On 9 April 2020, the Fair Work Act 2009 (Cth) was amended as part of the Australian Government’s JobKeeper scheme for eligible businesses.
The aim of the JobKeeper payment is to maintain connection between Australian employers and their employees during the COVID-19 pandemic. Eligible employers will receive AUD$1,500 per fortnight wage subsidy per employee from the Australian Government.
The JobKeeper payment is a complex scheme and will be operative until 28 September 2020.
To qualify, an Australian business must be:
- a business with a turnover of less than AUD$1 billion that suffers a 30% reduction in turnover;
- a business with a turnover of more than AUD$1 billion that suffers a 50% reduction in turnover; or
- a registered charity, other than schools or certain higher education providers, that suffers a 15% reduction in turnover; and
- must not be an expressly ineligible business (which includes companies that have appointed a liquidator).
There are also specific rules about the method for assessing reduction in turnover.
An employer must elect to participate in the JobKeeper scheme by particular deadlines. The notification must be submitted by 26 April 2020 in order to be entitled to receive payment for the fortnights commencing 30 March 2020 or 13 April 2020.
To receive the JobKeeper payment, an employee must:
- be 16 years of age or over (as at 1 March 2020);
be an Australian citizen or hold a valid permanent visa (conditions apply) (as at 1 March 2020);
- have been employed by the eligible Australian employer on 1 March 2020 as either a full time or part time employee or long-term casual employee (i.e. with a minimum of 12 months’ service, and regular and systematic employment);
- be employed during the relevant JobKeeper payment fortnight; and
- have provided the employer with the approved nomination notice form (although that “approved form” has yet to be prescribed).
What is a JobKeeper enabling stand down direction?
The new provisions allow for JobKeeper enabling directions. This is a direction from the eligible employer to an employee:
- not work on a day or days on which the employee would usually work; or
- work for a lesser period than the period which the employee would ordinarily work on a particular day or days; or
- work a reduced number of hours (compared with the employee’s ordinary hours of work).
To be entitled to give a JobKeeper enabling stand down direction:
- the employer must qualify for the JobKeeper scheme when the direction was given;
- the employee must not be able to be usefully employed for their normal days or hours because of business changes or government initiatives arising from COVID-19;
- the implementation of the stand down must be safe; and
- the employer must be entitled to a JobKeeper payment (or payments) for the employee during the period that is or includes the stand down period.
Additional conditions apply depending on the nature of the JobKeeper enabling direction that has been made. Employers are encouraged to obtain advice before issuing such a direction, to ensure the direction will be lawful and have effect.
For the duration of the direction, the employee’s base rate of pay (worked out on an hourly basis) must not be less than what the employee would ordinarily be paid per hour of work performed.
Employees are entitled to lodge disputes with the Fair Work Commission (FWC) challenging the validity/lawfulness of such directions on grounds including their reasonableness.
Record keeping obligations
Employers will not be entitled to receive a JobKeeper payment in respect of a fortnight unless the employer has kept records to substantiate any information provided to the Commissioner of Taxation in relation to the JobKeeper payment both before the payment was made and after the payment was made. These records must be kept for 5 years. The nature of the records required to be kept have not yet been prescribed. However, failure to keep these records will render the employer never to have been entitled to receive the payment(s).
Further changes to Modern Awards
On 8 April 2020, the FWC varied 99 modern awards by inserting a temporary schedule. These variations will affect 4.36 million Australian workers.
The temporary schedule is operative from 8 April 2020 to 30 June 2020 and provides:
- an entitlement to 2 weeks’ unpaid ‘pandemic leave’ if an employee is:
- required by government, medical authorities or upon medical advice to self-isolate and is unable to work; or
- prevented from working by government or medical authorities; and
- by agreement between an employee and employer, an employee can take their annual leave for twice as long at half pay.
Applications for reduction in redundancy pay
The FWC has issued its first decisions about applications for reduction in redundancy pay due to COVID-19. In one decision, the FWC agreed to reduce the employee’s redundancy entitlement due to the “significant financial strain” experienced by the employer, and the circumstances of the employee. However, another decision refused to reduce an employee’s redundancy pay because, despite anticipated cash flow difficulties, the employer had the means to pay the full amount and had the “money in the bank”.
Accordingly, it appears that the FWC will adopt a case by case analysis when determining whether to reduce an employee’s redundancy entitlement due to circumstances arising from COVID-19.
If you require advice in relation to these significant changes, please contact us. For more insights from Kennedys about the impacts of the COVID-19 pandemic across the globe, please see our global COVID-19 content hub.