The "JobKeeper Payment" wage subsidy program announced by the Federal Government on 30 March 2020 has received an unprecedented response with more than 700,000 businesses registering their interest so far and the Treasurer now estimating that up to half of the Australian workforce may receive a JobKeeper Payment over the next six months.

A summary of those announcements by our specialist employment law team is available here.

Legislation passes implementing JobKeeper Payment scheme

On 8 April 2020, the Federal Parliament passed legislation to implement and regulate the JobKeeper Payment scheme.

The legislation provides a framework for the Treasurer, Josh Frydenberg, to make the necessary rules administering and governing the JobKeeper Payment scheme which will generally be administered by the Tax Commissioner. Those rules have not yet been released, although it is anticipated that eligibility requirements and the amount and timing of payments under the scheme will not change from what was previously announced.

The legislation also significantly amends the Fair Work Act 2009 (Cth) to support the practical operation of the scheme by providing employers with significant temporary powers to implement flexibility measures.

Employers who are eligible for the Jobkeeper payment will now be able to issue a range of directions to eligible employees. Any directions given will remain in effect until 28 September 2020 (unless withdrawn earlier by the employer).

Employers should exercise caution before issuing any directions to employees to ensure they are legally entitled to receive JobKeeper payments, and should obtain expert advice if they are in any doubt about their likely eligibility because civil penalties will apply if unauthorised directions are given.

Direction to reduce employee working hours

Employers will be able to give a direction to employees to reduce their working hours (including to zero) if they cannot be usefully employed for their normal days or hours of work due to COVID-19 or government initiatives to slow the transmission of the virus.

Direction to change duties or work location

Employers will be able to direct an employee to:

  • perform different duties, provided they are safe and within the employee's skill and competency; and
  • change their place of work (including to their home) provided the alternative location is suitable and does not require the employee to travel an unreasonable distance.

Request to change days of work

Employers will also have a right to request that an employee agree to work on different days or at different times to those usually worked. Provided that the overall effect of the change will not be to reduce the employees' number of hours of work, an employee cannot unreasonably refuse to enter into such an arrangement.

Notice and consultation requirements

Before issuing a direction an employer must generally provide at least 3 days notice and engage in consultation with the employee.

Protections for employees

The new legislation provides a number of safeguards for employees, including that the direction not be unreasonable in all the circumstances and that it be necessary to continue the employment of one or more employees of the business (which need not be or include the employee receiving the direction).

Further, an employer will contravene a civil penalty provision where it purports to give a jobkeeper enabling direction which is not properly authorised under the legislation and the employer knew that this was the case which can carry a maximum penalty of $63,000 for companies and $12,600 for individuals.

The period that a direction is in effect will count as service and employees who are subject to a direction will continue to accrue leave entitlements as if the direction had not been given. Redundancy pay and notice of termination will also be calculated as if the direction had not been given.

Right to agree to take annual leave at half pay extended to award free employees

The legislation also amends the Fair Work Act to introduce a right for employers to request that an employee take twice as much annual leave at half pay. Provided that the employee's remaining leave balance will not be less than two weeks, an employee cannot unreasonably refuse to agree to such an arrangement.

For a discussion of similar amendments made recently by the Fair Work Commission to 99 modern awards see our related article here.

JobKeeper – what do we know?

As discussed in our previous article, the Federal Government's announcement of the JobKeeper scheme raised a number of questions as to how the scheme will operate in practice, including how payments passed on to employees would interact with existing contractual and legislative entitlements.

The Federal Government has since clarified that:

  • employers seeking to demonstrate the requisite decline in turnover will be required to establish that their turnover (defined according to the current calculations for GST purposes and as reported on a Business Activity Statement) has or will likely fall in a relevant month or quarter relative to their turnover in a corresponding period a year earlier;
  • where a business was not in operation a year earlier, or where their turnover a year earlier in a corresponding period was not representative of their usual or average turnover, the Tax Commissioner will have discretion to request and consider additional information to determine whether the business has been adversely affected by the impacts of the Coronavirus;
  • business who are part of a corporate group for income tax purposes will have their turnover aggregated to determine their eligibility for the program; and
  • Charities registered with the Australian Charities and Not-For-Profit Commission who estimate that their turnover has fallen or will likely fall by more than 15% in a comparable period will also be considered an eligible employer.

South Australian businesses will also be relieved with the South Australian Treasurer's announcement that business will be exempt from paying any payroll tax on the JobKeeper Payment.

Outstanding issues and where to from here

At this stage, a number of issues remain unclear:

  • whether an employee who was retrenched and has been subsequently re-hired would need to be re-employed on the same terms and conditions;
  • whether employers would have a right to set-off any termination or redundancy payments already paid against any JobKeeper Payments payable to an employee;
  • how the reasonableness of a direction will be assessed, given the balancing of interests between the employer and employee;
  • what degree of consultation will be required before a direction can be given.

The amendments to the Fair Work Act will likely come into effect very shortly and will operate until 28 September 2020.

We anticipate that the release of the JobKeeper payment rules will provide further clarity on how the scheme will operate.

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.