Employment Hero

JobKeeper Payment Q&A Guide [Updated 2020]

Last updated 8 October 2020 

What is the JobKeeper Payment?

A new day. A new stimulus package. And a new way to keep around half of Australia’s 13 million-strong workforce employed.

In March 2020 the Australian government announced a $130 billion JobKeeper payment package to support affected businesses and their employees through the COVID-19 pandemic. Eligible employers would receive a $1,500 payment per fortnight, per eligible employee until 27 September 2020 to assist with the economic impact caused by COVID-19. This package has now been extended to last until March 2021.

There has been confusion around who is and isn’t eligible, how you can apply, and when it comes into effect. We’ve pulled together some common questions and answers to help you navigate this and what it means for your business and team. 

If you are planning on making use of the jobkeeper payment but have already made your staff redundant, we’ve put together this template to help you: You can view the redundancy withdrawal template here.

Alternatively, if your organisation is ending stand down to make use of the JobKeeper payment, we’ve put together this template: You can view the notice to end stand down template here. These templates are written and approved by Employment Law experts, and are fully customisable to your business situation.

If you’d like to view our in-depth guide, we’ve put together a comprehensive whitepaper to help you. This guide covers everything you need to know to get your head around this stimulus package including:

  • What the payment is
  • Who is eligible and how to apply
  • Other financial business support available
  • JobKeeper vs JobSeeker
  • How are redundancies and stand downs affected
  • FAQs

Download your comprehensive guide to JobKeeper payments

Since March, we’ve been hard at work on the Employment Hero JobKeeper Wizard that allows employers to send, collect and report on the nomination form. If you’d like to find out more about how the Employment Hero JobKeeper Wizard can help streamline your application process, get in touch with one of our small business specialists today.

To register your interest in receiving the JobKeeper payment, follow this link to the ATO. 

 

Disclaimer: 

The information provided is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation, we recommend you contact Employment Innovations for further advice. 

 

How does JobKeeper work?

In simple terms, the jobkeeper allowance is given to employers to help them pay their staff and retain them during COVID-19. Up until 27 September 2020, employees would earn $1,500 per fortnight. From the 28th September onwards, they will instead earn $750 or $1,200 depending on their worked hours earlier in the year. Once you have established eligibility for the employer’s business and identified eligible staff (see below), the key terms are:

  • Employers will receive $750 or $1,200 per fortnight per employee equal to the amount paid to each eligible employee.
  • From 4 January 2021 onwards this rate is lowered to $650 or $1,000.
  • Employers must pay each individual employee the amount for which they’re claiming the JobKeeper allowance per fortnight (before tax) during the period the employer is claiming the JobKeeper allowance, even if the employee was earning less than that amount (e.g. casuals and part-timers). 
  • Employees earning more than the amount claimed via JobKeeper will continue to receive their normal wage or salary entitlement. If the employer is paying more than the amount allowance, the payment is simply a part-subsidy of the employer’s normal wage bill. 
  • PAYG withholding taxes continue to apply (rates applicable to Gross Amount paid)

 

A timeline of what has happened so far

  • 30 March 2020 – JobKeeper announced 
    • Government announces $130 billion JobKeeper scheme to help maintain jobs during the coronavirus pandemic
    • Eligible employees able to earn $1,500 per fortnight immediately, up until 27 September 2020.
  • 1 May 2020 Businesses begin earning JobKeeper
    • Eligible employers begin receiving reimbursement for JobKeeper expenditure from the government
  • 21 July 2020 – JobKeeper extension 2.0 announced
    • JobKeeper payment extended in two parts. The first extension runs from the 28th September 2020 till the 3rd January 2021. The second extension runs from the 4th January until the  28th March 2021. The payment amount would be lowered to a maximum of $1,200 in the first extension period and $1,000 during the second extension period.
  • 7 August 2020 – Eligibility criteria for JobKeeper extension changed
    • Government announces changes to the decline in turnover test for businesses and the employee eligibility reference dates
  • 28 September 2020 – JobKeeper 1.0 ends, first Jobkeeper 2.0 extension begins
    • Employees who worked 80 hours or more during the two pay periods prior to 1 March 2020 or 1 July 2020 earn the new tier 1 rate. Employees who worked less than 80 hours during the same period begin earning the tier 2 rate.
  • 4 January 2021 – First JobKeeper 2.0 extension ends, second extension begins
    • Both tier 1 and tier 2 rates are lowered for the remainder of the JobKeeper payment
  • 28 March 2021 – Second JobKeeper extension ends
    • Life is hopefully back to normal

 

JobKeeper 2.0 extension guide

The new law has now passed and with it comes a few updates to what was originally proposed.

The law was passed on the 16th September 2020 and outlines the ATO’s changes to eligibility for both employees and employers. These changes will now be in place for both the first and second extensions.

 

What has changed? 

Firstly, there are two rates of fortnightly payments for the two extensions:

JobKeeper Dates

While these payment rates have not changed as of the 16th September 2020, the amount of hours worked to be eligible for the Tier 1 rate has increased. Employees must now satisfy a 80 hour threshold to be entitled to the Tier 1 rate.

New info for employees:

  1. If you were newly employed as a full-time, part-time or fixed-term employee between 1 March and 1 July 2020, you are now eligible for either extension from your employer. The rate you receive will depend on how many hours you worked in the 2 fortnights before 1 July 2020. 
  2. If you are a long-time casual employee, the 12 month period of employment for extension 2.0 will now start from 1 July 2019.  The rate you receive will depend on how many hours you worked in the 2 fortnights before 1 July 2020. 
  3. Employees that now qualify for JobKeeper payments from 1 July can receive back payments dating from August 3. 
  4. Those who were aged 18 years or older, or were an independent 16 or 17 year old not undertaking full time study, at 1 July 2020 are now eligible.

That means that workers who were forced to switch employers during the uncertainty of the first wave will now qualify for JobKeeper from their new employer. 

New info for businesses: 

  1. To qualify for the first extension, you do not have to prove the 30% decline in revenue from April to June 2020. You only need to prove the 30% decline from July to September 2020.
  2. To qualify for the second extension, you do not have to prove the 30% decline in revenue from July to September 2020. You only need to prove the 30% decline from October to December 2020.

Bear in mind this percentage is 50% for businesses and NFPs with an aggregated turnover of more than $1 billion and 15% for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities).

That means that if your business briefly recovers for one quarter, (be it the July quarter or the September quarter), but declines again, you will still be eligible for the proceeding extension. 

 

What hasn’t changed?

  • Employees are eligible in the extension period if they:
    • are currently employed by an eligible employer (including if you were stood down or rehired)
    • are an Australian resident (within the meaning of the Social Security Act 1991)
    • an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as at 1 March 2020.
    • haven’t received parental leave, or Dad and Partner pay under the Paid Parental Leave Act 2010 or a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work during the fortnight.
  • Only one employer can claim the JobKeeper Payment in respect of an employee.
  • The self-employed will be eligible to receive the payments if they meet the relevant turnover test, and are not a permanent employee of another employer.

 

How does the new 80 hour threshold work? 

Workers must have worked a total of 80 hours or more within their reference period to access the Tier 1 rate. An employees reference period is the most recent 28 days ending on the final day of their pay period that ended before either 1 March 2020 or 1 July 2020.

For example: You were paid on the 27th February 2020. Your reference period would be from the 30th January 2020 till the 26th February 2020. 

If the employee has worked during both of these periods, they only have to satisfy the 80 hour threshold during one period to be eligible for the Tier 1 rate. The 80 hours must be actual hours worked so any hours worked overtime will count towards the 80 hours. Similarly, if an employee was rostered for over 80 hours but only worked 70 hours, they would not be eligible for Tier 1. Additionally, any hours of paid leave is counted towards the 80 hours regardless of whether it is at half pay or full pay. Unpaid leave is not counted. 

More information on the 80 hour threshold is available here.

 

Is your business eligible for the extension?

In order to be eligible for the first extension, you must show that your actual GST turnover in the quarter ending September 2020 has declined by the specified amount compared to the same period in 2019. For the second extension, you must show that your actual GST turnover in the quarter ending December 2020 has declined by the specified amount compared to the same period in 2019. The specified required decline in turnover remains the same:

  • 50% for businesses and NFPs with an aggregated turnover of more than $1 billion;
  • 30% for businesses and NFPs with an aggregated turnover of $1 billion or less; or
  • 15% for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities)

The new test is different from the original eligibility test because it is specific to the relevant quarters. It also operates on actual GST turnover rather than projected sales. 

 

JobKeeper FAQs for Employees

Do I have to work to earn JobKeeper payments?

While you must be employed by an eligible business, there is no minimum requirement for hours worked to earn JobKeeper payments. If you are unable to work with your employer due to COVID-19, you will still be able to get the payment. Additionally, it is not lawful for employers to use the payments as leverage to force you into unfair work conditions. However, under JobKeeper directives, your employer can direct you to perform tasks outside your usual responsibilities if determined as necessary by the business.

 

How long will the JobKeeper 2.0 extension go for?

There are two extensions. The first extension is until the 3rd January 2021. The second extension is from 4 January to 28 March 2021. These two extensions have different payment rates.

 

Can I earn JobKeeper if I work part time? 

Yes. Part-time, full-time and long term casuals are all eligible as long as they satisfy the eligibility criteria. A casual employee is considered long term if they have been with their employer for at least 12 months.

 

Can I get JobKeeper if I have 2 jobs?

Employees are only eligible for JobKeeper payments from their permanent employer. If you are working part-time at one business and as a casual employee at another business, you are only eligible to earn the payments from your part-time role. This is the case even if you are a long-term casual at your second job. This is also still the case even if your permanent employer is not eligible for JobKeeper but your casual employer is.

 

Can I say no to JobKeeper?

Employers are unable to claim the payments on your behalf if you do not agree to be nominated. You may want to refuse the JobKeeper payment as accepting it allows employers to issue an Enabling Direction. These directions enable employers to reduce hours of work or change the location of work.

 

Can I cancel JobKeeper? 

Yes, employees can cancel their nomination even if they have already applied and earned payments. To do so, you can either discuss the matter with your employer or phone the ATO directly.

 

How much will I get paid?

Depending on whether your employer is still eligible, and how many total hours you worked in the two fortnights before you became an eligible employee (either 1 March or 1 July 2020, either works), you will receive:

  • Worked 80 hours or more in the previous fortnight period
    • 28 September 2020 to 3 January 2021 = $1,200 per fortnight
    • 4 January to 28 March 2021 = $1,000 per fortnight
  • Worked less than 80 hours in the previous fortnight period
    • 28 September 2020 to 3 January 2021 = $750 per fortnight
    • 4 January to 28 March 2021 = $650 per fortnight

 

What if I earn more?

Employees can earn more than their relevant JobKeeper payment as long as they have worked enough to warrant further pay. Employers will only receive the relevant JobKeeper payment amount for that employee from the government.

 

When will I get paid?

The full amount should be paid as part of your regular pay frequencies. If you are paid weekly or monthly, employees will earn either half their fortnightly payment per week, or double their fortnightly payment per month excluding August. August contains three JobKeeper fortnights so employees will earn triple their fortnightly payment for that month only if paid monthly. 

 

Can I take leave without pay?

Yes, employees can take authorised unpaid leave while receiving JobKeeper payments. During this unpaid leave, employees will still receive the same payments.

 

Can I be fired on JobKeeper?

Employees can still be dismissed while earning JobKeeper. There still must be a valid reason for this in line with the employer’s signed workplace agreements. If you have been given notice of termination, you can still earn payments for the duration of that notice until dismissed. 

For more information on ending employment during the coronavirus pandemic, visit this fair work ombudsman page.

 

How is JobSeeker taxed?

The amount that you receive as a JobKeeper allowance is still taxed at your regular marginal tax rate, as it is regarded as assessable income.

 

Can I earn JobKeeper if I am earning JobSeeker or another coronavirus supplement?

No. For employees that have received either of these payments and then become eligible for the JobKeeper payment, they will need to advise Centrelink.

Please note: If an employee double-dips on JobSeeker and JobKeeper, they may be required to pay it back.

 

Is there an age limit for JobKeeper?

Employees must be 16 or older to qualify, however those aged 16 or 17 must be considered financially independent by the government to be eligible. Anyone aged 18 or above can be eligible without proving independence.

 

 

JobKeeper FAQs for Employers

How do I prove decline in turnover?

Organisations must still prove decline in actual GST revenue of:

  • 50% for businesses and NFPs with an aggregated turnover of more than $1 billion;
  • 30% for businesses and NFPs with an aggregated turnover of $1 billion or less; or
  • 15% for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities)

Employers will need to use business activity statements (“BAS”) for the relevant quarters to prove their eligibility for each extension. BAS for the September quarter are usually submitted in late October, while BAS for the December quarter are usually submitted late January. 

As you cannot process JobKeeper payments to employees before you have proved your eligibility as an organisation, we strongly recommend submitting BAS for the September quarter ASAP (i.e as close to 1 October for the September quarter). This way you will have plenty of time to process the first fortnight’s payment.

You will then need to compare the BAS statements for the quarter in 2020 with the same period in 2019 to prove your decline in turnover. If you are a newly established business and don’t have this information, or the period isn’t comparable for other reasons, there’s no need to panic. The Commissioner of Taxation has the discretion to set alternative tests for you to be able to prove a decline in turnover. Information about the existing discretions can be found here.

 

What are the key dates?

JobKeeper Dates

 

Do you only have to apply once?

If you were already enrolled for payments prior to 28 September 2020 you:

  • do not need to re-enrol for the extension
  • do not need to ask for employees to agree to be nominated by you as their employer if they were already receiving payments
  • do not need to meet any requirements again other than the new decline in income test

 

What does the extension mean for casual and part-time workers?

Initially, employees received the JobKeeper payment based on their employment type (casual or permanent). From 28 September, eligible employees will receive one of two pay rates based on whether or not they worked 80 hours  in the two pay periods prior to 1 March 2020 or 1 July 2020.

 

Will the original JobKeeper directives still apply under JobKeeper 2.0?

Yes. This is an extension of JobKeeper, not a new scheme. 

The JobKeeper Directives can alter some aspects of your employment contract. These changes can override modern awards and employment contracts. The changes can include:

  • Hours of work
  • Timing of work
  • Location of work
  • The taking of annual leave
  • The allocation of work tasks

However, certain conditions must be met, including:

  • The direction must be responsive to business changes attributable to COVID-19 or government initiatives to slow the transmission (eg. government shut-downs of businesses or less patronage)
  • You can only give the direction if the employee cannot be usefully employed for their normal hours
  • You can only give the direction to an employee who you have received a JobKeeper Payment for
  • The direction must be reasonable in the circumstances
  • The employee’s rate of pay cannot be reduced
  • The payment must continue to be passed onto the employee
  • The employee must be provided with at least three days’ notice of the intention to give the direction
  • The direction must be in writing
  • You must consult with the employee about the direction

For more information on these Directives, click here

 

What is the benefit for employers?

Employers will receive a supplement equal to the total amount that their employees are eligible for through the scheme. This will remain the case until the end of the second extension on the 28th March 2021. 

 

What is an eligible employee?

In regards to the JobKeeper payment extensions starting 28th September 2020, The employer must have been in an employment relationship with eligible employees as at 1 July 2020. This includes full-time, part-time or long-term casual employees. A long term casual employee is one that has been employed for a 12 month period ending 1 July 2020. Each eligible employee must continue to be engaged by the employer in order to receive JobKeeper payments. 

Eligible employees are employees who:

  • are current employees of an eligible employer, including employees who have been stood down or re-hired.
  • were employed on 1 July 2020.
  • were, as at 1 July 2020, employed on a full time or part time basis, or had been employed on a regular and systematic casual basis for at least 12 months.
  • are at least 18 years of age at 1 July 2020.
  • are not receiving a JobKeeper Payment from another employer.
  • were a resident for Australian tax purposes on 1 July 2020.
  • are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 July 2020.
  • satisfy the 80 hour working threshold

JobKeeper Payments are paid in respect of each eligible employee who is eligible and is currently employed by the business (including those who are stood down or re-hired).

If an employer opts to participate in the scheme, you must nominate all eligible employees. You cannot choose to nominate only some employees. However, individual eligible employees can choose not to participate.

 

What if an eligible employee is earning more than the JobKeeper payment?

Those earning more than the relevant payment per fortnight should continue to receive their usual salary even if an employer is claiming the JobKeeper allowance. If an employee regularly earns less than the relevant amount, the employer must pay them at least the amount they are eligible for per fortnight (before tax) if they are claiming the JobKeeper allowance for that employee. Employers will still receive the JobKeeper payment from the government for employees earning more than the payment each fortnight.

 

Can I reduce an Employee’s salary in line with the JobKeeper payment amount?

Employment laws and regulations relating to changes of employment contracts still apply. There are options available to employers to reduce employee hours and salaries using JobKeeper directives however this is a complex area that can give rise to employer liabilities if not handled correctly. You should consult a specialist employment adviser if you are considering this. 

 

Is the payment to employees taxable?

Yes, JobKeeper payments to the employer are regarded as assessable income and are subject to the same laws as other forms of income. However, these are not subject to GST.

 

What do employers need to do?

Employers who believe they meet the revenue decline test, or are likely to, and have eligible employees should register their interest at https://www.ato.gov.au/general/jobkeeper-payment/

 

How often is JobKeeper paid to employers?

The government began reimbursing employers from the first week of May 2020 backdating eligible payments to the first full eligible pay period of March 2020. The government now  pays eligible employers on a monthly basis for up to six months or until the business doesn’t qualify.

 

When will employees receive these payments?

Payments made to employees should be done in line with your regular pay period schedule. You can only claim JobKeeper Payment for eligible employees if you pay the supplement per fortnight (before tax) to each eligible employee. 

Think of the payment as a reimbursement—you must make the payment first, then the government will reimburse you the accurate amount per eligible employee. These payments should be made using your payroll system and reported to the ATO via Single Touch Payroll. This will support the online claim process when it is available.

 

Are employers required to pay superannuation on the payment  per fortnight?

No, superannuation is not required to be paid for the amount supplemented by the Government if the employee is not working. If it is supplementing a salary for work performed, super is payable.

 

Which employees will be eligible?

Full time, part time and casual employees (providing casuals have worked for the business on a regular basis for 12 months preceding 1 March 2020) as at 1 March 2020. New Zealand residents are also eligible. The ATO will be using Single Touch Payroll to assess employee eligibility.

 

Are employees eligible for JobKeeper payments if they commence in a business after 1 July 2020?

No, these employees would need to apply for benefits separately through Centrelink. 

 

 

Are employees required to do anything to receive the payments?

As of the 28th September 2020, Employees must be eligible by satisfying an 80 hour working threshold. Once the employer is deemed eligible, payments will be made in accordance with the benefit. Employees are only entitled to receive JobKeeper payments from one employer and they are not entitled to collect payments from Centrelink at the same time. Employees should notify an employer if they are already receiving payments from another employer and must not collect payments from multiple employers.

 

Will employees who receive this benefit still be eligible for the JobSeeker and/or Coronavirus Supplement?

No. For employees that have received either of these payments and then become eligible for the JobKeeper payment, they will need to advise Centrelink.

Please note: If an employee double-dips on JobSeeker and JobKeeper, they may be required to pay it back.

 

Will employees who are not Australian residents be eligible for the JobKeeper payment?

Only New Zealand citizens with Australian working rights. Other employees may be eligible for benefits through Centrelink 

 

Jobkeeper FAQs for Sole Traders

Most rules apply similarly to both sole-traders and larger businesses. As a sole-trader, if your question isn’t answered here check out the FAQs for employers section above.

 

Are sole-traders eligible for JobKeeper?

Most of the same eligibility tests for businesses apply to sole-traders. This means you must have carried out business in Australia on 1 March 2020 and satisfied the relevant decline in turnover tests. Sole-traders must also have had an Australian business number on the 12th March 2020 and an income tax return or statement for a period starting after 1 July 2018.   

 

Can business owners earn JobKeeper?

Yes, although you must satisfy the following conditions in order to qualify as an eligible business participant and earn the payment:

  • You must be actively engaged in your business from 1 March 2020 and onwards
  • You were a sole trader from 1 March 2020 and onwards
  • You were at least 18 years of age and an Australian citizen at 1 March 2020
  • You are not earning other forms of government subsidies or working as an employee for another organisation

Eligible business participants must now also prove they worked as part of the business for at least 80 hours in the month of February 2020 to earn the extension from 28 September 2020 onwards.  

 

Do sole-traders earn the same amount?

Sole-traders are eligible for both tier 1 and tier 2 rates depending on the amount of hours worked as a part of the business in February 2020. Eligible business participants who worked at least 80 hours in February will earn the tier one rate. Eligible business participants who worked less than 80 hours in February will earn the tier two rate. These rates are identical to the Tier 1 and 2 rates for regular employees.

 

Want more information on JobKeeper 2.0 from industry experts?

We know that times are challenging and navigating your way around complex changes can be stressful. To help you better understand the changes and what it means for your business, catch up on this important Q&A with industry experts to unpack the JobKeeper 2.0 extension

Join Ben Thompson (CEO and founder at Employment Hero), Shane Duffy (CEO at Employment Innovations) and Simon Obee (Head of Legal at EI Legal) as they talk about the new extension and what it means for your business. 

👉 Sign up here to watch the JobKeeper 2.0 Extension webinar 👈

 

Suggested Reading

If you’re looking for more information on COVID-19 and what it means for your business, we’ve pulled together many resources to help you navigate this uncertain time. From articles to templates, webinars and posters, we’re here to support you through this. You can visit the Employment Hero COVID-19 Resource Hub here. 

Additionally, we recommend these resources for further reading.

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