The Federal Government has proposed a $130 billion stimulus package aimed at keeping workers with their current employers, named JobKeeper

NextGen HR breaks it down for you.

Before we go anywhere with this, it is important to note that the scheme is a proposal at this point. Parliament still need to discuss and pass it, as they have with previous stimulus packages. Labor has signalled it will support the bill, so some version of it will pass, but the specifics might change. Latest information tells us that the MP’s have been recalled to a drastically scaled down sitting next Wednesday (8th April) to pass the bill.

 If you just want to register your interest in being part of JobKeeper now, you can do so at the ATO website.

 Here is what we know about JobKeeper

As it currently stands, the government will pay organisations $1,500 a fortnight per eligible worker. The payments will start from 30 March and continue for a maximum of six months, and flow from the ATO to the employer. Employees will be paid as normal, and will receive the full amount of the subsidy, pre-tax. This amount is equal to approximately 70% of the national median wage.

Where employers participate in the scheme, their employees will receive this payment as follows.

If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee(s).

If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.

If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.

If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per
fortnight, before tax.

Where employees have multiple employers – only one employer will be eligible to receive the payment. The employee will need to notify their primary employer to claim the JobKeeper Payment on their behalf. The claiming of the
tax-free threshold will in most cases be sufficient notification that an employer is the employee’s primary employer.

Around six million Australians are eligible under the scheme – that’s nearly half the workforce. Payments will not commence flowing through to businesses until the first week in May 2020. Payment will be made one month in arrears to the company.

Which businesses are eligible?

Eligibility for the subsidy is based on turnover and the size of your organisation. Organisations making less than $1 billion in annual have to experience a 30 per cent loss. Those with a turnover of over $1 billion need to experience a 50 per cent revenue loss to be eligible. Not-for-profits, charities and self-employed people will be eligible.

To prove a loss, you have to present evidence to the ATO that the organisation’s turnover has fallen as compared to the same months in 2019 – the government suggests it will be looking at the natural activity statement reporting period of each business (which is usually one or three months).

The ATO would be the guardians of the scheme and will be given legal powers to ensure employers are using these funds correctly, and to ensure compliance, single touch payroll is likely to be used to track the money. 

Employee Eligibility

Again, this could change as the legislation is debated in Parliament, but as of today (2nd April 2020 this is the eligibility)

  • staff who are currently employed, including those who are stood down or re-hired, and are full-time or part-time, or casuals who’ve been with the business for more than 12 months
  • staff who were officially employed as of 1 March 2020
  • staff who are over 16 years old
  • staff who are Australian citizens, permanent visa holders, non-protected Special Category Visa holders or someone who has been living in Australia for more than 10 years, or Special Category (Subclass 444) visa holders
  • staff who aren’t already receiving JobKeeper payments from another employer

Workers who have been stood down are also eligible for the subsidy. Casuals who have been employed for less than 12 months are NOT eligible.

If an organisation’s application is successful, you will be obliged to inform employees that their wages are being subsidised as part of the scheme and submit monthly information to the ATO in order to continue receiving the payments.

Employees who are already receiving JobSeeker payments, and are also eligible for JobKeeper payments, will have to forgo the former if their employer chooses to reinstate them off the back of this announcement.

 fact sheet from the Treasury provides further guidance and below are examples of how it can be applied (direct from the fact sheet).

 Self-employed Melissa is a sole trader running a florist.

She does not have employees. Melissa’s business has been in operation for several years. The economic downturn due to the Coronavirus has adversely affected Melissa’s business, and she expects that her business turnover will
fall by more than 30 per cent compared to a typical month in 2019. Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight before tax, paid on a monthly basis.

Worker with multiple jobs

Michelle currently works two permanent part-time jobs, at an art gallery during weekdays, and at the local café on the weekend. Due to the impact of the Coronavirus, the gallery has closed and Michelle has been stood down without pay under the Fair Work Act. Michelle continues to work at the café delivering take-away orders. Michelle can only receive the JobKeeper Payment once, from the employer from whom she nominates as her primary employer. As Michelle only claims the tax-free threshold from her job at the art gallery, this will be treated as her nomination of the art gallery as her primary employer. The art gallery is eligible for the JobKeeper Payment. The art gallery will pass the JobKeeper Payment on to Michelle, so she will receive $1,500 per fortnight before tax. During the application process, the art gallery will notify the ATO that Michelle receives the payment from them. The art gallery is also required to advise Michelle that she has been nominated to the ATO as an eligible employee to receive the payment. The café is not eligible to receive the JobKeeper Payment for Michelle. The income that Michelle receives from her job at the café does not change her entitlement to the JobKeeper Payment she receives from the art gallery.

Employee made redundant after 1 March

Miles worked as a permanent part-time personal trainer at a gym for six months and was made redundant on 20 March 2020 in response to the Government directive that gyms close. Miles was not entitled to redundancy pay due to his length of service. In response to the announcement of the JobKeeper Payment, the gym decides they want to re-engage Miles so they are well placed to resume their operations once the Coronavirus restrictions are lifted. After being made redundant, Miles had registered an intent to claim with Services Australia for access to the JobSeeker Payment and the Coronavirus Supplement. Miles is single, with no children and in total he would be eligible to receive $1,124.50 before tax per fortnight. If Miles chooses to be re-hired by the gym, under the JobKeeper Payment he will receive $1,500 a fortnight before tax while he is stood down. Miles will need to advise Services Australia of his income. He is no longer eligible for the JobSeeker Payment and the Coronavirus Supplement from Services Australia as a result of receiving the JobKeeper Payment.

Employer with 5 employees who all currently get paid more than $1,500 per fortnight

Sara runs a landscaping company, and employs five full-time gardeners. Sara is paying her employees $1,700 per fortnight before tax. She expects that her turnover will decline by more than 30 per cent over the coming months and
that she will either need to lay staff off, or reduce their wages significantly. As a result of the JobKeeper Payment, Sara will be able to keep employing every gardener, and only needs to pay the $200 wage cost per fortnight before tax per employee above the $1,500 per fortnight (before tax) JobKeeper Payment.

 

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