Many people were expecting the Federal Government to introduce a Bill into Parliament today to address the unanswered JobKeeper questions. Normally, a Bill such as this would clearly set out exactly how the JobKeeper initiative would operate.
Although we received some clarity on the relaxation to employment rules during the Covid-19 period, there was little detail on exactly how the Government will implement the JobKeeper stimulus package, including how the “all important” reduced turnover is to be calculated.
The Bill indicates that the Treasurer will govern how the $130 billion of job support will be applied, although it will be enforced by the Australian Taxation Office (“ATO”).
There is uncertainty in many areas. Treasury are attempting to clear the uncertainty via Factsheets and FAQ’s.
The following briefly summarises relevant parts that are being passed by Parliament today:
Relaxing of Fair Work Rules
Today the Government enacted changes to the Fair Work Act 2009 (“Fair Work”) to support the practical operation of the JobKeeper initiative.
The changes to Fair Work are only temporary (currently until 28 September 2020) and an employer can only make a JobKeeper enabling direction if they are eligible to receive JobKeeper payments, otherwise the standard Fair Work requirements apply.
The key changes to the Fair Work Act are as follows:
Employers who are eligible for the JobKeeper payment are authorised to impose:
- A stand down direction to an employee to work fewer days or hours where an employee cannot be usefully employed to work their normal days or hours;
- A direction to an employee about their duties to be performed; and
- A direction to an employee about the location where they work.
The employer must consult the employee before giving this direction. Any direction must be supported by a reasonable belief by the employer that it is necessary for the continued employment of one or more employees.
If an employer qualifies for the JobKeeper payments, the employee must consider (and not unreasonably refuse):
- Taking paid annual leave, provided that the leave arrangement would not result in reducing the employee’s leave balance to fewer than two weeks; or
- Taking twice as much annual leave at half the employees’ standard rate of pay for a period. This may be attractive to a parent looking after children.
It is important to note that this direction cannot apply while an employee is already taking paid or unpaid leave, authorised by the employer, or is otherwise authorised to be absent (for example, a public holiday).
Changes to Accrual Rules
Employers must ensure that leave entitlements for employees continue to accrue as though the employee is still employed under their normal contract terms i.e. no direction was imposed on the employee.
This would apply to the following scenarios:
- The employee has been stood down completely;
- The employee is on reduced hours or days; or
- The employee is supplementing income with annual leave, including employees who take annual leave at half pay.
Any entitlements to redundancy pay and payment in lieu of notice of termination are also to be calculated as if the direction had not been given. Please note that giving a JobKeeper enabling direction does not amount to a redundancy.
Hourly Rate of Pay Guarantee
Where an employer makes a direction to an employee to reduce hours, change duties or workplace location, the hourly rate of pay for the employee must not be less than the hourly rate of pay had the direction not occurred.
Under the new provision, the employee’s hourly pay must not be less than the greater of:
- The base rate of pay on an hourly basis that would have been applied had the direction not been given; or
- The base rate of pay on an hourly basis applicable to the duties performed.
Effectively an employer cannot reduce the hourly rate of pay for an employee as a result of action taken.
Requirements for Duties of Work Direction
Where reasonable, an employer can request employees to perform duties outside of their usual arrangement with the employer.
The employer must give at least three days written notice (or a lesser period if by genuine agreement) of their intention to give a direction. Employees must consider and must not unreasonably refuse the employer’s request for agreement to the changed arrangements.
The direction continues in effect until withdrawn or revoked by the employer or replaced by a new direction given to the employee. This is subject to any Fair Work Commission (“FWC”) order and ends on 28 September 2020.
Dealing with Disputes
If the employer and employee fail to reach an agreement based on the direction being requested by the employer, then they could resort to the FWC to settle the matter by arbitration. In summary, the FWC will be permitted to make:
- An order it considers desirable to give effect to a JobKeeper enabling direction;
- An order setting aside, or substituting, a JobKeeper enabling direction; or
- Any other order it considers appropriate.
All parties should act reasonably and attempt to reach an agreement to avoid resorting to the use of the FWC.
New Penalties for Employer Misuse of JobKeeper Payments
New penalties have been introduced for misuse of the JobKeeper payment by employers.
Penalties of up to $126,000, can be issued for the following:
- Failing to satisfy the wage conditions of the JobKeeper payments; and
An employer knowingly misusing a purported JobKeeper enabling direction.
JobKeeper Payment Initiative
There remain many unanswered questions concerning how the JobKeeper payment initiative will be implemented, however the following issues were clarified today:
- Payments will be made to the bank account nominated by the employer;
- If no such account has been nominated, payments will generally be made to the bank account nominated in the employer’s most recent income tax return;
- These payments will not be offset against tax liabilities or other amounts owing to the Commissioner; and
- The payments received under the Covid-19 payment framework are not taxable income in the hands of the employer.
Over-payments and General Interest Charges (GIC)
The Government has recognised that over-payments may occur during the application of the JobKeeper initiative.
Where the Commissioner has overpaid an entity under the initiative, the entity must repay the overpaid amount to the Commissioner. Over-payment can occur in the following situations:
- the entity is not entitled to the whole or part of a payment that is made; or
- the entity is paid more than the correct amount.
Where this occurs, the overpaid amount is due and payable by the entity on the day on which the Commissioner pays the amount. Further, the entity will be liable to pay GIC on all unpaid amounts for each day that it remains outstanding.
The Government has noted that some entities may enter into a contrived scheme in order to benefit from the JobKeeper initiative.
In the event the Commissioner considers an entity has entered a contrived scheme for the sole or dominant purpose of gaining a benefit under the initiative, audit activities may be undertaken by the ATO.
Penalties may be applied where entities make false, misleading or reckless statements, engage in arrangements or assist others to defraud the Government.
Covid-19 has significantly impacted the Australian way of life and economy. The unexpected and unforeseen events require the Government to continually release new announcements to provide updates and stimulus measures to assist all Australians.
Hall Chadwick is dedicated in continuing to provide timely updates as announcements unfold and changes come to light to allow you to focus on what matters most to you.
When reviewing our newsletters on these critical items we strongly encourage you to contact our office to discuss any items which you believe might have an impact on your personal circumstances
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