Lauren Townsend and Sophie Donaghey

Quick reference guide to the Federal Government’s extension of JobKeeper

Lauren Townsend and Sophie Donaghey

24 July 2020

JobKeeper

The Federal Government has made a much anticipated announcement that its economic lifeline JobKeeper scheme will be extended for a further 6 months beyond its initial drop-dead date, until 28 March 2021. However, it will come with some critical changes, including two stages of payment reductions and changed eligibility criteria.  The changes to JobKeeper will commence on 28 September 2020.  The current scheme will remain in place until that time.

At the time of publishing this blog, the Federal Government has released a detailed fact sheet on the forthcoming changes to the JobKeeper scheme.  However, we are still awaiting the release of amendments to the JobKeeper Payments & Benefits Rules, which set out the detailed ‘ins and outs’ of the JobKeeper scheme.

Further, no comment has been made on whether the temporary changes to the Fair Work Act 2009 (Cth) – which align with the JobKeeper scheme and allow employers to, for example, issue JobKeeper Enabling Stand Down Directions – will also be extended.  As things stand, those temporary provisions will automatically cease to apply on 28 September 2020 and all JobKeeper Enabling ‘directions’ and ‘agreements’ will stop at that time. Presumably though, there will be an extension to some degree.

What do we know about the extended version of JobKeeper?

1. The JobKeeper payment will be reduced in two phases

Workers (including eligible casuals) working 20 hours or more per week (average) in the 4 weeks of pay periods before 1 March 2020 Workers (including eligible casuals) working fewer than 20 hour per week (average) in the 4 weeks of pay periods before 1 March 2020
‘Phase 1’: JobKeeper payment per fortnight up to and including 27 September 2020 $1,500 $1,500
‘Phase 2’: JobKeeper payment per fortnight 28 September 2020 to 3 January 2021 $1,200 $750
‘Phase 3’: JobKeeper payment per fortnight 4 January 2021 to 28 March 2021 $1,000 $650

The Commissioner of Taxation will have discretion to allow the work hours test to be met where it might have otherwise failed in certain circumstances (e.g. where an employee was on leave, not employed during all or part of February 2020 or volunteering during the bushfires).

In an administrative change, entities claiming payments will be required to nominate which payment rate they are claiming for each of their eligible employees.

Businesses and not-for-profits will need to continue to satisfy the ‘wage condition’ by paying an eligible worker at least the amount of the (relevant) JobKeeper payment in advance of each JobKeeper fortnight (with reimbursement to be provided by the ATO in arrears).

2. Businesses and not-for-profits will need to prove they have actually suffered a relevant decline in turnover

While the test will shift from projected to actual decline in turnover, in general, employers will remain eligible to receive the JobKeeper Payment if their organisation meets the following decline in turnover test (unless the ATO establishes alternative tests):

Annual turnover (on a consolidated GST group basis) Actual decline in turnover
$1 billion or more 50% or more
Less than $1 billion 30% or more
ACNC-registered charities other than schools and universities 15% or more

Whereas JobKeeper eligibility is currently based on a projected GST turnover, from 28 September 2020 eligibility will be based on actual GST turnover.

Claimants will need to reassess and prove that they met the decline in turnover test based on actual GST turnover:

  • at the commencement of Phase 2 (and in advance of the BAS deadline in October 2020), for continued receipt of payments during Phase 2; and
  • at the commencement of Phase 3 (and in advance of the BAS deadline in January 2021), for continued receipt of payments during Phase 3.

The test will be satisfied by reference to actual GST turnover in the relevant preceding quarters by comparing current and corresponding periods (generally comparable quarters in 2019).  For Phase 2, this will be both the June and September 2020 quarters, while for Phase 3, the preceding periods will be the June, September and December 2020 quarters.

The JobKeeper scheme will remain available to new participants provided they meet the relevant decline in turnover tests.

3. The eligibility rules for employees will not change

The eligibility rules for employees and business participants will remain unchanged.

Employees will continue to only be able to claim JobKeeper from one employer.

Next steps

Organisations and not-for-profits do not need to take immediate action to secure their continued participation in the JobKeeper scheme – the scheme as it currently stands will run until 28 September 2020.  Further details of the changes and information on practical steps will be made available by the Government and the ATO closer to the time the changes are to be rolled out.

In the meantime, armed with this information, employers can start to make more informed workforce planning decisions for the period post-September 2020.  For example, it may now not be necessary for wholesale restructuring and redundancy decisions to be implemented, and planning and discussions around hours of work and structuring of rosters can begin to take place.

For further information, please contact our national Employment, Workplace Relations and Safety team.