CORONAVIRUS (COVID-19) - WAGES RELIEF FOR EMPLOYERS
The Federal Government has just announced a $130 billion wage subsidy package this afternoon for Employers to access from today, 30 March 2020 of:
$1,500 per fortnight per eligible employee;
to be paid for a maximum period of 6 months; and
for those businesses which have been adversely impacted by the ongoing COVID-19 crisis (subject to turnover reduction criteria).
Which Employers are entitled to the JobKeeper Payments?
Businesses will need to assess whether they have or will experience the required turnover decline as follows:
for businesses with less than $1 billion turnover - where their turnover will be reduced by more than 30% relative to a comparable to period a year ago (of at least a month); or
for businesses with $1 billion or more turnover - where their turnover will be reduced by more than 50% relative to a comparable to period a year ago (of at least a month); and
the business is not subject to the Major Bank Levy.
Applications will need to go through the ATO website, through the Single Touch Payroll system.
Not for profit entities, including charities, and self-employed individuals (businesses without employees) that meet the threshold tests are also eligible to apply for JobKeeper Payments.
Which Employees can be paid the JobKeeper Payments?
Eligible Employees will include those employees who are:
currently employed by the Eligible Employer (importantly this will include those employees who have recently been stood down or re-hired);
were employed by the Eligible Employer as at 1 March 2020;
Full-Time, Part-Time and Long Term Casuals (being a casual employee employed on a regular basis for longer than 12 months as at 1 March 2020);
at least 16 years of age;
an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more and Special Category (Subclass 444) Visa Holders; and
not in receipt of a JobKeeper Payment from another employer.
What else do Employers need to know about the JobKeeper Payments?
have been in a employment relationship with Eligible Employees as at 1 March 2020;
confirm that each Eligible Employee is currently engaged in order to receive the JobKeeper Payments; and
must pass on the JobKeeper Payments to Eligible Employees.
How much are the JobKeeper Payments?
Eligible Employers who participate will be required to ensure Eligible Employees receive at least $1,500 per fortnight before tax.
If Eligible Employees were already receiving more than this from their Employer, this will not change their income. It will operate as a subsidy of part of their wages for your business.
For Eligible Employees that have been receiving less than this amount, the Employer will need to top up the payment to the Eligible Employee up to $1,500 before tax. Employers can then choose if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
When will the Payments be made?
The first payments will come through in the first week of May 2020.
What does this means if I have already stood employees down or made them redundant after 1 March 2020?
Eligible Employers can apply for the JobKeeper Payment for employees that have been stood down since 1 March 2020.
If those employees are nominated, the Employer must advise them and ensure they receive the payment. Whether superannuation is then paid on the subsidiary, or any top up payments are made will be up the Eligible Employees will be a matter for the Eligible Employer.
If those Eligible Employees, as a consequence of having been stood down, start to then receive the JobKeeper Payment, they must inform Services Australia of their new income.
It would appear that former employees, who have been made redundant since 1 March 2020 may also be eligible if they are rehired by the business, however no specific details on this have yet been released. More details are expected shortly on the ATO's website.
What else should Employers consider during this crisis?
Where Employers are accessing the Scheme and are required to increase payments to Eligible Employees to the $1,500 per fortnight before tax, they should be careful that they do not make a permanent commitment to make those payments once the Scheme is finalised in 6 months time.
Unfortunately, this Scheme will not be available for all Employers, given the thresholds and may still require other decisions being made in your business to navigate the deterioration of business conditions. Therefore, as we navigate the COVID-19 crisis, Employers should still be considering their employment arrangements, contracts and terms and conditions they currently have in place and assessing what changes they may need to put in place. These may include:
agreed variations to employment contracts, such as salary and/or hours adjustments;
access to leave (paid and unpaid) during the crisis; as well as
stand downs (if allowable); and
restructures and redundancies (as required).
Employers should also take care in any re-employment decisions they make in order to make the Scheme available to former employees as well. As further details come through on these arrangements we will provide a further update.
If you need urgent advice or assistance in managing the impact of Coronavirus in your workplace, please contact IR Legal Solutions to discuss.
This content is not be a substitute for legal advice and is for information only. Employers should obtain advice that is specific to their circumstances and business operations, and not rely on this publication as legal advice.