JOBKEEPER SOLUTION EXPLAINED
“JobKeeper” – $130 billion to the rescue
Unfolding day-to-day, businesses are being required to respond to the unprecedented challenges of COVID-19. Following CLW’s update last week setting out the various alternatives to terminating an employee’s employment as a result of COVID 19 [available here], on 30 March 2020 the Federal Government announced its “business rescue payment”, dubbed the JobKeeper Allowance. According to the media release by the Federal Treasurer Josh Frydenberg, the historic wage subsidy will be provided to approximately 6 million Australian workers.
Within 24 hours of the announcement, over 66,000 businesses have registered with the Australian Taxation Office for the JobKeeper Allowance. This is now over 100,000.
FAQs / what we know so far:
It isn’t law yet – just an announcement – negotiation with the labor party may mean it changes prior to completion.
How much is the Jobseeker Allowance and how is it paid to employees?
Eligible employees will receive a flat payment of $1,500 per fortnight from the employer (before tax). It will start to be paid to employers in about mid-May (we think).
The payment is about 70 percent of the national median wage or for workers in accommodation, hospitality and retail sectors, about a full median replacement wage.
Is my business an eligible employer?
Some businesses who have suffered a significant financial hit will be eligible to claim the payment.
Eligible employers are: businesses with an annual turnover of $1billion or less who self-assess that they have a reduction in revenue of 30 per cent or more, since 1 March 2020 over a minimum one-month period on the basis of a comparison to last year. It is not clear yet if it is a specific month and whether you calculate based on last year’s business activity statement or what.
Companies, partnerships, trusts, sole traders, not for profits and charities who meet the above mentioned criteria are all eligible employers.
What types of employees are eligible?
The following employees are eligible:
- Full time employees;
- Part-time employees;
- Casual employees that have been with their employer for at least the previous 12 months; and
- Self-employed individuals.
The payment is only available to those employees who are:
- Australian residents;
- New Zealand citizens in Australia who hold a subclass 444 special category visa; and
- Those migrants who are eligible for JobSeeker Payment or Youth Allowance (Other).
Are “stood down” employees eligible to be receive the JobKeeper Allowance from their employer
Employees who have been ‘stood down’ since 1 March 2020 are eligible. These employees remain “on the books” of their employer, even during the stand down period.
For employees who have already applied for the JobSeeker Allowance through Services Australia as a result of being stood down, Assistant Treasurer Michael Sukkar said he “wouldn’t encourage anyone to withdraw” their application for the JobSeeker Allowance (even if they are now eligible for the Jobseeker Payment). The Assistant Treasurer indicated that Services Australia and the Australian Taxation Office will work out the administrative arrangements to ensure that eligible employees receive only one of the JobKeeper or JobSeeker Payments.
When does the JobKeeper Allowance commence and how long will it last?
The JobKeeper program commenced on 30 March 2020. The first payments to eligible businesses are to be in the first week of May as monthly arrears from the Australian Taxation Office, according to a media release from Joshua Frydenberg’s office on 30 March 2020.
The Federal Government announced that “eligible businesses can begin distributing the JobKeeper payment immediately and will be reimbursed from the first week of May.” There is of course danger in doing that if you think that your qualification for 30 percent revenue might be uncertain. The Federal Government however has urged businesses not to hesitate in paying the JobKeeper Allowance to eligible employees and that businesses should not be waiting to be reimbursed.
NOTE: The Government will provide updates on further business cash flow support in coming days.
Next Steps for Employers Responding to COVID-19
The JobSeeker Allowance is clear indication of the Government’s preference for businesses to keep employees employed, even whilst a business is experiencing a downturn or entering a period of “hibernation”. It re-affirms our advice given in our update last week that businesses should consider arrangements such as flexible working arrangements or standing down staff as preference to terminations.
In the event that your business requires any advice employment related or otherwise in responding to COVID-19 and the impact on your business, our office remains open and available to provide you with clear, succinct advice during this time.