Information current at date of publication: 14 April 2020. The average reading time for this Alert is 6 minutes.
The JobKeeper amendments to the Fair Work Act 2009 (Cth) will provide many employers with welcome flexibility given COVID-19’s unprecedented disruption to business. However, before relying on these new provisions, employers should ensure they follow relevant procedures to avoid facing penalties or successful challenges in the Fair Work Commission.
The jobkeeper legislation passed both houses of Parliament and received Royal Assent on 9 April 2020, coming into immediate effect. The Fair Work Act now contains provisions to enable employers to give eligible employees directions around their working arrangements, or to agree with eligible employees to arrangements which might otherwise attract penalties. The new provisions also ensure that employers who receive JobKeeper payments actually pass these onto their employees.
Eligibility for JobKeeper payments
Employers are eligible to receive JobKeeper subsidies if they have experienced a decline in turnover of:
- 15% for registered charities;
- 30% for organisations with a turnover of less than $1 billion; or
- 50% for organisations with a turnover of $1 billion or more.
The comparison point is to the same month or quarter in 2019, depending on whether the organisation has monthly or quarterly tax periods. The ATO may issue guidelines for alternative tests to cover business which did not have a turnover in 2019, or for which the comparable month in 2019 is not an appropriate reference point to measure the decline. As yet, those guidelines have not been issued.
Who does the JobKeeper scheme apply to?
The JobKeeper scheme does not apply to government (including local government) or government-owned corporations, businesses subject to the Major Bank Levy, companies in liquidation, or partnerships, trusts, or sole traders in bankruptcy.
Employers are only eligible for payments in respect of eligible employees. Eligible employees are people who are currently employed by the employer, and who were as at 1 March 2020:
- employed by the employer;
- full-time, part-time, or casuals who have been employed on a regular or systematic basis for at least 12 months;
- 16 years or older; and
- Australian citizens, permanent visa-holders, or Subclass 444 visa-holders.
Eligible employees must give their employer a completed nomination notice, confirming that they agree to be nominated by that employer for the JobKeeper scheme, and also confirming their eligibility.
Employers who are eligible for JobKeeper payments can issue three types of JobKeeper directions. Employers can direct employees:
- to not work on a day or days that the employee usually works, to work for a lesser period than the employee normally works, or to work a reduced number of hours compared with the employee’s ordinary hours of work (which can be down to nil);
- to work from a different location than their usual location, including their home; or
- to perform any duties within their competency, provided that the employee has any necessary licence or qualification.
There are two types of JobKeeper agreements. Employers can ask employees to agree to:
- alter their days or usual hours of work; or
- take some paid annual leave.
Provided these requests are valid, an employee cannot unreasonably refuse to enter into such an agreement.
A valid direction or agreement under the JobKeeper provisions will override the terms in any award, enterprise agreement or contract of employment, as well as some parts of the Fair Work Act itself.However, in order for these directions or agreements to be valid, they must:
- be given or made after 9 April 2020;
- the employer must qualify for the JobKeeper scheme; and
- the relevant employee must also be entitled to a payment under the scheme for the relevant period.
For a JobKeeper direction to be valid, the employer must ensure that:
- the direction is safe having regard to the nature of the COVID-19 pandemic;
- the direction is reasonable in all the circumstances, including in relation to carer’s responsibilities;
- the employer provides 3 days’ notice in writing of their intention to provide the direction (unless the employee agrees on a lesser period) and the employee, or their representative is consulted about the direction;
- for a stand down direction, the relevant employee cannot be usefully employed for their normal days or hours due to the COVID-19 pandemic; and
- for a direction in relation to duties or location, the direction is necessary for the continuing employment of one or more employees (not necessarily the relevant employee themselves).
Additional requirements apply to each specific direction that employers can give. Directions can be withdrawn by employers at any time, or replaced by new directions, and they will automatically cease to have effect on 28 September 2020.
In addition, to the above, if an employer qualifies for a JobKeeper payment for one of their employees, the employer must ensure that they pay that employee whichever is greater out of the $1,500 JobKeeper payment, or the employee’s entitlement to wages for work performed in the fortnight. Employees are entitled to receive their usual hourly rate in respect of hours worked, unless the duties which they are directed to perform attract a higher rate of pay. If an employer does not comply with these safety net provisions, penalties can apply.
Is the employee entitled to superannuation?
The employee is only entitled to superannuation on the payment if they are working (eg not wholly stood down). If the employee would be entitled to earn less than $1,500 per fortnight based on the hours they are working, they will only be entitled to superannuation based on the lower figure.
The Fair Work Commission’s role in disputes
The Fair Work Commission has the power to deal with disputes in relation to the new provisions. There are a range of issues that could arise in relation to directions, for example an employee may argue that:
- the duties they are being asked to perform are not within the scope of their skills or experience;
- they could be usefully employed without a stand down direction;
- that the consultation before providing a direction was inadequate;
- a direction to work from a different location is unreasonable because of the travel time required.
Where an application to the Commission is made, the Commission can make any order it considers appropriate including substituting one direction for another.
How we can help
If you require any advice on the new JobKeeper rules, please contact the Russell Kennedy Workplace Relations, Employment and Safety team.
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