Lee D Mitchell, Principal, Nicholson Ryan Lawyers
The Federal Government has announced a series of fiscal measures to protect the incomes and job of Australian workers, including the JobKeeper Program, a $130 billion ‘wage subsidy’ scheme.
Below, we have set out some key questions and answers in relation to the JobKeeper Program.
What is the JobKeeper Program?
- The JobKeeper Program is a wage subsidy open to eligible employers to enable them to pay their employees a fortnightly wage of at least $1,500 before tax.
- If your business is eligible, you will be reimbursed a fixed amount of $1,500 per fortnight for each eligible employee you pay under the JobKeeper program.
- The objective of the JobKeeper program is to encourage employers to retain or rehire their workforce employed throughout this turbulent time, rather than terminate their employment.
- The Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 outlines the formal criteria employers must follow to receive their wage subsidy.
Is my business eligible?
- For a business to be eligible, all the following criteria must be met;
- On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
- You employed at least one eligible employee on 1 March 2020.
- Your eligible employees are currently employed by your business for each fortnight you claim for the JobKeeper Program (including those who are stood down or re-hired).
- Your business has faced a;
- 30% fall in turnover (for an aggregated turnover of $1 billion or less)
- 50% fall in turnover (for an aggregated turnover of more than $1 billion), or
- 15% fall in turnover (for ACNC-registered charities other than universities and schools).
How do I determine turnover?
- To access the JobKeeper Program, your business must suffer a sufficient fall in turnover based on its projected GST turnover relative to a comparable period in 2019.
- This only needs to be satisfied once, no further testing of the turnover is required however you will need to continue to provide information monthly as to your current and projected turnover.
- To calculate turnover, you compare;
- projected GST turnover for a calendar month that ends after 30 March 2020 and before 1 October 2020 compared to the same month in 2019; or
- where a quarterly period is chosen, businesses will compare projected turnover for either the June or September 2020 quarters to the same quarter in 2019
- For new businesses that do not have a 12-month operating period, or where turnover a year earlier was not representative of their usual or average turnover, the Commissioner will have discretion to assess other information that proves the organisation has been similarly impacted by COVID-19.
What if my business is not eligible yet?
- You can apply for the JobKeeper payment if you reasonably believe that your business turnover will fall by 30% (or 50% or more for entities with a turnover of $1 billion or more) relative to their turnover in a corresponding period of a year earlier.
- If your business does not meet the turnover test threshold, you can start receiving the JobKeeper payment at a later time when this can be evidenced.
- In this case, JobKeeper Payments will not be backdated to the commencement of the program.
How do I determine my eligible employees?
- For an employee to be eligible, they must be:
- Over 16 years of age and have been employed as at 1 March 2020, whether in a full time or part time basis. Casual employees will also be eligible if they are ‘long term’ and have been engaged for at least 12 months;
- Still employed by the employer – including if they have been stood down. An employee who is subsequently re-hired having been made redundant after 1 March 2020 is also eligible; and
- An Australian Citizen or hold a valid visa such as a permanent visa, Protected Special Category Visa, non-protected Special Category Visa (who has been residing continually in Australia for 10 years or more), or a Special Category (Subclass 444) Visa.
- There is no income cap on eligibility for employees, therefore you may receive the subsidy in respect of your highest paid employees, as well as your employees whose employment terms and conditions are not in any way impacted by COVID-19.
- It should be noted that, subject to further announcements, employees who are ineligible to receive a benefit under the JobKeeper Program may be entitled to receive other benefits (such as the JobSeeker Allowance).
When do I pay my employees?
- You should pay your employees for each fortnight you plan to claim for, with the first fortnight commencing from 30 March – 12 April
- Thus, if you wish to claim the JobKeeper reimbursement from 30 March, you must pay your employees at least $1,500 (before tax) each fortnight from that date
- The ATO has indicated that it will accept late payments and provide reimbursements between 30 March to 26 April, provided that you evidence a total payment of $3,000 before the end of April
- You cannot claim the JobKeeper payment in advance. The JobKeeper payment is a reimbursement from the ATO to your business in arrears and cannot be paid in advance in any circumstances.
- The first reimbursements will be provided to employers after 4 May 2020.
How do I pay my employees?
- We note that there are several differing circumstances surrounding workplaces, especially considering the current climate.
- Therefore, we have outlined the pay requirements you comply with below;
- Employee ordinarily receives $1,500 or more fortnightly – You must pay the employee their regular income according to their work arrangements
- Employee ordinarily receives $1,500 or less fortnightly – You must pay the employee, at a minimum, $1,500 per fortnight, before tax.
- Employees who are stood down – You must pay the employee, at a minimum, $1,500 per fortnight, before tax.
- Employees who were employed at 1 March 2020, terminated, and subsequently re-engaged – You must pay the employee, at a minimum, $1,500 per fortnight, before tax
- You will still be required to pay superannuation guarantee contributions based on the usual wages of your employees and have discretion to determine if you want to pay a superannuation on any additional wage paid.
- There is no obligation on your business to provide work to the employees that you have retained or rehired while participating in the JobKeeper Program.
Registration and Notice Requirements
- You must send the JobKeeper employee nomination notice to your eligible employees to complete and return to you by the end of April if you plan to claim JobKeeper by the end of April. These forms are not required to be sent to the ATO.
- You must notify an eligible employee within seven days of providing the eligible employee’s details to the ATO for the purposes of the JobKeeper Program.
- From 20 April 2020, you can enrol for the JobKeeper payment through the ATO’s business portal, https://bp.ato.gov.au/.
- Set up your myGovID and establish your authorisations using Relationship Authorisation Manager (RAM).
- You must provide your bank details and indicate if you are claiming an entitlement based on business participation, for example if you are a sole trader; and
- You must specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).
How do I claim the JobKeeper Payment?
- From 4 May 2020, you will be able to apply to claim the JobKeeper payment by logging onto the ATO’s Business Portal and;
- if you do not have Single Touch Payroll (STP) enabled payroll software you can;
- manually enter your eligible employees’ details if you have 40 employees or less; or
- you can use the JobKeeper Payment Guide sample payload files to produce your own JobKeeper report and provide it back to the ATO by uploading via the Business Portal Transfer file function
- if you do have STP enabled payroll software but it is not updated with JobKeeper Functionality you can;
- log in to the Business Portal and select employee details that are prefilled from your STP pay reports if you have 200 employees or less; or
- you can manually create a pay report, ask the ATO for a prefilled JobKeeper report, or use the JobKeeper Payment Guide sample payload files to create your own JobKeeper report and provide it back to the ATO by uploading via the Business Portal Transfer file function
- if you do have STP enabled payroll software and it is updated with JobKeeper Functionality you can;
- directly identify employees and maintain their details
- You must ensure that you have paid eligible employees a minimum of $1,500 per JobKeeper fortnight before tax.
- Each month, you must reconfirm your reported eligible employees. This can be done through the ATO Business Portal or via your registered tax or BAS agent.
- The ATO has indicated that they will pay you the JobKeeper payment for all eligible employees in the first week of May.
- The ATO and Treasury has indicated that further guidance addressing turnover tests and consolidated groups are to be released in the following weeks, so we will continue to keep you updated.
Nicholson Ryan delivers expert advice across all areas of corporate and commercial law and is assisting clients on a broad spectrum of legal issues in relation to COVID – 19. If you have any queries as to the matters addressed in this article, please contact us at (03) 9640 0400 or email us at firstname.lastname@example.org
This memorandum is intended as general information only. It does not purport to be comprehensive legal advice. Readers must seek professional advice before acting in relation to the aforementioned matters.