The Federal Government has announced a large scale wage subsidy scheme called Jobkeeper.  Notwithstanding the previous two rounds of stimulus and business assistance this is, by far, the largest direct stimulus measure announced in Australia since the COVID-19 pandemic reached our shores.

There is a lot of information and disinformation circulating in relation to eligibility and access to this program.  We provide the following analysis to cut through the confusion.

If you still have questions after you have had the opportunity to review the information below please do not hesitate to contact us.

SUMMARY

The Jobkeeper Scheme is a $130b program costed to run for 6 months.  Its objective is to assist employers retain and pay their staff during the worst of the COVID-19 crisis.

The objectives extend beyond staff retention but to also ensure that employers and employees remain connected throughout a period of prolonged downturn to maximise the chances of a quick recovery when the worst of the crisis passes.

The scheme is extensive and will cover full-time, part-time, long-term casual employees as well as those that have been stood down. Sole traders will also be able to access the scheme.

We do not expect to see draft legislation until later in the week and there will undoubtedly be some fine tuning in relation to eligibility and access.  The information provided below is based on communications by Treasury as of 31 March, 2020.

ELIGIBILITY

REDUCTION IN TURNOVER

For our clients, those turning over < $1b, eligibility will be based on a reduction in turnover of 30% or more relative to the same period a year ago.  The comparison period must be of a duration of at least a month.  Clearly many businesses will meet this criteria.  We expect that a high proportion of businesses within industries such as hospitality, tourism, retail and those that support these industries would be eligible.  But there are many industries extending beyond these that have suffered significant downturn as a result of reduced consumer and corporate demand.

It is important to note that like all the stimulus measures thus far there will be integrity measures built into the legislation to ensure that there are significant consequences for any employer manipulating their books to become eligible. 

ELIGIBLE EMPLOYEES

Businesses that have experienced the 30% (or 50%) reduction in turnover can receive a subsidy payment for each employee that meets the following key criteria:

• the employee was employed by the business as at 1 March 2020;
• the employee is currently employed, was stood down or has been re-hired by the employer;
• the employee is a full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
• the employee is either an Australian citizen, Permanent resident, Protected Special Category Visa holder, Non-protected Special Category Visa Holder residing continually in Australia for more than 10 years,  Special Category (Subclass 444) Visa Holder
• the employee is not receiving any other Jobkeeper payment

Any employee currently receiving income support through Services Australia that becomes a recipient of the Jobkeeper payment will need to advise Services Australia of the income you are receiving under the Jobkeeper scheme. This may reduce or negate your entitlement to ongoing income support through Services Australia.

SOLE TRADERS

Self-employed individuals will also be able to access the Jobkeeper payment as long as they are able to demonstrate the reduction in turnover detailed above.

APPLICATION

Unlike the previous stimulus and business assistance measures Employers will have to apply to participate in the scheme.  The application process will be handled by the Australian Taxation Office.  The application will involve the provision of supporting information to prove the business satisfies the downturn requirement. 

You can register your intention to apply for Jobkeeper through here

After registering your interest, the ATO will notify you once applications open.

It goes without saying that we are happy to assist any of our clients in regard to the registration or application process.

PAYMENT & COMPLIANCE

Eligible employers will receive $1,500 per fortnight for each eligible employee from 30 March, 2020.  Payment will be made monthly in arrears by the ATO which means that employers have to make the payment first and then be reimbursed.

Employer obligations to distribute this money to eligible employees is as follows :

• Ensure that each eligible employee receives at least $1,500 per fortnight before tax (ie Payments are subject to PAYGW);
• Employees that normally receive more than this minimum payment must have their wages topped-up by their employer to meet the terms of their current workplace arrangements;
• Notify all eligible employees that they are receiving the JobKeeper Payment;
• Provide the ATO with information on the employees that are eligible to receive the payment. (Single Touch Payroll data will be used to pre-populate the employee details for most businesses.)
• It is expected Jobkeeper payments up to the wage level of an employee at 1 March, 2020 will be subject to compulsory superannuation support. Employers can choose if they provide superannuation support for any ‘additional wages’ paid because the Jobkeeper payment exceeds the employees usual wage (ie. part-time & casual staff)

The first of the above points highlights that many casual and part-time employees will actually receive more than they were receiving previously. In addition this point highlights that employers are simply a conduit for this Jobkeeper payment and must pass it on in full to their eligible employees.