The Australian Government is offering wage subsidies to help employers retain their employees during the COVID-19 pandemic, and keep employees engaged until the inevitable rebound.

Wage relief

Eligible businesses (including not-for-profits) who elect to participate in the scheme can expect a wage subsidy of $1,500 per fortnight per eligible employee. The JobKeeper payment is a flat rate regardless of a person's salary. An employer will continue to receive the JobKeeper payment for each employee while they remain employed. Eligible sole traders will also receive a single payment of $1,500 per fortnight.

How it will work

Eligible employees whose wages are at least $1,500 per fortnight before tax, will continue to receive their pay as normal. The JobKeeper payment will assist the employer to subsidise all or part of the employee's income.

If an employee usually receives less than $1,500 in income per fortnight before tax, their employer must pay their employee at least $1,500 per fortnight, before tax (regardless of whether the person is working or stood down). Superannuation on the amount that is the difference between an employee's usual fortnightly income, and the JobKeeper payment, is a discretionary matter for the employer.

The JobKeeper payments will also apply in relation to those employees who were employed on 1 March 2020, subsequently ceased employment, and then were re-employed by the same employer.

Eligible businesses

Under the proposed fiscal package, businesses will be eligible for the subsidy if their:

  • turnover is less than $1 billion and will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
  • turnover is $1 billion or more and will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and
  • the business is not subject to the 'Major Bank Levy' (currently ANZ, Commonwealth, NAB, Macquarie and Westpac only).

Eligibility for employees

Employees will be eligible if they are:

  • at least 16 years of age and was employed by the employer as of 1 March 2020;
  • full-time, part-time, or a long-term casual (a casual employed on a regular basis for over 12 months as at 1 March 2020);
  • not receiving the JobKeeper payment from another employer; and
  • an Australian citizen, the holder of a permanent visa, or any other relevant visa (Subclass 444 visa holder, protected special category visa holder, or a non-protected special category visa holder residing continually in Australia for 10 years or more).

What's next

Employers should familiarise themselves with these new measures as well as the relevant legislation, once it has been passed by the Federal Parliament, likely early next month.

In the interim, businesses can register their interest in the scheme via the ATO's website, or wait to apply on-line. Information required by the ATO will include revenue information (declaration of recent business activity), ABN and eligible employee details.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.