Yesterday, the Federal Parliament passed legislation extending the economic lifeline JobKeeper scheme for a further six months beyond its initial drop-dead date, until 28 March 2021 (Extended JK Scheme).
Critically, the legislation:
- lays the foundation for the Federal Government to give effect to its intention, announced in late July/early August, to extend the scheme, though with some critical changes – including two stages of payment reductions and changed eligibility criteria; and
- extends the life of the temporary changes to the Fair Work Act 2009 (Cth) (FW Act), which align with the JobKeeper scheme and afford employers greater flexibility to manage employees during the pandemic (for example, by issuing JobKeeper Enabling Stand Down Directions). However, there will be some reduction of flexibility for some employers who no longer qualify for JobKeeper payments because their turnover has improved.
Most of the detail of the JobKeeper scheme is set out in the Payments & Benefits Rules 2020 (Rules). The Rules have not been changed yet, but now that the life of the scheme has been legislatively extended we can expect to see significantly amended Rules issued in the coming weeks.
The Extended JK Scheme will come into effect on 28 September 2020. The current scheme (Current JK Scheme) will remain in place up to and including 27 September 2020.
Key changes under the Extended JK Scheme
1. The JobKeeper payment will be reduced in two phases
The Government intends to modify the Rules to reflect that the JobKeeper payment amount will be reduced as follows:
|Workers (including eligible casuals) working 20 hours or more per week (average) in the 4 weeks of pay periods before the Reference Date||Workers (including eligible casuals) working fewer than 20 hour per week (average) in the 4 weeks of pay periods before the Reference Date|
|‘Phase 1’ (Current JK Scheme): 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|
Reference Date is either 1 March 2020 or 1 July 2020 – on whichever of those dates the employee was working more hours. This means that:
- employees working full-time through February 2020 who had their average weekly hours reduced to fewer than 20 before 1 July 2020 can rely on the 1 March 2020 Reference Date to retain the higher JobKeeper payments in Phase 2 and 3; and
- employees working fewer than 20 hours per week on average in April 2020 but who commenced working more than 20 hours before 1 July 2020 may be able to rely on the 1 July 2020 Reference Date to retain the higher JobKeeper payments in Phase 2 and 3.
The Commissioner of Taxation will retain discretion to allow the work hours test to be met in certain circumstances where it might have otherwise failed (e.g. where an employee was on leave, not employed during all or part of February 2020 and/or June 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-profit organisations 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
The Government intends to modify the Rules to reflect that the test will shift from projected GST turnover (under the Current JK Scheme) to actual decline in turnover (under the Extended JK Scheme). In general, though, 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|
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 the September 2020 quarter; while, for Phase 3, the corresponding period will be the December 2020 quarter.
The JobKeeper scheme will remain available to new participants, provided they meet the relevant decline in turnover tests.
3. Revised assessment date to determine ‘eligible employees’
Effective as of 3 August 2020, the assessment date for ‘eligible employees’ in the Rules was changed from 1 March 2020 to 1 July 2020. This opened the scheme to the employees of employers that hired employees after 1 March 2020 only to experience a decline in turnover due to Covid-19.
The 1 March 2020 test remains relevant for employees who were eligible for JobKeeper before 3 August 2020. These employees do not need to satisfy the 1 July test to continue receiving JobKeeper payments.
There have been no further changes to the original eligibility rules. We understand that the Government intends to retain the eligibility rules for employees and business participants, as they currently stand, into Phase 2 and Phase 3.
Employees will continue to only be able to claim JobKeeper from one employer.
4. Changes to the temporary FW Act Part 6-4C JobKeeper flexibility provisions
Who will be eligible to use the FW Act Part 6-4C provisions?
From 28 September 2020 there will be two categories of employers that can use the temporary flexibilities set out in Part 6-4C of the FW Act:
- Qualifying Employers: Employers who are eligible for JobKeeper during Phase 2 and/or Phase 3 of the Extended JK Scheme; and
- Legacy Employers: Employers who were eligible for JobKeeper payments during Phase 1 of the Current JK Scheme but do not qualify for JobKeeper during Phase 2 and/or Phase 3 under the Extended JK Scheme.
To continue to access the FW Act Part 6-4C provisions, Legacy Employers will first need to have obtained a ‘10% decline in turnover certificate’, stating they have experienced at least a 10% decline in current GST turnover in the relevant quarter this year compared to last year, as follows:
|Time in which Legacy Employer seeks to implement JobKeeper flexibility||Period for which the 10% decline in turnover certificate must have been issued||Comparison period|
|After the Bill receives Royal Assent and before 27 October 2020 (inclusive)||10% decline in turnover certificate for the June 2020 quarter (April, May and June 2020)||Comparison to the June 2019 quarter|
|Between 28 October 2020 and 27 February 2021 (inclusive)||10% decline in turnover certificate for the September 2020 quarter (July, August and September 2020)||Comparison to the September 2019 quarter|
|Between 28 February 2021 and 28 March 2021 (inclusive)||10% decline in turnover certificate for the December 2020 quarter (October, November and December 2020)||Comparison to the December 2019 quarter|
As such, Legacy Employers will need to obtain a certificate for the June quarter after the legislation receives Royal Assent, to implement JobKeeper Enabling Directions and Agreements from 28 September 2020 (and so on, each quarter).
If an employer does not obtain a certificate, then any JobKeeper Enabling Directions or Agreements that were in place in previous periods will automatically terminate on 28 October 2020 or 28 February 2021 (as relevant).
Legacy Employers with 15 or more workers will require a certificate issued by a qualified, eligible accountant, whereas Legacy Employers with fewer than 15 workers will be permitted to complete a certificate themselves.
Are the FW Act Part 6-4C flexibilities changing?
Overall, the Part 6-4C flexibilities will largely remain the same, except that from 28 September 2020 an employer will no longer be able to request that an employee receiving JobKeeper payments takes annual leave, which is currently contained in section 789GJ of the FW Act (JK Annual Leave Agreements). Employees will not be required to comply with JK Annual Leave Agreements from 28 September 2020 onwards, and any existing JK Annual Leave Agreements will automatically terminate at the end of 27 September 2020.
What FW Act Part 6-4C flexibilities will Qualifying Employers be permitted to implement?
Qualifying Employers will be permitted to continue to implement any of the JobKeeper Enabling Directions and Agreements in Part 6-4C, provided any qualifying conditions are met.
Any JobKeeper Enabling Directions and Agreements that are already lawfully in place under Part 6-4C will automatically continue when the scheme switches from the Current JK Scheme to the Extended JK Scheme on 28 September 2020. This means, for example, JobKeeper Enabling Stand Down Directions will automatically carry on beyond 27 September 2020.
What FW Act Part 6-4C flexibilities will Legacy Employers be permitted to implement?
Legacy Employers will be able to access the Part 6-4C flexibilities on a modified/reduced basis. For example:
- Legacy Employers will not be permitted to make an agreement with an employee to modify their days/times of work that results in an employee working less than two consecutive hours in a day; and
- Legacy Employers will only be permitted to issue JobKeeper Enabling Stand Down Directions to reduce an eligible employee’s hours to a minimum of 60% of their usual ordinary hours, and the employee must be permitted to work no less than two consecutive hours in a day;
- Legacy Employers will be required to give 7 days’ notice of an intention to issue a JobKeeper Enabling Direction and will be required to comply with expanded consultation obligations during the 7 day period.
Any JobKeeper Enabling Directions and Agreements that are in place under Part 6-4C will automatically cease for Legacy Employers when the scheme switches from the Current JK Scheme to the Extended JK Scheme on 28 September 2020.
Legacy Employers will need to enter into new JobKeeper Enabling Directions and Agreements to begin from 28 September 2020 (and, as noted above, will need to have a 10% decline in turnover certificate before doing so). Legacy Employers will also be required to notify employees who are the subject of a JobKeeper Enabling Direction or Agreement before the end of each relevant period (i.e. before 28 October 2020 and 28 February 2021 as relevant) as to whether the arrangements will cease or continue in the next period.
Organisations and business participants 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 (including through updated Rules) 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, employers can prepare themselves to obtain a 10% decline in turnover certificate, if necessary. Further, 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.
In addition to the wage subsidy and flexibilities offered by the JobKeeper scheme, employers can consider utilising any available pandemic-specific flexibility measures built into modern awards which (at this stage) generally continue to apply until the end of September or October 2020 but could possibly be extended, as well as any future additional flexibility arrangements made available by the Fair Work Commission such as its proposal to include a new working from home flexibility schedule in several modern awards.
For further information, please contact our national Employment, Workplace Relations and Safety team.
Sophie Donaghey | Lawyer | + 61 3 8080 3525 | firstname.lastname@example.org