On 9 April 2020, the Federal Government enacted its changes to the Fair Work Act 2009 (Cth) and other amendments which will impact organisations as a result of the COVID-19 pandemic.
This article outlines the key changes introduced by the Coronavirus Economic Response Package (Payments and Benefits) Act 2020, the Coronavirus Economic Response Package Omnibus (Measures No.2) Act 2020 (the Acts) and Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the Rules), and the impact of these reforms on employers.
The objectives of the Acts and Rules
The Acts and the Rules will operate from 30 March 2020 to 27 September 2020 and will be administered by the Commissioner of Taxation.
The Coronavirus Payments and Benefits Act introduces the Jobkeeper Scheme to provide wage subsidies for employees, and the Coronavirus Omnibus (Measures No.2) Act amends the Fair Work Act to provide organisations eligible for the JobKeeper Scheme with greater workplace flexibility in relation to their employees.
The main objectives of these reforms are to enable eligible employers that are suffering financially due to COVID-19 to:
- claim JobKeeper payments (a $1,500 fortnightly payment to subsidise wages for pre-registered eligible workers including some regular casuals); and
- stand down specific employees without pay (partially or completely) for any period that they cannot be usefully employed; and
- change employment arrangements by lawful direction, request or agreement (e.g. duties/tasks, location of work and working hours, taking leave) for specific employees.
These changes will override any modern award, enterprise agreement or employment contract, and are subject to strict legal requirements.
What employers are eligible?
Employers will be eligible for the JobKeeper payment under the Acts and the Rules if:
- they carried on business in Australia or were a not-for-profit organisation that pursued its objectives principally in Australia on 1 March 2020;
- their business faces a:
- 15 percent fall in turnover (for ACNC registered charities other than universities and non-government schools);
- 30 percent fall in turnover (for an aggregated turnover of $1 billion or less); or
- 50 percent turnover (for an aggregated turnover of more than $1 billion);
- they are not an ineligible entity; and
- they employed at least one eligible employee on 1 March 2020, and their eligible employees are currently employed for the fortnights claimed (including those stood down or rehired).
How is revenue reduction calculated?
To satisfy the decline in turnover test, an employer must be able show that the current or projected GST turnover in a:
- a calendar month ending after 30 March 2020 and before 1 October 2020; or
- a quarter that starts on 1 April 2020 or 1 July 2020,
is at least 15 percent, 30 percent or 50 percent less than the corresponding turnover period in 2019 for their relevant entity type. For example, if an ACNC registered charity (excluding a non-government school or university) can demonstrate that it carried on a business in Australia prior to 1 March 2020 and that its projected GST turnover in April 2020 is 15 percent less than its revenue in April 2019, it will satisfy the revenue reduction requirement of the JobKeeper scheme.
The Commissioner for Taxation has discretion to set alternative or additional tests to qualify for the JobKeeper Scheme by legislative instrument.
What entities are excluded?
The following entities do not qualify for the JobKeeper Scheme.
- a company which was already in liquidation or had a provisional liquidator appointed prior to the Acts and Rules; and
- any entity that is wholly owned by a local governing body or Australian government agency.
What are the nomination and application requirements?
The JobKeeper Scheme requires eligible entities and employees to comply with specific nomination requirements. An entity must notify an eligible employee that they intend to apply to the Scheme so that the employee can provide written notice in the approved form confirming that they are:
- over 16 years of age;
- employees or long term casuals of the organisation (not short term casuals of less than 12 months employment or with irregular shifts or volunteers);
- Australian residents or residents for the purposes of the Income Tax Assessment Act (i.e. they hold a special category of migration visa);
- agreeing to be nominated by the entity as an eligible employee for the purposes of the JobKeeper Scheme;
- confirming they are only an employee of the organisation (e.g. in the instance of long term casuals); and
- not double-dipping by nominating a second time to be an eligible employee (if they work at another organisation e.g. this will be more relevant with long term casual workers or relief teachers at schools).
Employees that receive parental or partner leave pay at any time or receives workers compensation payments because they are totally incapacitated for work during any of the fortnightly period(s), will not be classified as eligible employees.
Entities will then need to:
- register interest in the JobKeeper payment with the ATO;
- obtain a notification of consent form from each employee to be included in any JobKeeper application; and
- notify the ATO in the approved form:
- that it wants to participate in the Scheme;
- of details of the eligible employees each fortnight;
- of the organisation’s previous monthly GST turnover and projected GST turnover for the next month.
If the Commissioner for Taxation is satisfied that the organisation meets the requirements of the Acts and Rules it will make the fortnightly JobKeeper subsidy payment of $1,500 to the organisation in accordance with the Acts and the Rules.
What are the new stand down and workforce flexibility provisions?
The new stand down and workforce flexibility provisions allow an employer to direct an employee to:
- not work on specific day(s) which they would usually work,
- work for a lesser period than the employee would ordinarily work on a particular day or days,
- work a reduced number of hours (compared with the employee’s ordinary hours of work), and not be paid for the period that work is not performed; and
- take paid annual leave.
An entity can do this provided that:
- they are eligible for the JobKeeper Scheme and entitled to one or more JobKeeper payments at the time that the JobKeeper direction applies;
- they provide the employee with at least three days written notice of their intention to give the direction (or a lesser period by agreement) and consult with the employee (or their representative) about the direction;
- the period of the stand down is because the employee cannot be usefully employed due to the business changes associated with COVID-19 pandemic or Government initiatives to slow the transmission of COVID-19 (see below);
- the implementation of the stand down for the employee meets health and safety requirements, particularly in respect of the nature of spread of COVID-19. This is important when directing employees to work remotely or in a different place of business. The place must be suitable for the employee’s duties;
- in the case of workplace flexibilities, the new duties are:
- within the employee’s skill and competence, including the requirements to hold any licences/qualifications;
- reasonably within the scope of the organisations business operation;
- in the case of paid annual leave:
- the organisation has made the request to the employee;
- the employee considers and does not unreasonably refuse the request; and
- the employee will maintain a balance of paid annual leave of no fewer than two weeks;
- the wage condition is satisfied because the entity qualifies for the JobKeeper Scheme and is entitled to payments under the Acts (e.g. the organisation paid the employee at least $1,500 a fortnight prior to 1 March 2020 inclusive of salary, wages, bonuses, commissions and allowances. For organisations that pay staff monthly wages, this amount will need to be calculated by what the employee would be allocated during a fortnight(s);
- the minimum payment guarantee is met (see below); and
- the hourly rate of pay guarantee is met (i.e. where an employer provides an employee with a stand down direction, the employer must ensure that the hourly base rate of pay is not less than the rate that usually applies to the employee (as if the direction had not been given to the employee). The only exception is if the duties of the employee have changed – the hourly base rate should be the greater of the previous duties or the rate applicable to the new duties now being performed).
How do I know when an employee can’t be usefully employed?
An employee can’t be usefully employed for the purposes of the Acts and the Rules when employee has no (or a reduced level of) useful work available to performed because of the COVID-19 pandemic or because of the Public Health Orders and state based Directions imposing restrictions on individuals and entities.
For example, a Victorian organisation that runs school camps in Term 2 of 2020 may not be able to usefully employ all staff due to the Victorian government’s restrictions and the decision to move to remote school learning. Therefore, there may be a period from April to June where the entity is captured by the JobKeeper Scheme, cannot have 100 percent of its employees undertaking their normal workload, and does not have any other or useful work available for the remaining employees to perform.
Useful work does not have to be the work that the employee ordinarily performs but needs to be genuine productive work that provides a net benefit to the employer. Employers should be able to demonstrate that the impacts of the virus or the Government’s measures to deal with it have caused the fact that there is none, or less useful, work available.
What is the minimum payment guarantee?
If a JobKeeper payment is payable to an employer for an employee for a fortnight, the employer must ensure that the total amount payable to the employee in respect of the fortnight is not less than the greater of the following:
- the amount of JobKeeper payment payable to the employer for the employee for the fortnight; or
- the amounts payable to the employee in relation to the performance of work during the fortnight.
This means that organisations must use the Jobkeeper payment to cover or supplement the normal wage of the employee, and cannot pocket this extra money or use it for other purposes. For example, if an employee is normally paid $1,750 per fortnight for the work that they do within the organisation, the organisation must still cover the remaining $250.
The amounts payable includes salary, wages, bonuses, commissions and allowances payable in respect of the fortnight.
What is the hourly rate of pay guarantee?
If an employer provides and employee with a stand down direction, the employer must ensure that the hourly base rate of pay is not less than the rate that usually applies to the employee (as if the direction had not been given to the employee).
If an employer has directed the employee to perform different duties to normal, the employer must ensure that the employee’s hourly base rate of pay is not less than the greater of the:
- the hourly base rate of pay that would have been applicable to the employee if the direction had not been given to the employee.
- the hourly base rate of pay that is applicable to the duties the employee is performing.
For example, if an employee was earning $25 an hour prior to the stand down, they must still receive the equivalent of $25 an hour despite the change in working hours or arrangements. The only exception is if the duties of the employee have changed and the hourly base rate should be the greater of the rate for the previous duties or the rate applicable to the new duties now being performed.
What other requirements apply to workforce flexibility directions?
An employer can only provide a workforce flexibility direction (e.g. changes in duties/tasks, location of work and working hours, taking leave) if the employer has information before them that leads them to reasonably believe that a JobKeeper direction is necessary to maintain their employment.
In short, this means that organisations need to satisfy itself that “but for this direction, the employee would be made redundant”.
How Moores can help
Moores is currently providing advice and support to our clients who are navigating the complex requirements of the JobKeeper Scheme. If you’d like to understand your rights, responsibilities and options to ensure your workforce is safe, sustainable and prepared to brace the ramifications of COVID-19, please do not hesitate to contact us.
 See Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 sections 14 and 15 at https://www.legislation.gov.au/Details/F2020L00419
 Note that this can also occur by request or agreement. Organisations can also request or agree with an employee that they take double leave on half pay. For example, an employee agrees to take four weeks leave but only has two weeks annual leave deducted from their leave balance and is only paid for two weeks’ worth of leave.