What is Jobkeeper?
Jobkeeper is a government initiative to provide temporary financial support to certain employers as a result of Covid-19. Your practice may be entitled to a payment of $1500 each fortnight per employee (in arrears), if it has suffered a significant reduction in turnover. Many practices will qualify if they can show a decrease in 30% of monthly turnover, when compared to the same or a similar month in 2019. A convenient reference may be estimating your April 2020 BAS, and comparing it to your April 2019 BAS, and providing this to the ATO together with a copy of the regulatory/government direction to cease providing services.
How does it work?
Participation is by choice of the employer - not obligation. We summarise and outline the steps for employers here:
- Register with the ATO, which administers the scheme.
- Formally nominate your practice, and furnish evidence of your turnover reduction.
- Notify employees that you want to list them as participating employees.
- Employees can choose whether or not to agree, and will need to formally advise you of their decision. Some employees may not be eligible, or may already be participating through another employer.
- You will then either start receiving payments in arrears (on the basis you are eligible) or be formally notified you are not eligible.
Importantly, if you are incorrectly paid, or overpaid, you will be required to pay it back.
You will be required to provide monthly reports to the ATO on the actual turnover for the relevant month, as well as the expected turnover for the next month. Although you only need to demonstrate eligibility once, there is scope to cancel, terminate, revise or change your eligibility to Jobkeeper as provided by legislation.
How do I know which employees are covered?
Importantly, if you choose to participate then Jobkeeper will apply to ALL your eligible employees. This means you cannot pick and choose which employees are covered. Some employees may not be eligible, for example where they:
- have been employed casually for less than 12 months;
- do not meet requisite residency or visa requirements;
- commenced employment after 1 March.
If you made an employee redundant after 1 March and wish to re-employ him/her, he/she will also be eligible. However there is no obligation to re-employ someone.
If your employees are stood down, or on leave (with or without pay) they are still regarded as employed, and eligible to participate and be paid.
What are my obligations?
You will be required to pay each eligible employee the full $1500 per fortnight, even if they normally earn less. You must not unilaterally reduce the hourly rate of your employees. If an employee's ordinary hours equate to more than $1500 each fortnight, and they have not been reduced by agreement or by you lawfully (see below), then you will need to pay the difference. You must pay superannuation on all hours worked by your employees (but are not required to pay it on hours not worked but covered by Jobkeeper payments) and employees will continue to accrue leave where they are working, or stood down. You must consult with employees with respect to workplace change (changing hours, places of work, or duties).
How does this benefit my Practice?
Your employees' wages will be subsidised by the government, up to $1500 each fortnight. This will allow you to benefit from the time worked, maintain the employment relationship, and avoid needing to invest in recruiting and training afresh when your practice re-emerges. It also prevents losing valuable employees who you have already invested in.
In addition, various provisions of the Fair Work Act have been amended to make it more flexible for employers for this temporary period, if they are participating in Jobkeeper. You will be permitted to make new Jobkeeper Enabling Directions. In summary, you will be permitted to:
- stand down employees entirely or partially (including reducing some hours or days they normally work) if you can demonstrate there is no work for them to do.
- alter their duties, providing they are reasonable and within their skill-set and classification (tasks at a higher Award classification might trigger an increase in pay).
- direct them to work at another location, again providing it is reasonable to do so.
All of these changes can be effected by the employer, providing the proper process is followed and so long as the employee continues to receive the full fortnightly payment.
What other considerations should I be aware of?
The employment relationship still stands. This means that unless your employees are stood down or on leave, you need to consider and decide what work it will benefit your practice for them to do, where and when they should do it. In other words, you still need to manage them.
You should also consider the liabilities that will arise from your employees continuing to accrue leave, and the costs of superannuation. From a practical point of view, you should consider which staff should be required to work, and which to stand down (if any) with pay.
Based on available economic forecasts, you should take into account what your staff needs will be once the practice re-emerges. Will you still need all your team members?
Please note new Jobkeeper Rules and Guidelines will still emerge in the coming days and weeks. The above information is current as at the date of publication and is based on information made publicly available. It is important to stay appraised of any developments or changes. This Circular is produced for guidance purposes only and is not a substitute for legal advice. Legal advice should be sought for individual circumstances. For tailored advice for your Practice, please contact us for a confidential discussion:email@example.com