Jobkeeper wage subsidy – what does it mean for your business?
On 8 April 2020 the Australian Parliament passed the legislation necessary to introduce the Jobkeeper wage subsidy. The legislation was given Royal Ascent on Thursday 9 April 2020. Although this gives us greater clarity in relation to what may change at the workplace, questions around timing and eligibility for employers and which employees are to be covered remain in need of some additional clarity.
The remaining uncertainty is unfortunate, as the proposed changes apply only to those businesses and their employees who qualify for Jobkeeper. The changes to employment arrangements have been achieved by temporary variations to the Fair Work Act, 2009 (FWA). Importantly, where an employer makes a decision or gives a direction provided for under the amendments to the FWA, they must be eligible for Jobkeeper at the time the decision/direction was made to obtain the protections for those decisions/directions. This will create challenges for employers who are not certain that they will be eligible. However, it should not be forgotten that most if not all of what can be achieved under the Jobkeeper amendments can also be achieved through co-operation between employers and employees under the existing provisions of the FWA.
Fair Work Act 2009 temporary amendments
Jobkeeper enabling directions to employees
Employers who are eligible for Jobkeeper may issue a Jobkeeper enabling direction to an employee to:
- Undertake alternative duties, provided those duties are reasonably within the scope of the employers’ business and are safe. If a licence or qualification is needed to perform the work, only an employee with such licence or qualification can be required to undertake such work.
- Work from a different location provided the location is suitable for the employees’ duties and that there is not an unreasonable distance for the employee to travel. In most instances this will be used to require employees to work from their home.
- Stand down on a day or days on which the employee would usually work, to work a lesser period on a day that the employee would normally work or to reduce the number of hours to be worked. Employees can only be stood down where the employee can not be usefully employed for the stand down period.
Guidelines for giving Jobkeeper enabling directions
- Jobkeeper enabling directions can only be given following consultation with the effected employee and such direction must be reasonable.
- A Jobkeeper enabling direction will apply from the time it is given but will cease to have effect from 28 September 2020.
- If a Jobkeeper enabling direction to stand down has been given, the employee continues to accrue leave as if the employee had not been given the direction. That is, at the rate which applied prior to the direction being given.
- If an employee’s employment is terminated whilst they are subject to a Jobkeeper enabling direction, any redundancy pay or payment in lieu of notice of termination are to be calculated as if the direction had not been given.
- If a Jobkeeper enabling direction to stand down has been given, an employee on stand down may request to be allowed to engage in secondary employment, to undertake training or professional development. Where such a request is made an employer must consider the request and must not unreasonably refuse the request.
Change of hours or days of work
Additionally, employers who are eligible for Jobkeeper may request employees to change their hours and/or days of work, provided that they do not reduce the actual normal hours worked. Employees may not unreasonably refuse such requests.
Employers who are eligible for Jobkeeper may request an employee take a period of annual leave. Employees who are given such a request must not unreasonably refuse to take the leave. Employers must give at least 3 days’ notice of the period of leave the employee is being requested to take. Employees must not be requested to take so much leave that they have less than 2 weeks of accrued leave once they have taken the requested period of leave.
Employees and employers may agree, in writing, for an employee to take annual leave at half the employees’ rate of pay for twice the period of time. That is, for each week of absence on annual leave the employee would be paid 50% of their usual wages. Employees would have 1 week of annual leave deducted from their accrual for each 2 weeks of leave taken under such an arrangement.
The wage subsidy will apply during a period of annual leave. That is, if an employee earns $3000 per fortnight and they take a fortnight of annual leave, an employer who is eligible for Jobkeeper would use the wage subsidy to cover the first $1500 of the payment for the fortnight and would be required to top up the remaining $1500 of the payment for the fortnight of annual leave.
Wages to be paid under Jobkeeper wage subsidy
Jobkeeper is a flat rate of subsidy for all employees. That is, eligible employers will be paid $1500 per fortnight for each eligible employee. This amount must be passed along to the employee in full, irrespective of whether the employee earned less than that amount per fortnight previously.
Where employers continue to have work for employees to undertake either full time or for a lesser period of time, the hourly rate paid to the employee before Jobkeeper must be maintained. Therefore, where an employee is working, the $1500 per fortnight wage subsidy may be used to pay those hours worked by an employee that represent $1500 per fortnight at the employees’ hourly rate of pay before the Jobkeeper amendments commenced.
Examples of how the Jobkeeper subsidy works in practice
Fred has been working part-time in a restaurant for the last 2 years every Friday and Saturday night. His hourly rate for normal hours has been $40 per hour since 1 July 2019. He usually earned $800 per fortnight. Fred has been issued with a Jobkeeper enabling stand down direction as he is unable to do any hours of work for his employer as the restaurant is closed. Fred’s employer will be required to flow onto Fred the full $1500 even though he previously only earned $800 per fortnight.
Fred’s employer has now commenced a takeaway and delivery service. The employer is now able to offer Fred 50% of his previous hours of work. Therefore, but for the Jobseeker subsidy, Fred would earn $400 per fortnight. However, as the employer is receiving the $1500 subsidy for Fred, they must continue to pay him the full $1500 per fortnight even though the work that he is doing is valued at $400.
Fred’s employer’s takeaway and delivery service has been relatively successful and therefore his employer is now able to offer him additional hours. In fact, Fred is able to return to 100% of his previous hours plus additional hours. Fred has agreed to vary his part-time arrangement to work the additional hours as normal hours. Fred therefore now works twice his previous hours. Therefore, on his hourly rate of $40 he would now be entitled to be paid $1600 per fortnight. The employer must pay the $1500 Jobkeeper wage subsidy plus must make up the difference in the pay so that Fred receives his full pay of $1600 for the fortnight.
Fair Work Commission makes changes to 99 Modern Awards
We previously provided information on the proposed changes to a number of Awards. On 8 April 2020 the Fair Work Commission issued a variation to 99 Awards, essentially to give effect to the previously announced intentions. Awards in the Maritime, Mining and Resources sector were excluded from the variation.
In summary, the decision provides for employees covered by the varied Awards to:
- Access up to 2 weeks of unpaid pandemic leave; and
- With agreement between the employer and employee, to take twice the amount of leave at half the pay.
The unpaid pandemic leave provisions will apply to casual employees as well as permanent employees. Where an employer is receiving a wage subsidy for an employee who is on pandemic leave, the wage subsidy would remain payable to the employee despite the leave being identified as “unpaid”. However, if an employer is not eligible for the wage subsidy, the leave would be without any payment.
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