On 30 March 2020, the Federal government announced a support package for employers and employees through the ‘JobKeeper’ payment scheme, aimed at keeping people employed during the COVID-19 pandemic and the following economic downturn.
The JobKeeper Scheme is a payment of $1500 per employee per fortnight made available to employers who meet the eligibility criteria, backdated to 30 March 2020 (Payments). The Payments will be made to employers from the first week of May and will continue for up to six months.
Employers must ensure that each employee it claims the Payments for receives at least $1500 (gross) per fortnight in wages. This includes part-time and eligible casual employees who would usually receive less than $1500 per fortnight.
If the employee usually earns greater than $1500 (gross) per fortnight, the employer is required to continue paying the employee their usual wages.
The employer is not required to pay the superannuation levy on any amount paid to employees that is not wages, however may do so if it wishes.
Eligible employers may claim the Payments if:
- the annual turnover of their business is either:
- less than $1 billion and has reduced by more than 30%; or
- more than $1 billion and has reduced by more than 50%,
relative to a comparable period of at least a month; and
- the employer was in an employment relationship with eligible employee as at 1 March 2020 and confirms that the eligible employee is currently engaged with the business.
Banks subject to the Major Bank Levy will not be eligible for the JobKeeper Scheme. Not-for-profit entities and self employed individuals will be eligible for the JobKeeper Scheme provided they meet the above eligibility criteria.
Employees are eligible employees if they meet all of the following criteria:
- were employed by the employer at 1 March 2020
- are currently employed by the eligible employer – this includes employees that have been stood-down, dismissed or made redundant and rehired
- are full-time, part-time or long-term casuals – a long-term casual is a casual employee that has been employed for at least 1 year on a regular basis as at 1 March 2020
- are at least 16 years of age
- are an Australian citizen, permanent visa holder, Protected Special Category Visa Holder, or a New Zealand citizen in Australia holder a Special Category (Subclass 444) Visa Holder
- are not receiving a Payment from another employer.
Employees who receive the Payment may no longer receive payments from Services Australia as the Payment must be reported by the employee as income.
How to apply
Employers who intend to claim the Payments under the JobKeeper Scheme should register their interest with the ATO. The registration form can be found here.
Once the legislation has been passed and the ATO has been set up to receive formal applications, employers who have registered their interest will receive communication from the ATO regarding the formal application process.
An employer must identify each eligible employee to the ATO and will be required to provide monthly updates to the ATO, including providing proof that eligible employees are receiving at least $1500 per fortnight.
On application, the employer will likely need to provide financial records that show a reduction in turnover of 30% or 50% for a comparable period in 2019 of at least a month.
What should employers do next?
Employers should first consider their eligibility for the Payments.
Employers should then review the employment of each employee as at 1 March 2020 to see if that employee is eligible for the Payment.
If an employee is eligible, the employer should discuss the eligibility to receive the Payment with that employee, and the terms of the employee’s ongoing employment with the employer.
Information on the JobKeeper Scheme is still limited. Legislation will be passed in the coming weeks confirming the Scheme. Employers should continue to monitor the ATO website for further details on the application process.
Where required, seek legal advice from the Cooper Grace Ward workplace relations or tax team about your specific circumstances.