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.
Jobkeeper enabling directions to employees
Employers who are eligible for Jobkeeper may issue a Jobkeeper enabling direction to an employee to:
Guidelines for giving Jobkeeper enabling directions
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.
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
Example 1
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.
Example 2
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.
Example 3
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.
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:
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.
These are challenging times and the rules keep changing. If you need any assistance, please contact us on mazarshr@mazars.com.au or 07 32183919. We have exclusive COVID-19 HR and employee relations support packages available.
