The new wage subsidy plan, JobKeeper, will provide a much needed lifeline to Australian businesses and workers, and provide eligible employers a flat rate subsidy of $1,500 per fortnight for existing, stood down and re-hired employees for the next 6 months.

But the complexity of contemporary work arrangements means the scheme has its complexities too, and employers will need to understand the fine print.

Our JobKeeper FAQ and How-To Guide helps you get through the maze and find the solution that works for you, your business, and your employees.

Are my employees eligible for a JobKeeper payment?

What's changed in the Fair Work Act?

Employee eligibility for JobKeeper payments is not set out in the new amendments to the Fair Work Act; instead it is contained in the Rules.

What do the Treasurer's Rules say?

An employee is eligible for JobKeeper payments if they:

• are employed during a JobKeeper period (between 30 March 2020 and 27 September 2020);
• met the eligibility criteria on 1 March 2020; and
• have completed a Nomination Notice.

The eligibility criteria for an employee on 1 March 2020 are that the employee was:

• employed on a full-time or part-time basis, or were a long-term casual employee;
• over 16; and
• an Australian resident or 444 visa holder.

A long-term casual employee is defined as an employee who has been employed by the business on a "regular and systematic basis" for at least 12 months prior to JobKeeper beginning.

Eligible employees must also complete a Nomination Notice indicating they wish to receive a JobKeeper payment from their employer. The Nomination Notice states that the employee:

• met the 1 March 2020 eligibility requirements;
• agrees to be nominated by the employer as an eligible employee for the JobKeeper payment; and
• has not given a Nomination Notice to any other employer.

The Nomination Notice is available on the ATO website, and must be completed by both the employer and employee.

Employees cease to be eligible for JobKeeper payments if at any point during the JobKeeper period, they:

• receive government-administered parental leave pay or dad and partner pay; or
• become totally incapacitated for work and receive workers compensation.

The Rules also include some guidance around transfers of business, which have the effect that an employee engaged by different entities within the same wholly-owned group or who performs the same work but the employing entity changes, is still considered to be an eligible employee if they meet the other eligibility requirements. This means that when transfers of business have occurred since 1 March, the transferred employees are eligible for JobKeeper.

What does the Treasury FAQ say?

The Treasury FAQ provide further detail about which employees are eligible. They provide a useful supplement to the Rules for employers trying to determine eligibility, particularly for less clear-cut categories of employees.

Based on the Treasury FAQ, employees who have been stood down or terminated since 1 March 2020 will also be eligible for JobKeeper. For employees who have been terminated, employers will need to re-hire these employees for them to become eligible for the payment. Employees who have been stood down will need to be issued a new JobKeeper stand down direction once a business confirms they are eligible.

In terms of particular categories of workers, some additional guidance is provided:

• Labour hire employees are only eligible to receive the payment from their "'direct employer".
• Self-employed workers are eligible, subject to meeting the revenue test, having an ABN on or before 12 March 2020 and either had an amount included in its assessable income for Financial Year 19 or made a supply during the same period, provided in both cases they have provided relevant information to the ATO prior to 12 March 2020. They also have to be actively engaged in the business and not receiving a JobKeeper payment from another source. The general requirements around residency ad age also apply.
• Fixed term contractors are eligible, provided they were employed at 1 March and meet the general eligibility criteria above.
• For company directors and partnerships, only one person can be nominated to receive the JobKeeper payment.

Employees on longer term leave are discussed in more detail below.

Are there any examples of how this works in the Explanatory Material?

The Rules seem to leave the question of which eligible employees should be asked to nominate open but the Explanatory Statement to the Rules specifies that employers must ensure that all eligible employees should be asked to nominate and complete a Nomination Notice. All eligible employees who agree to participate in the JobKeeper scheme are required to be covered. The Explanatory Statement to the Rules make it clear that employers cannot pick and choose which of the nominated employees will have their wage subsidised by the JobKeeper payments.

The Rules however do not make this expressly clear, but this may be clarified in further ATO documentation that employers must complete when making a claim for a JobKeeper payment.

For now though, it is important for employers who are likely eligible for the JobKeeper scheme to be aware that a large proportion of its workforce will likely be eligible and anyone who agrees to be nominated should be included in the scheme.

Clayton Utz comments

Employers determining employee eligibility should undertake the following steps:

1. Review all employees who were engaged on 1 March 2020 and assess whether they are eligible.
   1. If you have purchased another business since 1 March 2020, and employees continue to perform the same duties, you will need to assess those employees who were engaged on 1 March 2020.
   2. Exclude any employees who are receiving government parental leave pay or who are totally incapacitated for work and in receipt of workers' compensation payments;
   3. Exclude any employee who is under 16 years old, is not an Australian resident for tax purposes or who is not a citizen or 444 visa holder;
   4. For any employees who are not permanent full or part time employees, review the Treasury FAQ and determine if they are eligible (see matters to be aware of below!);
   5. For any employees you have stood down since 1 March 2020, issue them a new stand down direction under the JobKeeper scheme (more below);
   6. For any employee you have terminated since 1 March 2020, consider re-hiring them, including re-hiring them and standing them down;
2. Send a Nomination Notice to each employee you have assessed as eligible; and
3. Ensure you pay each eligible employee $1,500 per JobKeeper fortnight.

A few particular things to be aware of when assessing your employees' eligibility include:

• When businesses are determining whether a casual employee is regular and systematic, the normal test from the Fair Work Act applies. Factors such as a clear pattern or roster of hours is a strong indicator of a regular and systematic casual, though this can also be established where the employer offered work and it was accepted by the employee regularly enough to no longer be considered irregular.
• How a transfer of business will affect eligibility for casual employees appears to be based only on the 12 month regular and systematic test. If employers are assessing casual employees affected by a transfer of business, we recommend considering the transfer of business provisions in the Fair Work Act in determining whether a casual employee is eligible.
• Labour hire providers who provide labour to clients through facilitating independent contractors need to be particularly careful about responsibilities for JobKeeper payments. Confirming that an independent contractor is a "direct employee" may provide evidence of an employee/employer relationship, which might leave labour hire providers exposed to claims for employment entitlements.

Is my business eligible for a JobKeeper payment?

What's changed in the Fair Work Act?

Similarly to employee eligibility, the amendments to the Fair Work Act do not contemplate which businesses will be eligible for the JobKeeper payment. Again the Rules set by the Treasurer detail which businesses are eligible based on downturn in turnover as a result of COVID-19.

What do the Treasurer's Rules say?

The Rules outline a two-step test to determine if a business is eligible for the JobKeeper payment:

1. that the business carries on in Australia and has not declared bankruptcy or under liquidation; and
2. that the business has suffered, or is projected to suffer a specified decline in turnover based on its size.

Governments (Commonwealth, Foreign, State or Territory) and their agencies or wholly owned corporations; local council governments; or a business subject to the Major Bank Levy will not be eligible, however, most businesses who will be considering participation in the JobKeeper scheme will satisfy the first step.

In relation to the second step, the Rules specify the required turnover declines:

• businesses with an annual turnover of less than $1 billion, who estimate that their turnover will likely fall by 30% or more;
• businesses with an annual turnover of $1 billion or more, who estimate that their turnover will likely fall by 50% or more. This includes consolidated groups for income tax purposes with a turnover of $1 billion or more;
• charities registered with the Australian Charities and Not-For-Profit Commission who estimate their turnover will likely fall by 15% or more.

When assessing decline in turnover, generally, businesses will use the comparable period in FY2019 as the benchmark to assess what effect the COVID-19 pandemic has had on the same period in FY2020.

What does the Treasury FAQ say?

The FAQ is consistent with how the Rules will operate in practice. It also explains that if a business is unable to prove their turnover for a comparable period (for example, you are a newly established business or your activities in previous FY are not comparable to what you are undertaking this FY), the Tax Commissioner has the power to develop an alternative test to assess anticipated decline in turnover. An alternative test is also contemplated in the Rules.

While this alternate test is yet to be published, any business in this position should begin gather evidence as to why you think your business satisfies the decline in turnover test nonetheless.

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum does not include any examples of when an employee will be eligible. However, the Rules provide the following example:

"Patrick Enterprises assesses its eligibility for JobKeeper payments on 6 April 2020 based on a projected GST turnover for April 2020 of $6 million. It considers that the comparable period is the month of April 2019 for which it had a current GST turnover of $10 million. The April 2020 turnover falls short of the April 2019 turnover by $4 million, which is 40% of the April 2019 turnover. This exceeds the specified percentage, so the decline in turnover test is satisfied."

Clayton Utz comments

By giving the Treasurer the ability to amend the Rules as required, and not requiring parliamentary intervention, it means eligibility for the scheme can be expanded or reduced as necessary in the months ahead. This flexibility is especially important given the dynamic nature of COVID-19, and the measures the government is taking to address it.

For now however, businesses that satisfy one of the eligibility requirements outlined above should consider registering for the JobKeeper scheme on the ATO website, and begin to consider its workforce requirements.

Businesses should also be aware that if their turnover has not declined to the requisite amount at the time of the JobKeeper scheme's introduction, this does not mean that they cannot participate later on down the track. The scheme is currently set to run until late September 2020, which means that should a business' turnover decline to the point where it would be eligible for a JobKeeper payment, it may apply at that time and participate in the scheme until its conclusion.

It is also important to note that the tranche of legislation passed by Parliament also contains provisions to ensure the integrity of the scheme. In addition, sting administrative penalties and tax and criminal offence provisions will also apply.

If anyone enters into a scheme for the sole or dominant purpose of obtaining a coronavirus economic response payment, the Commissioner of Taxation will have the power to determine that the entity was never entitled to a payment, or to reduce the amount of the entitlement, and to do so retrospectively. The Commissioner will be able to recover any overpayments and will have the power to impose significant penalties and interest. This specific integrity provision is aimed at contrived and artificial arrangements that technically satisfy the eligibility requirements, but have been implemented for the sole or dominant purpose of accessing a Coronavirus economic response payment.

For example, if a business reduces the prices of its goods or services in an attempt to maintain its current customer base, and that reduction of price results in a drop of turnover to the requisite amount depending on their annual turnover, there is a risk that the business may be found to have artificially reduced its turnover for the purpose of obtaining the JobKeeper payment. In determining this, the Commissioner will look at a range of factors, including:

• the manner in which the scheme was entered into or carried out;
• the form and substance of the scheme;
• the time at which the scheme was entered into and the length of the period during which the scheme was carried out;
• the result in relation to the operation of the Coronavirus payment framework that, but for this provision, would be achieved by the scheme;
• any change in the financial position of the recipient that has resulted, will result, or may reasonably be expected to result, from the scheme;
• any change in the financial position of any entity that has, or has had, any connection (whether of a business, family or other nature) with the recipient, being a change that has resulted, will result or may reasonably be expected to result, from the scheme;
• any other consequence for the recipient, or for any connected person, of the scheme having been entered into or carried out; and
• the nature of any connection (whether of a business, family or other nature) between the recipient and any connected person.

Any businesses who are considering amending the price charged for their goods and services should seek legal advice before doing so, as it is possible that this may lead to a determination that they are not eligible to participate in the scheme.

How do employers get the JobKeeper payments?

What's changed in the Fair Work Act?

Again, the mechanism on how the JobKeeper payments will flow to businesses has been left to the Rules set by the Treasurer.

What do the Treasurer's Rules say?

The Rules outlines that in order for businesses to get JobKeeper payments, they must:

1. employ an eligible employee;
2. that eligible employee must have provided the business with a completed nomination notice;
3. satisfy the wage condition; and
4. report to the ATO that the above steps have occurred.

For more information on which is an eligible employee, see above. The nomination notice is a template published by the ATO. All employees who wish to be declared eligible must provide a completed nomination notice to their employer.

In relation to the wage condition, it requires that all businesses, in order to receive a JobKeeper payment must pay their employees either:

• the amount that they would be entitled to for the hours they worked during that particular fortnight; or
• $1,500, being the fortnightly JobKeeper payment amount.

If the employee is entitled to more than the JobKeeper payment as a result of the hours worked then the higher amount should be paid. If the employee is entitled to something less, then the JobKeeper amount of $1,500 per fortnight should be paid.

What does the Treasury FAQ say?

The Treasury FAQ makes it clear that the JobKeeper payment is made to the employer as a monthly in arrears reimbursement. In addition, while the JobKeeper scheme requires businesses to pay employees at least $1,500 per fortnight, employers are permitted to pay their employees monthly if this is the manner in which their payroll system is set up.

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum does not include any examples of when an employee will be eligible.

Clayton Utz comments

Given that the JobKeeper payment is a reimbursement, it requires eligible businesses to pay the eligible employees first and prior to the reimbursements. This may prove difficult for businesses whose cash flow is already reduced to a point where they cannot fully process their payroll each cycle, and may require access to lines of credit to cover the period until the reimbursement is made.

Given this, businesses should begin talking to credit providers and seek financial advice about their options as soon as possible, as their ability to secure such finance may dictate whether they are able to participate in the scheme or not. The Treasury FAQ has indicated that some banks have already indicated they would be willing to extend credit to those businesses in this situation to allow them to pay their employees and thus be eligible for the scheme.

The tranche of legislation also allows the ATO to credit any JobKeeper payments to a business’ tax running balance account to give it more time to make inquiries into the business' eligibility. While the default position is that the payment will not be withheld to offset against existing tax liabilities of the business, the Commissioner is to be given the power to offset against existing tax liabilities, rather than pay the business. This is more likely to happen where a business has unmanaged tax debts and has not engaged with the ATO to put a plan in place.

Practically, depending on the size of the unmanaged tax debt, this is likely to mean the JobKeeper payment made to a business would not achieve its purpose. For this reason, businesses with unmanaged tax debts should seek to resolve this issue with the ATO as soon as possible or seek legal advice.

How do employees get JobKeeper payments?

What's changed in the Fair Work Act?

Under the JobKeeper scheme the employer will continue to pay the employee either:

• the amount that they would be entitled to for the hours they worked during that particular fortnight; or
• $1,500, being the fortnightly JobKeeper payment amount.

In addition to the changes outlined above, under the JobKeeper scheme, an employer can't reduce an employee's normal base hourly rate of pay (as worked out on an hourly basis) – for example, to still have an employee working their normal hours but at a lower rate of pay per hour to try to minimise the employer's liability to pay more than the JobKeeper amount.

 

An employee's "base rate of pay" means the rate that would have been paid if the employee wasn't subject to the stand down direction or direction to perform other duties. This includes the rate for their ordinary hours of work, but not incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and any other separately identifiable amounts. This must be calculated on an hourly basis.

If an employee is not paid an hourly rate (eg. they are paid an annualised salary) and an award or enterprise agreement applies to that employee that sets the employee's base rate of pay or a method for working out the base rate of pay for the purposes of the NES, then the base rate of pay must be determined in accordance with the award or agreement.

There are civil remedy provisions in relation to employer’s obligations to satisfy the wage condition which mean failure to pay the JobKeeper payment (or greater amount for work performed) could leave the employer liable for penalties of $12,600 per contravention (or $126,000 for serious contraventions).

What do the Treasurer's Rules say?

The JobKeeper Rules include the requirement for eligible employees to provide their employer a nomination notice indicating their consent to participate in the scheme. An employee must agree to be nominated by the entity as an eligible business participant and has not agreed to be nominated by another entity.

There are also employees who are excluded from the JobKeeper scheme based on certain circumstances, which are discussed in more detail below.

Long-term casuals

An individual is a long-term casual employee of an entity at a time if:

• at that time, the individual was a casual employee of the entity; and
• the individual had been employed by the entity on a regular and systematic basis during the period of 12 months that ended at that time.

Overpayments

The Rules include a note that if an overpayment results from an individual nominating more than one entity, the individual may be jointly and severally liable to pay the overpayment and any general interest charge on the overpayment under section 11 of the Act.

What does the Treasury FAQ say?

The Treasury FAQ confirms that “eligible employees will receive, at a minimum, $1,500 per fortnight before tax. You will receive a payment from your employer.”

The first payment period under the scheme is from 30 March 2020 to 12 April 2020. For all payment periods during the JobKeeper scheme, employers will need to continue to pay employees a minimum of $1,500 per fortnight (before tax), before the end of the payment period. Where an employer pays its staff monthly, the monthly payment must be equivalent to the required fortnightly payment.

JobKeeper payments will be taxed but will not attract superannuation. Any amount paid by an employer in excess of the JobKeeper rate will attract superannuation and normal tax.

The Treasury Fact Sheet for Employees explains that eligible employees will receive the JobKeeper Payment in a number of different ways.

• If the employee is paid $1,500 or more in income per fortnight before tax, the JobKeeper payment will assist the employer to continue operating by subsiding all or part of the income.
• If the employee is paid less than $1,500 in income per fortnight before tax, the employee must be paid, at a minimum, $1,500 per fortnight before tax.
• If the employee has been stood down, the employee must be paid, at a minimum, $1,500 per fortnight before tax.

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum does not include any examples of how an employee will receive the payments.

Clayton Utz comments

Employers who are paying award or agreement free employees an annualised rate need to be careful in calculating their employees' hourly "base rate of pay". This can be a complicated figure to determine, particularly if you try to remove considerations such as loadings, penalties or allowances. Employers should seek legal advice on how to determine this amount.

Rates of Pay explainer

If an employee worked 76 hours over a fortnight, and their normal hourly rate is $30 an hour, the employee must be paid their entitlement of $2,280. $1,500 of this amount would be covered by the JobKeeper payment, and the employer would need to contribute $780.

If the employee worked 20 hours over the fortnight, at $20 per hour, the amount payable for the work they performed in that fortnight would be $800. However, the employer must pay the JobKeeper payment of $1,500.

Pursuant to their Enterprise Agreement, an employee is engaged as a Level 2 – Manager. The Enterprise Agreement states that the hourly pay rate for a Level 2 – Manager is $35 per hour. Their employer cannot reduce the employee's hourly pay rate of $35 per hour to minimise the employer's liability for top-up payments.

What about employees who have been absent on long service leave, workers' compensation or parental leave?

What's changed in the Fair Work Act?

The amendments to the Fair Work Act don't address the circumstances of employees on long-term leave such as long service leave, workers' compensation or parental leave.

What do the Treasurer's Rules say?

Workers’ compensation

An individual is excluded from being an eligible employee of the entity for a fortnight under Rule 9(4)(c) if:

• the individual is totally incapacitated for work throughout the fortnight; and
• an amount is payable to the individual under, or in accordance with, an Australian workers’ compensation law in respect of the individual’s total incapacity for work; and
• the amount is payable in respect of a period that overlaps with, or includes, the fortnight.

The Explanatory Statement to the Rules indicates that this exclusion is intended to capture a person whose entire wage is being paid under a workers’ compensation scheme. Where a person has some capacity to work in a particular fortnight, the person is not excluded from being an eligible employee for that fortnight, provided the other eligibility and entitlement criteria are satisfied.

Parental leave

An individual is excluded from being an eligible employee of the entity for a fortnight under Rule 9(4)(a) and (b) if:

• under the Paid Parental Leave Act 2010, parental leave pay is payable to the individual and the individual’s paid parental leave period overlaps with, or includes, the fortnight; or
• at any time during the fortnight, under the Paid Parental Leave Act 2010, the individual is paid dad and partner pay.

Parental leave payments are provided to eligible parents by the Australian Government so these payments will not be affected by the economic impact of Coronavirus.

If a person ceases to receive parental leave pay or dad and partner pay and the person is otherwise an eligible employee of a qualifying employer, their employer may be able to receive JobKeeper payments for that employee.

This exclusion does not extend to any employer-funded paid parental leave that is outside the scope of the Paid Parental Leave Act 2010.

What does the Treasury FAQ say?

Employees will not be eligible for the JobKeeper payment if they are on Parental Leave Pay or Dad and Partner Pay from Services Australia. However, they will otherwise be eligible if they are on parental leave from their employer.

Otherwise, if an employee is an "eligible employee" who is employed by an "eligible employer", the employer will receive the JobKeeper payment whether the employee is working, on leave or has been stood down.

In relation to employees receiving workers' compensation, if the employee is still working for their employer (such as reduced hours), they will be eligible to receive the JobKeeper payment. Employees who are fully incapacitated, unable to work and being supported by a workers compensation scheme will not be eligible for JobKeeper payments. Otherwise, employees will be eligible as they are in an employment relationship with the employer, provided their employer has an obligation to pay some component of their salary or wages.

If the employee is fully compensated under an employer's workers compensation insurance, they will be ineligible for the payments.

The Treasury FAQ does not explicitly cover long service leave.

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum does not provide any examples.

Clayton Utz comments

Employees receiving workers' compensation will be eligible for JobKeeper payments if they are still working for their employer and are not being fully compensated under workers compensation insurance.

Employees on paid parental leave will be eligible where they are not in receipt of Parental Leave Pay or Dad and Partner Pay. There is no guidance on how this will interact with employees who receive both paid parental leave from their business and Parental Leave Pay from the Government.

We recommend businesses carefully review employees on leave. If they receive any payment from the business (or would have but for the impacts of COVID-19), they are probably eligible for JobKeeper, though employers should seek guidance if they are unsure.

Will employees who have already been stood down get JobKeeper?

What's changed in the Fair Work Act?

Employees who have already been stood down under the Fair Work Act prior to 30 March 2020 (when the JobKeeper scheme commenced) and whose Employers are otherwise eligible to participate will be eligible for JobKeeper Payments.

The amendments to the Fair Work Act have introduced the power of employers to issue eligible employees with a JobKeeper enabling stand down direction (JESDD) to:

• not work on normal work days;
• work for shorter hours on a particular day or days; or
• work a reduced number of total hours (including nil hours).

A JESDD is only authorised if:

• it is made after the commencement of the JobKeeper legislation;
• the employer qualified for the JobKeeper scheme at the time they issued the JESDD as well as during the period to which it relates;
• the employee cannot be usefully employed for their normal days or hours, and it is due to COVID-19 or Government initiatives in response to COVID-19; and
• the direction is safe, including with regard to the spread of COVID-19.

A JESDD has effect even if it is inconsistent with another provision of the Fair Work Act, an enterprise agreement, award or employment contract, to the extent of that inconsistency.

A JESDD cannot be issued to employees already on leave (paid or unpaid) or employees otherwise authorised to be absent. However, it can be issued to employees who have already been stood down, depending on the circumstance.

Once a JESDD has been issued, an employee on a JESDD stand down must be paid either the JobKeeper payment or their usual pay for any hours that the employee does work – whichever is more. The employee’s hourly base pay rate can’t be reduced.

What do the Treasurer's Rules say?

The Rules do not refer to employees who have already been stood down. The eligibility requirements set out in the Rules do not exclude employees who have already been stood down.

What does the Treasury FAQ say?

For employees who were stood down without pay after 1 March 2020, employers are required to confirm that eligible employees want to be part of the scheme and arrange for them to be paid a minimum of $1,500 per fortnight before tax from 30 March 2020. There is no mention of a requirement to convert their stand down to a JESDD.

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum provides some more information about what constitutes a “change to business”, for example, less patronage and the closing of stores.

The EM also includes the following examples:

Example 1.1

Jo is employed as a waiter in Anna’s restaurant. Anna’s restaurant has reduced operations to takeaway only because of Coronavirus restrictions. Anna qualifies for the JobKeeper scheme in relation to Jo, and gives Jo a JobKeeper enabling stand down direction not to attend work for 4 weeks, compared to her usual roster of 40 hours per week.

Anna is required to ensure Jo is paid the appropriate value of JobKeeper payments ($3000) during the four week JobKeeper enabling stand down period (section 789GD, which contains the wage condition obligation).

Example 1.2

Rachel works as an administrator for a manufacturing business whose retail operations have moved online as a result of significantly reduced shopfront demand and a 30 per cent reduction in turnover, following the Coronavirus outbreak. Rachel’s employer qualifies for the JobKeeper scheme in relation to Rachel and gives her a JobKeeper enabling stand down direction under section 789GDA that reduces her ordinary hours of work from 38 to 32 hours per week. Rachel’s contractual base pay rate is $30 per hour, which cannot be reduced for her hours of work, regardless of how many hours she is directed to work (section 789GDB, which contains the hourly rate of pay guarantee).

As a result of the JobKeeper enabling stand down direction reducing her hours, Rachel’s fortnightly pay has reduced from $2280 ($30/hr multiplied by 76 hours worked in a fortnight) to $1920 ($30/hr multiplied by 64 hours worked in a fortnight).

Rachel must be paid for hours she worked, and as her reduced fortnightly pay is still higher than the value of the fortnightly JobKeeper payment ($1,500) she must be paid that higher amount (section 789GDA, which contains the minimum payment guarantee).

However, under the JobKeeper scheme, Rachel’s employer can apply the value of the JobKeeper payment towards her fortnightly pay.

Clayton Utz comments

Unlike the JESDD, the general stand down power in the Fair Work Act does not allow an employer to unilaterally reduce the amount of hours an employee works because of changes in business attributable to COVID-19. Both however do allow an employee's hours to be reduced to nil.

Employees who have already been stood down under the general stand down power in the Fair Work Act will still be eligible for the JobKeeper scheme provided they meet the requirements outlined in question 1 above. Their stand down under this power should be regularly reviewed by their employer to ensure that it remains the most appropriate form of stand down (ie. can the employee recommence work on reduced hours, or performing different duties, at which point a JESDD may be more appropriate).

Going forward, employees should consider whether a JESDD or a stand down under the general power in the Fair Work Act is more appropriate based on the businesses expected requirements during the COVID-19 pandemic, and consider seeking legal advice as to their options. A factor in this decision will be whether the employer is able to make any payment to the employee. A stand down under the general Fair Work Act power has no requirement to make payment to the employees, whereas when a JESDD is used, the employer must (at a minimum) pay the JobKeeper payment in order to be eligible for the reimbursement.

If you are an eligible JobKeeper recipient business, you should consider:

• contacting employees who have been stood down since 1 March 2020 and asking them to complete a nomination notice; and
• consider issuing a partial stand down as a JESDD if you have some work, but not enough work, for your employees.

Difference between a JESDD and stand down under s 524 of the Fair Work Act

There are a few key differences between a JESDD and being stood down under the existing stand down provisions in the Fair Work Act:

1. Employees must be paid if they are stood down under a JESDD, but not if stood down under the Fair Work Act stand down provisions.
2. A non-JESDD stand down must comply with other relevant employment instruments (such as a contract or enterprise agreement); a JESDD does not.

The test for whether a not an employee can be stood down is different. The JESDD specifically refers to changes in business attributable to the COVID-19 pandemic or government initiatives to deal with the pandemic. This is broader than a non-JESDD stand down, which can only be issued if there is "a stoppage of work for any cause for which the employer cannot reasonably be held responsible".

What extra flexibility does JobKeeper give me to direct my employees to take leave?

What's changed in the Fair Work Act?

The Fair Work Act has been amended to add a new section allowing employers and employees to agree to the employee accessing their accrued leave. Where an employer qualifies for the JobKeeper payments for an employee, new rules allow employers to request employees to agree to take paid annual leave. Employees must consider this request, and cannot unreasonably refuse an employer request to take their leave. In addition, employers cannot request employees to take a period of annual leave under this new provision if doing so would see their annual leave balance fall below two weeks.

While this falls short of an ability to direct employees to take annual leave, practically it gives employers greater powers and flexibility when it comes to managing their workforces than may have been available under existing industrial instruments.

The new Rules also let an employer agree with employees to take a period of accrued annual leave at either full or half pay. Where employees take double the amount of leave at half pay this needs to be agreed to in writing. Employees who take annual leave at half pay will still accrue leave at their normal rate. However, no matter what is put in place employers cannot request employees to agree to something which means that they would have less than two weeks accrued leave left as a result of the request.

These new rules apply and can be used despite any clause employers might otherwise have in an employment contract, Enterprise Agreement, Award or the Fair Work Act (Designated Instruments). However, terms and conditions in Designated Instruments otherwise still apply in situations beyond the scope of the JobKeeper arrangements.

What do the Treasurer's Rules say?

The Rules do not deal with this particular part of the new changes. 

What does the Treasury FAQ say?

The Treasury FAQ does not go into any detail about how these changes will work.

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum does not contain any examples about how these new provisions will work in practice.

Clayton Utz comments

The new rules certainly give eligible employers and employees greater flexibility around taking annual leave in the current circumstances that is not constrained by rules that are otherwise set out in Designated Instruments.

However, the requirement that any arrangement must not result in employees having less than two weeks' annual leave may throw up some practical difficulties, in that many employees are unlikely to have accrued in excess of two weeks' annual leave that they could then agree to take. This is particularly the case given we are only still early in the calendar year, and many people take all of their accrued annual leave over the Christmas break. It is also unclear when an employee might reasonably refuse a request to agree to take annual leave. Further, to the extent regular and systematic casual employees are covered under the new arrangements, given they do not accrue leave, this section will not be able to be used for them.

Can I direct my employees to change their working arrangements?

What's changed in the Fair Work Act?

The JobKeeper legislation has introduced "JobKeeper enabling directions" (or JED), which include an ability to issue certain directions to employees on duties of work, and location of work.

A new section has also been added that allows employers and employees to agree to the employee performing their duties on different days or at different times to their ordinary days and times.

Practically this means employers can direct employees to perform different work duties, or to perform their duties at a different location, provided that among other things, the thing the employee is directed to do is:

• within the employee's skill and competency;
• within the employer's scope of business;
• safe, and the employee has the appropriate licences; and
• does not require the employee(s) to travel unreasonable distances (in the context of COVID-19).

In these situations, and provided the conditions for the directions are met, employers do not need their workers' to agree to the changes. However, employers will still need to give employees three days' written notice of their intention to issue a direction to perform different duties or perform duties elsewhere (or a shorter period if "genuinely agreed to" by the employee). Directions need to be in writing.

However, the situation is a bit different with requests to perform duties on different days.

In this situation, an employer cannot direct employees to work on different days or different times, and instead needs to request that they do so and reach an agreement with them to the changes. However, similarly to requests to make an agreement take annual leave, employees cannot unreasonably refuse to make an agreement to change their work days. The arrangement also cannot have the effect of reducing the employee's number of hours of work, compared with the employee's ordinary hours of work.

What do the Treasurer's Rules say?

The Rules do not deal with this particular part of the new changes.

What does the Treasury FAQ say?

The Treasury FAQ does not go into any detail about how these changes will work.

Are there any examples of how this works in the Explanatory Material?

There are some examples around complying with directions to do different work, or to work in a different location. For instance, the following example is given about directing employees to perform different work:

"Ameisa operates a warehouse in NSW. The Storage Services and Wholesale Award 2010 applies to the employees of the warehouse, including Meera. As a storeworker grade 4, Meera generally acts in a leading hand capacity, coordinating the work of other storeworkers, performs liaison duties including with customers, and controlling inventory.

Ameisa’s business is affected by the Coronavirus pandemic and qualifies for the JobKeeper scheme. Given the downturn in Ameisa’s business operations, Meera is not required to perform her usual duties in respect of customer liaison. In order to keep Meera connected to employment during the pandemic, rather than reducing Meera’s hours, Ameisa gives Meera a JobKeeper enabling direction that changes Meera’s usual duties and enables her to be retain her regularly rostered hours, albeit in other duties.

Ameisa wants Meera to drive a forklift in the warehouse. Because the duties can be performed with appropriate social distancing and in a way that is safe with respect to the nature and spread of Coronavirus, reasonably within the scope of Ameisa’s business operations, and Meera holds a current high risk work licence to operate a forklift (class LO), Ameisa is able to give a JobKeeper enabling direction authorised by section 789GE to drive the forklift.

While Meera’s duties have been modified by the JobKeeper enabling direction, the other terms and conditions relating to her employment, such as the days and hours she works, are unchanged."

Clayton Utz comments

The above arrangement appears to reflect a distinct approach taken to divide the new arrangements into two camps, being those things that an employer can require and direct an employee to do, and things that it can only request that they agree to do.

This could indicate that even in these unprecedented times, there are limits in terms of what powers and arrangements the legislature is willing to put in place when it comes to what employers can do with their workforce, and to give employees some power to determine their work arrangements vis-à-vis their employers.

However, this arrangement is in line with the messages the government has been sending about wanting employers and employees to co-operate wherever possible, and to craft bespoke arrangements that will be best suited to them, their business, and the prevailing conditions in the market.

Do I have to consult with my employees about employment decisions under JobKeeper?

What's changed in the Fair Work Act?

The JobKeeper Scheme has introduced consultation obligations in relation to JobKeeper Enabling Directions (JEDs), which are:

• JobKeeper enabling stand down directions;
• directions changing an employee's duties of work; and
• directions changing an employee's location of work.

Before making a JED, employers are required to:

• give written notice of the intent to give the direction at least 3 days before the direction is issued (or shorter if the employee 'genuinely agreed'); and
• have consulted the employee or their representative about the direction before they issued it.

The employer doesn't need to consult if they have previously complied with the consultation obligations in relation to a JED and the employee (or their representative) expressed views which were considered by the employer (section 789GM(3)).

The employer also doesn't need to consult in relation to agreements to take annual leave or to vary an employee's days of work, presumably because both are contingent on the employee's consent and therefore consultation is assumed.

What do the Treasurer's Rules say?

The Rules do not refer the employer’s consultation obligations. The Explanatory Statement to the Rules clarifies that an employer does not need to consult with or obtain the consent of its eligible employees if it no longer wishes to participate in the JobKeeper scheme.

What does the Treasury FAQ say?

The Treasury FAQ does not say anything about consultation obligations.

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum does not provide any examples of how consultation with employees would operate in practice.

Clayton Utz comments

We recommend that you consider your consultation requirements in the relevant enterprise agreement or modern award as illustrative of what is required to satisfy your consultation obligations.

The exception if prior consultation has occurred is unclear in some respects:

1. How does the employer show they "considered the views" of the employee? This may require, for example, the employer to maintain records of emails, file notes or meetings which evidence consideration of the employees’ views.
2. What if the new proposal is quite different to the previous proposal for which prior consultation occurred? The language of the JobKeeper legislation and appears to indicate that it doesn't matter if the proposals are different, provided that:
   1. consultation took place in accordance with the requirements for the first proposal, and
   2. the views expressed by the employee during the first consultation were considered by the employer in deciding whether to give the direction in respect of the new proposal (ie. there appears to be a two-tiered consultation obligation).

Do I have to keep records of employment decisions under JobKeeper?

What's changed in the Fair Work Act?

If an employer issues a JobKeeper enabled direction, it must keep a written record of any consultation about it, and also make a written record of the direction.

What do the Treasurer's Rules say?

The Rules do not refer to any requirements to keep records around employment decisions under the JobKeeper scheme.

What does the Treasury FAQ say?

The Treasury FAQ does not cover recording employment decisions.

Are there any examples of how this works in the Explanatory Material?

There are no examples of how JobKeeper enabling decisions should be recorded in the Explanatory Memorandum.

Clayton Utz comments

While the legislation does not explicitly provide for what would be sufficient evidence to demonstrate that an employer has "considered" the views of the employee or the employee's representative for the purpose of the consultation requirements, this evidence could be in the form of emails, file notes or meetings which evidence consideration of the employee's views.

Given this, we recommend that employers record and retain direction-related correspondence, file notes and meetings.

What happens if my employees aren't happy with a JobKeeper direction I issue?

What's changed in the Fair Work Act?

A new dispute resolution mechanism has been inserted into the Fair Work Act.

The new division gives the Fair Work Commission the power to deal with any dispute about the operation of the JobKeeper Rules. Applications to deal with a dispute can be made by an employee, an employer, or employer/employee organisation.

After having received an application to resolve a dispute, the Fair Work Commission can make any order they consider desirable to give effect to a JED. It can also set aside a JED, or substitute with a different JED. Further, nothing prevents the Commission from making any other order it considers appropriate. Contravening an order of the Fair Work Commission under this part can also give rise to civil penalty provisions.

However, these powers do appear to have a use by date, as an order made by the Fair Work Commission in relation to a JobKeeper rule will cease to have effect at the start of 28 September 2020, and the Fair Work Commission cannot make an order on or after this date.

What do the Treasurer's Rules say?

The rules do not deal with this particular part of the new changes.

What does the Treasury FAQ say?

Although the Treasury FAQ does not expressly address this situation or the powers of the Fair Work Commission, it does confirm that "employers must continue to comply with their obligations in the Fair Work Act" and that "the JobKeeper Payment does not remove any workplace protections for employees."

It also makes clear that other entities will be involved in other aspects of the JobKeeper arrangements, including that "enforcement in relation to Fair Work entitlements will continue to sit with the Fair Work Ombudsman", and that "enforcement and compliance to ensure the JobKeeper Payment is passed on to employees will be done by the ATO."

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum does not contain any examples about how these new provisions will work in practice.

Clayton Utz comments

Under the new arrangements, the Fair Work Commission remains the primary arbiter of disputes under the Fair Work Act. The new arrangements do not indicate a huge breakaway from the current approach, or expansion of the Fair Work Commission's current powers.

However, if disputes do occur, they are likely to give rise to some very interesting case law. Further, the fact that these new powers and arrangements are time limited means that disputes only have a small window during which they can be brought and orders made, before the Fair Work Commission's powers to make orders regarding disputes about JED's cease.

What happens if I don't comply with my obligations under the JobKeeper legislation?

What's changed in the Fair Work Act?

A number of the provisions in the JobKeeper employment measures inserted in to the Fair Work Act are civil penalty provisions. This means that employers will be exposed to penalties for breaching the new provisions. In addition a new offence has been created for employers who are knowingly dishonest in the administration of the JobKeeper employment measures.

The civil remedy provisions in the JobKeeper legislation relate to the requirement on the employer to:

• satisfy the JobKeeper wage rules;
• pay the greater of the JobKeeper payment or the amount payable to the employee for the work they have performed;
• ensure that employees who have been issued a JobKeeper enabling stand down direction continue to receive their pre-JobKeeper base hourly rate of pay;
• ensure that employees who have been issued a JobKeeper enabling direction which modifies their duties of work continues to receive their pre-JobKeeper base hourly rate of pay even if their duties are different;
• consider and not unreasonably refuse requests provided by employees on a JobKeeper enabling stand down direction for secondary employment, training or professional development;
• not contravene a Fair Work Commission order dealing with a dispute about the JobKeeper employment measures; and
• not misuse the new provisions by giving JobKeeper enabling directions where it would not be authorised by Part 6-4C and the employer knows this is the case.

Employees, employee organisations and Fair Work Inspectors will have standing to bring a claim about suspected contraventions of the JobKeeper provisions in the Federal Court, the Federal Circuit Court or eligible State or Territory courts.

If an employer is found to have contravened any of above JobKeeper employment measures, it could be liable for penalties of $12,600, or $126,000 for a serious contravention.

The legislation also sets out a new civil remedy offence: purporting to give a JobKeeper enabled direction when it was not authorised and the employer knew it was unauthorised. This is significant because employers are responsible for administering the scheme, and it is the only clear safeguard to ensure that employers are not dishonest in relation to the scheme (to the extent that any employer dishonesty is not captured by any other the other measures mentioned above).

What do the Treasurer's Rules say?

There are no additional offence provisions in the Rules.

What does the Treasury FAQ say?

The Treasury FAQ sets out the measures that will be taken under the JobKeeper measures to ensure compliance. In particular it will be important for employers to note that:

• the ATO will work with Services Australia to cross-check available data to ensure that any ineligible payments are identified;
• the ATO will be providing specific guidance to employers in particular areas to assist them to assess their eligibility under the JobKeeper measures; and
• there will be serious consequences for those who try to illegally obtain benefits under the JobKeeper measures, including by entering into artificial schemes.

Are there any examples of how this works in the Explanatory Material?

The Explanatory Memorandum does not contain any examples for what will happen if there is a non-compliance with the JobKeeper scheme.

Clayton Utz comments

This new provision raises more questions than it answers. In particular, it is unclear what the test would be for whether an employer 'knew' their action was not authorised under the new scheme. Notwithstanding this uncertainty, we recommend employers only take JobKeeper employment measures when they are very certain that they are complying with the technical requirements. At the least, employers should carefully confirm they are eligible employers at the time they issue a direction and at the time the direction is in effect.

JobKeeper 2.0

The JobKeeper wage subsidy introduced in April 2020 will end on 27 September 2020 and will be replaced by "JobKeeper 2.0" on 28 September 2020. JobKeeper 2.0 will be available until 28 March 2021 with additional eligibility criteria and a two-tier payment system with lower rates of pay for eligible recipients.

The extension of the JobKeeper system acknowledges the ongoing impact felt by businesses despite many states undergoing a gradual return to normal operations. It also signals the likelihood of stand downs continuing well into 2021.

JobKeeper 2.0 payment rates

From 29 September 2020 to 3 January 2021, the two-tier payment rate will consist of:

• $1,200 payment per fortnight for all eligible employees whose normal working hours are 20 hours or more per week; and
• $750 payment per fortnight for employees whose normal working hours are less than 20 hours per week.

From 4 January 2021 until 28 March 2021, the payment rates will be further decreased to:

• $1,000 payment per fortnight for employees whose normal working hours are 20 hours or more per week; and
• $650 payment per fortnight for employees whose normal working hours are less than 20 hours per week.

"Normal working hours" will be determined by looking at how many hours an employee worked on average in the four weeks before 1 March 2020. The Commissioner of Taxation will have discretion to set out alternative tests where an employee's hours were not usual during the four weeks before 1 March 2020 (e.g. where the employee was on leave, volunteering during the bushfires, or not employed for all or part of February 2020).

Business eligibility

Businesses and not-for-profits will still need to prove that they have experienced reductions in turnover of:

• 50% for businesses that have an aggregated annual turnover of over $1 billion;
• 30% for businesses that have an aggregated annual turnover of $1 billion or less; or
• 15% for Australian Charities and not-for-profits Commission-registered charities (excluding schools and universities).

Employers seeking to claim JobKeeper payments from 28 September 2020 will be required to reassess their eligibility for JobKeeper 2.0 with reference to their actual turnover in the June 2020 and September 2020 quarters (rather than projected GST turnover). Businesses will need to demonstrate they meet the decline in turnover test in both of those quarters to be eligible for JobKeeper from 28 September to 3 January 2021.

To be eligible for JobKeeper from 4 January to 28 March 2021, businesses will need to demonstrate they have met the turnover test in each of the three previous quarters to remain eligible for the March 2021 quarter.

Generally when determining a fall in actual GST turnover, the turnover will be compared to relative comparable periods (e.g. the corresponding quarters in 2019). The Commissioner of Taxation will have discretion to set out alternative tests for eligibility in circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019.

Self-employed people remain eligible where they meet the relevant turnover test and are not a permanent employee of another employer.

Other eligibility criteria for businesses and not-for-profits, and their employees, remain unchanged.  

What does this mean for JobKeeper enabled stand down?

There have been no proposed changes to the provisions permitting employers to utilise JobKeeper enabled stand down directions. The extension of the JobKeeper scheme clearly evinces an intention that ongoing stand down of employees up to at least 28 March 2021 is a real possibility. However, it is important to understand that any form of stand down cannot be a "set and forget".

If your business needs to continue reductions in hours for some or all staff, this is something that needs to be tested on a regular basis and assessed based on the prevailing circumstances of the business. It is likely we will continue to see an ever increasing number of challenges to the amount of JobKeeper payments and use of stand down in the Fair Work Commission.

This need not deter employers if the conditions necessitate the use of stand down but clear and continued communication with staff about the ongoing impact of COVID-19 on the business is a way in which to mitigate this risk.

Tax

Which government agency will administer the JobKeeper Payment program?

The Commissioner of Taxation will have the administration of the program, using the administration mechanics that already exist in the Commonwealth tax legislation.

When will an employer be eligible for the JobKeeper Payment subsidy?

The Coronavirus Economic Benefits Response Package (Payments and Benefits) Rules 2020, dated 9 April 2020, set out the eligibility criteria for the JobKeeper payment.

An employer will be entitled to receive a JobKeeper payment for a fortnight if:

• the fortnight is the fortnight beginning on 30 March 2020 and each subsequent fortnight ending 27 September 2020;
• the employer qualifies for the scheme on or before the end of the fortnight;
• the payment is for an eligible employee;
• the employer has satisfied the wage condition;
• the employer has notified the Commissioner of its election to participate; and
• the employer satisfies the record-keeping obligations and provides the required information to the Commissioner.

Which employers qualify for the JobKeeper scheme?

An employer will qualify for the JobKeeper scheme for a fortnight if it meets the following requirements:

• on 1 March 2020, the employer carried on a business in Australia, or was a non-profit body pursuing its objectives principally in Australia; and
• before the end of the fortnight, it met the decline in turnover test.

The following classes of employers are not eligible for the JobKeeper scheme:

• on 1 March 2020, it (or any member of its consolidated group) had been subject to the Major Bank Levy for any prior quarter;
• most government bodies; and
• any entities in liquidation or in bankruptcy.

Employers need to meet the eligibility requirements for each fortnight and need to be registered with the Commissioner before the end of the fortnight in order to qualify for the JobKeeper payment for that fortnight. There is an exception for April 2020, so that employers register by the end of April, they can receive the JobKeeper payment commencing 30 March 2020 if they meet the other criteria for each relevant fortnight.

Employers must notify their employees that they have elected to participate in the JobKeeper payment scheme and that all eligible employees will be covered by the scheme.

Self-employed individuals (businesses without employees) will be eligible for the subsidy where they meet the relevant turnover test outlined above, subject to some additional criteria.

Foreign resident business entities carrying on business in Australia may also be eligible employers.

What is the decline in turnover test?

Employers must satisfy the decline in turnover test to be eligible for the JobKeeper payment scheme. Once an entity has satisfied the decline in turnover test, it does not need to re-satisfy the decline in turnover test in future months. Entities who satisfy the decline in turnover test part way through the six-month period of the JobKeeper scheme can notify and participate in the scheme from that point onwards.

The Rules set out two ways to satisfy the decline in turnover test:

• the basic decline in turnover test; and
• the alternative decline in turnover test.

An entity satisfies the basic decline in turnover test as follows:

• if the entity’s projected GST turnover for the turnover test period falls short of the entity’s current GST turnover for a relevant comparison period; and
• the amount by which the projected GST turnover falls short equals or exceeds the specified percentage for the entity.

The turnover test period must be:

• a calendar month that ends after 30 March 2020 and before 1 October 2020; or
• a quarter that starts on 1 April 2020 or 1 July 2020.

The relevant comparison period is the period in 2019 that corresponds to the turnover test period.

The specified percentages are as follows:

• 15%: ACNC registered charities (except schools and universities);
• 30%: entities who do not meet the $1 billion aggregated turnover test;
• 50%: entities whose aggregated turnover for the income year in which the test time occurs is likely to exceed $1 billion or the aggregated turnover for the previous income year exceeds $1 billion.

What is aggregated turnover?

Aggregated turnover has the meaning given in section 328-115 of the Income Tax Assessment Act 1997.

This will include the annual turnover of the entity, but also the annual turnover of all entities that are connected entities or affiliated entities. Caution is required because the definitions are quite broad. In particular, the definition of affiliates is quite broad and will capture entities who would not formally be viewed as part of a corporate group. Importantly, entities who act, or could reasonably be expected to act, in accordance with your directions or wishes, or in concert with you, in relation to the affairs of the business will be affiliates and their turnover will need to be counted.

Aggregated turnover captures the total ordinary income that the entity derives in the income year in the ordinary course of carrying on a business. Ordinary income is to be distinguished from statutory income and the meaning also seeks to distinguish income which is not derived in the ordinary course of carrying on a business, so that extraordinary items of income or receipts may or may not be excluded. Further, caution must be exercised to ensure that legal and not accounting characterisations of income and other receipts is applied for the purposes of calculating aggregated turnover. These are highly technical questions and specialist legal advice should be sought on the characterisation of income and other amounts received for purpose of including or excluding those amounts in the aggregated turnover calculation.

Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) will be eligible for the subsidy if they estimate their turnover has or will likely fall by 15% or more.

How will turnover be calculated?

GST turnover calculations will be used as reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies.

For groups:

• for each entity within a group to be eligible, it will need to meet the decline in turnover test; and
• the applicable percentage (30% or 50%) will be determined by the meaning of aggregated turnover.

A small entity will have to meet the 50% decline in turnover test if the aggregated turnover of that entity and its connected and affiliate entities is or is likely to exceed $1 billion in the income year in which the test time occurs, or was or exceeded $1 billion in the previous income year. Within a group, only those entities that meet the applicable decline in turnover will be eligible for the JobKeeper payment.

Registered charities, both those who are deductible gift recipients and those who are not, must also include in their turnover calculations, most types of gifts, including gifts received and those likely to be received.

The Rules provide that the Commissioner may, by legislative instrument, determine that an alternative decline in turnover test applies to a particular class of entities. Businesses or sectors who consider they are or are likely to be effected by COVID-19, but do not meet the decline in turnover test, should seek specialist legal advice about how to approach the Commissioner to seek a discussion about the appropriateness of a legislative instrument.

What is the process to apply?

To apply for the JobKeeper Payment, employers must:

1. Assess whether they have or will likely experience the required turnover decline
2. Register an interest to apply on the ATO website which is currently open;
3. Provide information to the ATO on all eligible employees engaged as at 1 March 2020 and those currently employed by the business or not-for-profit (including those stood down or re-hired).
4. Ensure each eligible employee receives at least $1,500 per fortnight (before tax). This means that for employees who were receiving less than $1,500 per fortnight before tax, the employer will need to pay them this amount at a minimum.
5. Notify all eligible employees that they are receiving the JobKeeper Payment.
6. Continue to update the ATO (on a monthly basis) on the eligible employees engaged by the business.

An employer is not eligible for the JobKeeper Payment in respect of an employee if another employer is claiming it.

When does the JobKeeper Payment scheme start and end?

The JobKeeper Payment scheme will be available from 30 March 2020 and will be available for the period until 27 September 2020. It is payable to eligible employers for a maximum of 13 fortnights in respect of each eligible employee on their books on 1 March 2020 who is retained by the employer.

Is this a reimbursement plan where employers first pay employees, and then get the subsidy at the end of the month?

Yes, employers will need to satisfy the payment requirements for their eligible employees in respect of each 14 day period covered by the scheme, with the first period starting on Monday 30 March 2020 and ending on Sunday 12 April 2020 and the first payments by the ATO to be received by employers in the first week of May 2020.

The payments will be made by the ATO monthly in arrears.

How will the payment be made?

The ATO will generally make the payment directly to the business' bank account.

However, the Commissioner can instead credit an amount to the business’ tax running balance account, to allow the ATO to have more time to make inquiries as to the eligibility of the business. While the default position is that the payment will not be withheld to offset against existing tax liabilities of the business, the Commissioner is to be given the power to offset against existing tax liabilities, rather than pay the business. This is more likely to happen where a business has unmanaged tax debts and has not engaged with the ATO to put a plan in place.

If your business has an unmanaged tax debt with the ATO, you should be talking to the ATO immediately.

What if my business has a tax debt?

You should seek legal assistance to engage with the ATO about your tax debt. The ATO is more likely to release the payment where the business has tried to engage with the ATO to put a debt management plan in place. 

Is the JobKeeper subsidy subject to superannuation guarantee obligations?

The legislation and Rules do not yet provide for the superannuation guarantee obligations in relation to the JobKeeper subsidy. However, the Government has said that it will seek to pass legislation to put the following policy into effect.

In relation to superannuation obligations, where an eligible employee already receives more than $1,500 per fortnight (before tax) and the eligible employer receives $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of the eligible employee's salary, the eligible employer will continue to pay superannuation guarantee on the eligible employee's income.

Where an eligible employee's wage is below $1,500 per fortnight and later topped up to $1,500 per fortnight by the JobKeeper Payment, the eligible employer can choose whether to pay superannuation on the additional top up amount, but it will not be mandatory. For example, where an eligible employee is receiving $1,000 per fortnight (before tax) and later receives a further $500 per fortnight (before tax) under the JobKeeper Payment scheme (totalling $1,500 per fortnight before tax), the eligible employer must pay superannuation guarantee on $1,000 but can choose whether to pay the superannuation guarantee on the additional $500.

Consequently, in relation to eligible employees that have been stood down, eligible employers will have no obligation to pay superannuation on the JobKeeper Payment passed on to them.

Do employers have withholding obligations from JobKeeper payments?

Yes.

The eligible employer must provide the eligible employee at least $1,500 per fortnight (before tax) to apply for the JobKeeper Payment. The eligible employee will be taxed (withheld by the eligible employer) on this payment.

Eligible employers will have PAYG withholding obligations on this payment, regardless of whether the eligible employee has been stood-down or not.

Is the JobKeeper payment subject to payroll tax?

All States and Territories have now introduced payroll tax exemptions in respect of wages subsidised by JobKeeper payments. The application of such payroll tax exemptions will vary depending on the jurisdiction and particular circumstances of the employer and employee. 

What are the record-keeping obligations of employers?

Entities must create and retain records substantiating information provided to the ATO in relation to eligibility and payments unless the Commissioner provides otherwise. There are record-keeping requirements both prior to payment (referred to as "pre-payment record-keeping requirements") and post-payment (referred to as "post-payment record-keeping obligation").

Compliance with these record-keeping obligation is an eligibility criteria and failure to satisfy them will disentitle the entity from receiving payments, and the ATO will be able to claw back payments already made as the entity will be taken to have never been entitled to the payment. The ATO will have the power to issue guidance about the form and contents of records that must be kept.

What if an employer enters into a scheme to obtain the JobKeeper Payment?

The legislation contains specific integrity provisions and the existing administrative penalties and tax and criminal offence provisions will also apply.

If anyone enters into a scheme for the sole or dominant purpose of obtaining a JobKeeper payment, the Commissioner will have the power to determine that the entity was never entitled to a payment, or to reduce the amount of the entitlement, and to do so retrospectively. The Commissioner will also be able to recover any overpayments and will likely have the power to impose significant penalties and interest. This specific integrity provision is aimed as contrived and artificial arrangements that technically satisfy the eligibility requirements, but have been implemented for the sole or dominant purpose of accessing a JobKeeper payment.

The Commissioner may make the determination having regard to:

• the manner in which the scheme was entered into or carried out;
• the form and substance of the scheme;
• the time at which the scheme was entered into and the length of the period during which the scheme was carried out;
• the result in relation to the operation of the coronavirus payment framework that, but for this provision, would be achieved by the scheme;
• any change in the financial position of the recipient that has resulted, will result, or may reasonably be expected to result, from the scheme;
• any change in the financial position of any entity that has, or has had, any connection (whether of a business, family or other nature) with the recipient, being a change that has resulted, will result or may reasonably be expected to result, from the scheme;
• any other consequence for the recipient, or for any connected person, of the scheme having been entered into or carried out; and
• the nature of any connection (whether of a business, family or other nature) between the recipient and any connected person.

The ATO will be supported by near real-time data through STP reporting to help identify wrongdoing.

Examples of conduct that may attract the operation of the integrity provisions include the following steps undertaken for the sole or dominant purpose of accessing a JobKeeper payment:

• reducing prices;
• postponing invoices;
• invoicing out of a different entity; and
• receiving “payment” for goods or services in kind and not reporting the value of the in kind payment.

Some of these steps may also rise above the integrity provisions and constitute criminal behaviour.

Can the employer be liable for other penalties?

There are a number of tax offences and criminal offences that will apply to conduct in relation to the JobKeeper Payment, including penalties for false and misleading statements under the Taxation Administration Act 1953 and Criminal Code 1995 and other criminal fraud offences.

Can an employer seek review a decision by the Commissioner?

Decisions by the Commissioner in relation to JobKeeper Payment is subject to review under the tax framework in Part IVC of the Taxation Administration Act 1953, involving a form of statutory internal review by the Commissioner, and then review by the AAT or Federal Court.

JobKeeper litigation

On 8 May 2020, the FWC published a President's statement outlining that the FWC has implemented the following timeliness benchmarks for the JobKeeper dispute jurisdiction:

• Lodgement of application to first conference/hearing – within 48 hours from lodgement;
• Decision issued – issued ex tempore wherever possible, reserved decisions issued within 48 hours of hearing;
• Lodgement to finalisation (all cases) – 90% within 4 days, 100% within 14 days.

The Western Australian Federal Court has ordered an employer to reinstate an injured worker, pending the outcome of his disability discrimination claim, so he can maintain a connection to employment and access JobKeeper payments during the pandemic. The employer has been restrained from dismissing the employee until the disability discrimination claim is concluded. The employer argued that such an order left the issue of whether the worker was fit to return to work unresolved and exposed the employer and other employees to safety risks. However, the court found that the employer did not consider any reasonable adjustments to overcome the purported incapacity of the worker, like allowing him to avoid taxing areas of work, or work part time.

A retailer that has tried to make nomination for JobKeeper payment conditional on a casual employee tripling their normal hours has been challenged by the shop union. This attempt by the retailer is inconsistent with the ATO's position that the JobKeeper scheme is for all eligible employees and the "one-in, all-in" rule. Furthermore, given the expansion of the definition of "workplace right" to include eligibility for JobKeeper payments, this type of action by employers is likely to be an adverse action and subject to a general protections claim by employees.

On 29 April 2020, the FWC published a JobKeeper disputes benchbook recording that 120 applications had been filed to deal with disputes under the JobKeeper scheme. These include disputes over JobKeeper enabling directions and agreements, such as stand down directions, reductions to working hours or changes to duties or locations. The FWC can enforce, set-aside or replace JobKeeper enabling directions, or make any other order in respect of the direction that it considers appropriate. Disputes regarding eligibility to participate in the JobKeeper scheme are dealt with by the ATO.

On 22 May 2020, the FWC found the quantification of the amount Qantas paid in JobKeeper payments to a monthly paid manager who worked for part of that period was unreasonable. The employee – one of thousands of Qantas workers stood down on April 6 – argued the airline should not have factored in his monthly pay up to this point and deducted it from his first JobKeeper instalment. While it was open to the airline, prima facie, to allocate the value of the employee's earnings across the monthly pay cycle and simply use a portion of the JobKeeper payment as a top-up to the $1500 fortnightly sum, it was considered that Qantas did not make the allocation "in a reasonable manner", as required by JobKeeper Payment Rule 10(3). This was because Qantas secured the full JobKeeper payment for the period plus the "value" of the manager's labour for some of the days. As well as recommending Qantas reverse its allocation decision, the FWC recommended Qantas take into account any accrued benefit from the manager's labour and its receipt of the full JobKeeper subsidy when making future assessments.

Employers should be careful when considering terminating the employment of casual employees who have changed their availability for shifts after receiving JobKeeper payments. Casual employees cannot be compelled to accept shifts and they do have access to unfair dismissal if they are eligible for JobKeeper. However an employer can issue a reasonable and lawful direction to complete a changed number of hours. What would be considered reasonable was dealt with in the case below.

On 17 June 2020, the FWC found it reasonable for an employer (Prosegur Australia Pty Limited) to issue JobKeeper-enabling directions for some casuals to perform more than their pre-coronavirus hours. Prosegur directed armoured vehicle operators to work a minimum of 25 hours a week. The Commissioner was satisfied that since Prosegur issued the direction, no casual employees were working more than 30 hours a week, while full-time and part-time workers did more than 30 hours. Furthermore, hours of full-time workers remained close to or exceeded the 38-hour award minimum. In light of these circumstances, the Commissioner found that the JobKeeper-enabling direction was not unreasonable.