JobKeeper – Extension – Latest Update

The extension to the JobKeeper scheme to 28 March 2021, first announced by the Federal Government on the 21 July, became law in early September when amendments to the JobKeeper Rules were registered.

Highlights of the new Rules:

  • They establish a two-lane highway for employers – those that remain fully eligible for JobKeeper and those no longer eligible, but still impacted by the pandemic (so-called ‘legacy’ employers);
  • Eligibility no longer determined by a projected decline in turnover, but on evidence of an actual fall in GST turnover;
  • Two extension periods (28 September 2020 to 3 January 2021 and 4 January to 28 March 2021);
  • New [lower] rates of payment;
  • As of 3 August 2020, the key date for assessing employee eligibility moves from 1 March to 1 July.

Extension Period 1 (September 2020)

Eligibility

Employers with an average turnover of $1 billion or less seeking to receive JobKeeper Extension payments from 28 September 2020 to 3 January 2021 will need to:

  • Demonstrate they have suffered a decline in ACTUAL GST turnover (rather than projected) of 30% with reference to the September 2020 Quarter (July, August, September) relative to the September 2019 Quarter

Payments

  • $1,200 per fortnight for eligible employees /business participants who were working/actively engaged in the business for 20 hours per week or more on average in the four weeks before 1 March 2020 or 1 July 2020;
  • $750 for other eligible employees and business participants;
  • Employers will need to nominate the rate they are claiming for eligible employees and inform employees as to which rate will apply to them

Extension Period 2 (January 2021)

Employers with an average turnover of $1 billion or less seeking to receive JobKeeper Extension payments from 4 January 2021 to 28 March 2021 will need to:

  • Demonstrate they have suffered a decline in ACTUAL GST turnover (rather than projected) of 30% with reference to the December 2020 Quarter (October, November, December) relative to the December 2019 Quarter

Payments

  • $1,000 per fortnight for eligible employees /business participants who were working/actively engaged in the business for 20 hours per week or more on average in the four weeks before 1 March 2020 or 1 July 2020;
  • $650 for other eligible employees and business participants.

Employers should note that;

  • They do not need to re-enrol for the JobKeeper Extension if they were already enrolled before 28 September 2020;
  • They do not need to reassess the eligibility of their employees to agree to be nominated if they were already claiming for them before the 28 September 2020

Eligible Employees

Employees are eligible for the JobKeeeper Extension if they are:

  • Currently employed by an eligible employer (including stood down or re-hired);
  • Worked for an eligible employer either as:

– a full-time, part-time or fixed-term employee at 1 July 2020; or

– a long term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer; and

  • Were aged 18 or older at 1 July 2020; and
  • Were an Australian resident,; and
  • Were NOT in receipt of Government parental leave or Dad and Partner Pay, or a payment in accordance with Australian Workers Compensation law for an individual’s total incapacity to work.

Fair Work Act – JobKeeper Flexibility Rules

Qualifying Employers

For employers that continue to meet the eligibility criteria for JobKeeper Extension, the flexibility rules continue to apply unchanged in most respects (apart from Annual Leave – see below). Of most significance, an eligible employer can continue to issue a JobKeeper Enabling Stand Down direction (JESD) to an employee for whom they are entitled to a JobKeeper payment to reduce their ordinary working hours, including down to zero, provided the relevant criteria for issuing the direction have been met.

Legacy Employers

The Federal Government has sought to recognise that although some employers will no longer meet the basic eligibility test (i.e. 30% reduction in GST turnover), they will still be operating below full capacity after the 28 September as a direct result of the pandemic. Hence, the JobKeeper Extension Flexibility Rules seek to provide those employers with greater flexibility until the 28 March 2021 than would normally prevail under the Fair Work Act.

Legacy Employers – Eligibility

  • Must demonstrate a decline in turnover of 10% or more in the Designated Quarter – to be assessed as follows:

– 28 September to 27 October 2020 (Designated Quarter – June 2020 vs June 2019)

– 28 October 2020 to 27 February 2021 (Designated Quarter – September 2020 vs September 2019)

– 28 February 2021 to 28 March 2021 (Designated Quarter – December 2020 vs December 2019)

  • The Employer must produce a 10% decline in turnover certificate covering the designated quarter. These can be prepared by an independent registered company auditor, tax agent, accountant or BAS agent

Legacy Employers – Flexibility Provisions

An eligible ‘legacy’ employer can issue a JobKeeper Enabling Stand Down direction (JESD) to an employee provided:

  • The JESD does not require the employee to work reduced hours of less than 60% of the employee’s ordinary hours of work as at 1 March 2020;
  • The employee is not required to work less than two hours on a work day;
  • The employee cannot be usefully employed;
  • The JESD is safe;
  • The JESD begins after 28 September 2020;
  • The employer was entitled to JobKeeper payment for the employee for the fortnight ended 28 September 2020;
  • At the time of the JESD, the employer was not entitled to JobKeeper payments and held a 10% decline in turnover certificate covering the designated quarter

Example

Per Month Pre 1 March 2020 JobKeeper – Current JobKeeper – Extension JobKeeper – Legancy JobKeeper – Ineligible
(30% Reduction) (30% Reduction) (10% Reduction) (≤10% Reduction)
Revenue $100,000 $70,000 $70,000 $80,000 $91,000
JobKeeper Payments $0 $18,000 $14,400 $0 $0
Labour Costs (x6 FTE) $39,000 -$20,000 -$20,000 -$23,400 -$39,000
Net $61,000 $68,000 $64,400 $56,600 $52,000
Reduction in Revenue % 0% 30% 30% 20% 9%

In the example above, the legacy employer has been able to offset their labour costs by up to 60% (in this example, from $39,000 down to $23,400) at a time when their revenues have fallen by 20%, making them ineligible for the JobKeeper Extension payments but eligible to implement the flexibility provisions of a ‘legacy’ employer.

Legacy Employers – Casual Employees

It should be noted that the Explanatory Memorandum that accompanies the legal amendments confirms that “casual employees do not have ‘ordinary hours’ because, by virtue of the nature of casual employment, they are free to accept or refuse work, and their employers are free to offer work or not”.

This interpretation may well be challenged given the recent ruling by the Federal Court in the WorkPac Pty Ltd v Rossato [2020] FCAFC 84 case, which found that ‘casual’ workers who worked regular and predictable shifts with a firm, and had an advanced commitment to work were not casuals despite how they were described in employment contracts.

Legacy Employers Consultation Requirements

Legacy employers must give written notice to impacted employees of the intended direction 7 days before the direction is given. The written notice must provide:

  • Information on the nature of the direction;
  • Information on when the direction will take effect;
  • Information on the expected effects of the direction.

The employer must also invite the employee to give their views on the impact of the proposed direction.

Paid Annual Leave

In a significant change, current agreements relating to an employee taking paid annual leave under the JobKeeper scheme will be repealed (for all employers). Hence, an employee is NOT required to comply with any previous agreement to take paid annual leave from the date of the repeal (which commences on the 28 September 2020). Any previous agreement ceasing to have effect will NOT affect the days, hours, duties or times the employee is to work.

If you need some guidance or advice call us on 08 8231 6100 or email:

http://reception@ezralegal.com.au.

Julian Roffe

Practice Manager

Ezra Legal

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