JobKeeper Rules for Business 

Now we have the JobKeeper Rules for Business, business owners can now make decisions about:

• whether they want to formally apply for the JobKeeper scheme; and,
• which employees they want the JobKeeper scheme to apply to.

To help make these decisions, I have set out some of the key components of the JobKeeper scheme for business owners.

Also watch out as shortly I will provide a step by step process to get your JobKeeper scheme money

Important Note

The JobKeeper Rules for Business is made up of over 200 pages of legislation, notes and fact sheets.  These are complex in nature and on top of that, no one knows exactly how the ATO will manage this process. In law they have discretion, but how they apply this is still to be seen.  And as the rules are set by the Treasurer, they can be changed with minimal notice.  If you are unsure about anything, obtain appropriate advice.

If you want a confidential discussion on your business situation, feel free to contact me by email wayne@arealcfo.com.au or by phone on 0412 227 052

What is the JobKeeper Scheme?

The JobKeeper scheme is a reimbursement scheme which has a minimum payment guarantee of $1,500 before tax, per fortnight, for each eligible employee.

This scheme will be available for 13 fortnights starting 30 March 2020 and ending 27 September 2020 and the reimbursement will be paid monthly in arrears.

Key Dates

The JobKeeper Scheme is for 13 fortnights starting 30 March 2020 and ending on 27 September 2020.

To be eligible for the JobKeeper Scheme for the fortnights 30 March 2020 to 12 April 2020 and 13 April 2020 to 26 April 2020, you must have applied before 27 April 2020.  If you apply after 27 April 2020, you will only get the JobKeeper reimbursement for that particular fortnight and thereafter.  There is no backdating.

Each fortnight, you must make an election that you wish to remain in the JobKeeper Scheme and provide all the necessary details of the reimbursement claimed for that fortnight.

Business Employer Eligibility for the JobKeeper Scheme

Employers excluding the major banks, as long as they had an ABN on 12 March 2020, will be eligible for the JobKeeper subsidy if their business has a turnover of:

• less than $1 billion (*) and estimate their turnover has fallen or will likely fall by 30 per cent or more; or
• more than $1 billion (*) and estimate their turnover has fallen or will likely fall by 50 per cent or more.

For most charities registered with the Australian Charities and Not-for-profits Commission (ACNC), they will be eligible for the JobKeeper subsidy if they estimate their turnover has fallen or will likely fall by 15 per cent or more relative to a comparable period.  Some charities such as schools are excluded.

Specific exclusions include any government body (federal state or local).

(*)          Either of, if your revenue was above $1 billion in your 2018-2019 tax return, or is likely to exceed $1 billion in the 2019-2020 year.  For example, if your revenue in 2018-2019 was $1.2 billion, and your revenue fell by 35% to $780 million, you are not eligible for the JobKeeper payment.  Instead your revenue needs to fall by 50% to $600 million.

What periods are you comparing to determine the revenue reduction?

To determine if your revenue has fallen by the appropriate amount or not, there are set comparison periods (what the government calls the “Turnover Test Period”).  These are the:

• individual months of March to September 2020; or
• quarters of April to June 2020 or July to September 2020.

In the first instance the selected month, quarter is compared to the corresponding period last year.  But the Australian Taxation Office has discretion to review this.  For example, for start-ups.

For example, for a business with a turnover of less than $1 billion, if you are using the month of March 2020, your March 2020 revenue must be at least 30% lower than the revenue for March 2019.    If your revenue in March 2019 was $250,000 which declined to $200,000 in March 2020, you would not be eligible as this $50,000 decline is only 20% ($50,000 / $250,000).  If your revenue fell to $150,000, you would be eligible as your revenue fell by 40% ($100,000 / $250,000).

It is important to note that if you:

• missed the revenue reduction in March 2020, you can reassess this using April or later months.
• If you met the revenue decline in one month, you don’t need to be reassessed in future months.

Business Employee Eligibility for the JobKeeper Scheme

There are two tests for eligibility.

One test is based on factual data as at 1 March 2020 for each employee including the requirement that the employee:

• was a full-time or part-time employee, or a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020;
• was aged 16 years or older at 1 March 2020;
• was an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020; and,
• was a resident for Australian tax purposes on 1 March 2020.

The first thing any employer who is thinking about applying for the JobKeeper scheme should do is to work out which employees meet the above requirements as at 1 March 2020.

The second test for eligibility is assessed each fortnight for every employee who meets the 1 March 2020.  These tests are:

• the employee is not in receipt of a JobKeeper payment from another employer; and,
• the employer has satisfied the wage condition (see below for more on the wage condition) by the end of the fortnight in respect of that employee. Employees on monthly pays are apportioned into fortnights.
• the employee is not an excluded employee such as on paid parental leave, partner or dads leave and some people on workers compensation payments

The employer is then required to get a “nomination notice” each fortnight from the employee stating they comply with the tests as at 1 March 2020 and that they are not claiming JobKeeper from another employer, nor are they an excluded employee.  The reason for this notice being submitted by the employee is that it gives the ATO the ability to directly chase the employee if they make false statements.

Note if an employee claims from more than one employer, both employers run the risk of losing the JobKeeper reimbursement.

If you replace an employee who was employed on 1 March 2020 with a new employee, that new employee will not be eligible for the JobKeeper payment.  Nor will any other new employees employed after 1 March 2020 be eligible for the Job Keeper payment.

Rules for working directors who were not paying themselves a salary

If the working director is actively engaged in the business, but not an employee as they normally pay themselves by way of dividend, they may be entitled to the JobKeeper reimbursement.

This is limited to only one director however.

Wage Condition

The payment to your employer before tax for each fortnight has to be the greater of:

• the $1,500 JobKeeper payment payable to the employer for the employee for the fortnight; or
• the amount payable to the employee in relation to the performance of work during the fortnight. You can’t reduce the base hourly rate of pay for the employee, but you may need to increase it if they are doing higher duties

For example, if your employee, Jim was on a salary of $52,000 per annum excluding superannuation and they worked 76 hours in that fortnight, you have to pay Jim $2,000, plus superannuation.  Which means after the $1,500 JobKeeper reimbursement from the ATO, Jim costs you $500 before superannuation and $190 in superannuation.

For example, if you had Jess, a casual working 10 hours in the fortnight at a rate of $25 per hour, being $250 in total, the employer needs to pay Jess an extra $1,250 in that fortnight.  Which means after the $1,500 JobKeeper reimbursement from the ATO, Jess costs you just $24 in superannuation.

The $1,500 in each fortnight can be made up of:

• the actual moneys paid to the employee net of tax and any salary sacrifice, which includes any JobKeeper supplement moneys paid to workers ordinarily earning less than $1,500 per fortnight.
• the value of the income tax or HECS debts withheld for this particular pay.
• any salary sacrifice superannuation contributions payable on behalf of the employee.
• any other salary sacrifice arrangement for that period.

Note for employees paid for periods longer than a fortnight (for example monthly), you will need to determine a fortnightly equivalent.  For example, for monthly pays, I expect this is taking the monthly pay you paid them, times this by 12 and then divide by 26.

What flexibility does the Employer have?

Under the Fair Work Act there was limited flexibility for an employer to deal with their staff in the current environment.  To overcome this, new rules have been passed as part of the JobKeeper scheme.

These rules are called the “JobKeeper enabling stand down direction”.  These give the employer more flexibility and certainty in how they handle their workforce if they qualify for the JobKeeper Scheme.

In order to make a JobKeeper enabling stand down direction valid, the employee:

• Must be eligible for the JobKeeper scheme;
• Can’t be usefully employed for the employee’s normal days or hours during the JobKeeper enabling stand down period because of changes to business attributable to the Coronavirus pandemic;
• Being paid in accordance with the rules noted above.

And any direction must not be unreasonable in all the circumstances.

If all of these apply to the employee, the employer can, after consultation with the employee, make a written direction with at least 3 days notice, to the employee:

• To work fewer days and / or hours. For example, you could direct the employee to work only 4 days a week.
• Change work duties as long as these are safe and within the employee’s skill, competency and qualifications and the work is reasonably within the scope of the employer’s business operations. For example, if your business was a café, you could not ask the employee to work on a production line.
• Perform those duties at a place different from their normal place of work, including the employee’s home. But they can’t be forced to travel unreasonably.

The employee can’t unreasonably refuse such a direction.  If there is a dispute the Fair Work Commission can resolve this.

Other rules around a JobKeeper enabling stand down direction include:

• It does not apply while an employee is taking paid or unpaid leave authorised by the employer. If the employee is on annual leave it is either at full pay, or twice as long at half pay.
• These directions can’t extend beyond 27 September 2020.
• These directions are not redundancies.

An Example of Workplace Flexibility

Earlier we used the example of Jim, who was paid $2,000 a fortnight for 76 hours of work.  Assuming all the criteria was met, the employer could make a direction to Jim to work 4 days a week, one week in the usual office and one week at home doing the same work.  Jim’s hours would reduce to 60.8 hours per fortnight.  Using the same hourly rate, Jim would now be only entitled to $1,600 a fortnight plus super.

Alternatively, the employer could make a direction to Jim to work 3 days a week, one week in the usual office and one week at home doing other work of equal or lower level of duties.  Jim’s hours would reduce to 45.6 hours per fortnight.  Using the same hourly rate, Jim would now be only entitled to $1,200 a fortnight plus super plus a top up of $300 with no super.

Alternatively, the employer could stand down Jim totally with no work.  Jim would then only be entitled to $1,500 a fortnight with no super.

In all cases the employer should recover $1,500 from the government.

Impact on Leave balances 

Leave balances accrue as if the employee was employed under normal conditions.

For example, if Jim was covered under this JobKeeper scheme for six months he would have earned 2 weeks annual leave at his full pay of $2,000, even if he was stood down and did not work any hours.  Yes, it is a cost, but think of this as saving you in retraining costs if you employed a new person.

What about Public Holidays?

Let’s say you agreed that Jim would work Tuesday to Thursday, when he normally worked Monday to Friday.  If a public holiday fell on a Monday or Friday (like at Easter), you would need to pay him his normal pay for those days, even if he was not supposed to work that day.

Important Note

The JobKeeper Scheme and JobKeeper Rules for Business are made up of over 200 pages of legislation, notes and fact sheets.  These are complex in nature and on top of that, no one knows exactly how the ATO will manage this process. In law they have discretion, but how they apply this is still to be seen.  And as the rules are set by the Treasurer, they can be canged with minimal notice.  If you are unsure about anything, obtain appropriate advice.

If you want a confidential discussion on your business situation, feel free to use the below form to contact me or call me on 0412 227 052

Contact Wayne Wanders for your FREE Business Survival Session

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au