 2020, ushering in Spring with its reformed JobKeeper package.
What are the new payment rates?
From 28 September 2020 to 3 January 2021 (First Period), the JobKeeper payment will reduce from $1,500 per fortnight to:
- $1,200 per fortnight for all eligible employees who were working at least 20 hours a week on average in the four weeks before either 1 March 2020 or 1 July 2020 (see further below as to the relevance of these dates); and
- $750 per fortnight for other eligible employees.
From 4 January 2021 to 28 March 2021 (Second Period), the JobKeeper payments will reduce further to $1,000 per fortnight and $650 per fortnight respectively.
The ATO will release further guidance in relation to unique circumstances that may arise, such as where employees have irregular hours (as a consequence, for example, of being on leave or were not employed for the whole time) or if they are paid in non-weekly or non-fortnightly pay periods.
Practically, the changes recognise that many employees who were working very few overall hours (particularly part-time and casual employees) were benefitting from the Current Scheme such that they were receiving more income than they otherwise normally would. The Extended Scheme seeks to reduce this entitlement to represent a more proportionate figure to their usual earnings.
What are the new eligibility requirements for employers?
Employers will need to meet a further decline in the turnover test for both the First Period and Second Period, as well as meeting the other existing eligibility requirements of the Current Scheme, in order to continue to receive payments under the Extended Scheme after 28 September 2020.
For the First Period, the decline in turnover is measured against how much their actual GST turnover (rather than projected GST turnover) has fallen in the September 2020 quarter (July – September 2020) relative to a comparable period (generally the corresponding quarter in 2019). Employers must then make a further reassessment using an equivalent test for the December 2020 quarter (October – December 2020) in order to remain eligible for the Second Period.
The turnover test itself remains unchanged – that is, employers need to demonstrate that their turnover has fallen by:
- 50% for those organisations with an aggregated turnover of more than $1 billion;
- 30% for those organisations with an aggregated turnover of $1 billion or less; or
- 15% for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities).
What are the new eligibility requirements for employees?
The eligibility requirements for employees remain largely unchanged, with the exception that the relevant date of employment has moved from 1 March to 1 July 2020. This change is effective from 3 August 2020, meaning that it increases the scope of eligibility for both the Current Scheme and the Extended Scheme.
Put simply, an eligible employee is a person who is currently employed by an eligible employer and, at 1 July 2020, was:
- a full-time, part-time, fixed-term, or long-term casual employee (employed on a regular and systematic basis for at least 12 months);
- aged 18 years or older (or aged at least 16 years old if financially independent or not undertaking full-time study);
- either an Australian resident (within the meaning of the Social Security Act 1991) or an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa; and
- not in receipt of government paid parental leave or workers compensation.
Further, all employees who were an eligible employee as at 1 March 2020 under the Current Scheme are taken to be eligible employees under the Extended Scheme (unless one of the usual exclusions applies, such as they are no longer a current employee).
Are there any changes to the workplace flexibility provisions?
For the most part, the existing flexibility provisions that were introduced into Part 6-4C the Fair Work Act 2009 (Cth) (Act) under the Current Scheme remain in place and have also been extended to 29 March 2021. However, some important amendments have been made with effect on 28 September 2020.
Employers who meet the new eligibility requirements for the Extended Scheme (Qualifying Employers) will continue to benefit from the existing flexibility provisions in the Act, which remain unchanged. This means they are entitled (subject to the existing procedural and other requirements) to:
- issue that employee with a jobkeeper enabling stand down, such as to reduce their days or hours of work (including to nil); and
- change that employee’s duties, location or days of work.
For Qualifying Employers, any arrangements that have already been put in place under the Current Scheme will continue in effect, unless otherwise withdrawn, revoked or replaced.
Employers who do not meet the new eligibility requirements under the Extended Scheme, but otherwise qualified under the Current Scheme (Legacy Employers), will have their existing arrangements made under these provisions automatically cease on 28 September 2020. However, Legacy Employers will be able to access a modified form of the above flexibilities if they are still experiencing at least a 10% decline in turnover under the Extended Scheme. Such modifications include that Legacy Employers:
- cannot reduce an employee’s hours to less than two consecutive hours in a day, or less than 60% of their ordinary hours of work as they were on 1 March 2020; and
- must give at least 7 days’ notice before issuing a jobkeeper enabling direction (compared to 3 days’ notice under the Current Scheme and for Qualifying Employers under the Extended Scheme).
The provisions allowing employers to request employees to take annual leave so long as at least two weeks of annual leave remain, or to agree to take annual leave at half pay, have not been extended and will be repealed for all employers effective 28 September 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