Eligible businesses will have to cover the wages and overheads of keeping their employees employed at least one month in advance of receiving each JobKeeper payment.
The Australian Government’s $130 billion JobKeeper payment scheme aims “to help keep more Australians in jobs and support businesses affected by the significant economic impact caused by the Coronavirus [COVID-19]”, says the Treasury’s website.
“Around 6 million workers will receive a fortnightly payment of $1,500 (before tax) through their employer.
“The payment ensures eligible employers remain connected to their workforce and will help businesses restart quickly when the crisis is over.”
Seems straight forward, but what are the financial burdens that eligible businesses have to carry in order to “restart quickly when the crisis is over”?
Eligible businesses include those that have a turnover of less than $1 billion and estimate their GST turnover has fallen or will likely fall by 30 per cent or more.
Businesses with a higher turnover are eligible if their GST is likely to or has fallen by 50 per cent or more.
The Australian Tax Office (ATO) is administering the scheme; payments to businesses, backdated to March 30 for eligible employers, will commence in the first week of May.
However, to receive the payment, businesses must have paid their employees their normal pay and, in some instances, more than what they were paying their employees, in other words: “In many cases, [a business’s] payments and obligations to eligible employees [have] not changed.
“Where an employee earns more than $1,500 per fortnight, employers can use the payment to subsidise the employee’s wages.
“Where an employee’s total remuneration is less than $1,500 per fortnight (before tax), or has been stood down, the employer must provide the employee [with] at least $1,500 per fortnight (before tax).”
As a result, eligible businesses will have to cover the wages and overheads of keeping their employees employed at least one month in advance of receiving the JobKeeper payment – and each month until the scheme ends, irrespective of whether or not the employee is actually working.
In some cases businesses will have to ‘top up’ an employee’s payment, if they were previously paid less than $1,500 per fortnight.
On the superannuation front, businesses “must pay a minimum of $1,500 per fortnight [before tax] to … eligible employees, withholding income tax as appropriate”.
“Where an employee is paid more than $1,500 per fortnight, the employer’s superannuation obligations will not change,” the Treasury website states.
“Where an employee is having their wages topped up to $1,500 per fortnight … it will be up to the employer if they want to pay superannuation on any additional wages [as a result of receiving] the JobKeeper payment.”
There are other changes in place to assist businesses through the crisis, including deferring the payment date (up to six months) for amounts due through the business activity statement; allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting; and, allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter.
Several changes have also been made to the Fair Work Act as a result of the JobKeeper legislation.
For example, the new provisions enable a qualifying employer “to request an eligible employee to take paid annual leave (if they keep a balance of at least 2 weeks) [and to make an agreement] in writing with that employee, for them to take annual leave at half their usual pay for twice the length of time.
“Employees who make an agreement to take annual leave still accrue their usual leave entitlements for the period to which the agreement applies…
“…If an employer asks their employee to take annual leave, the employee has to consider the request, and can’t unreasonably refuse it.”