ATO, Fair Work, Industry News, JobKeeper

COVID-19 JobKeeper 02 is Now Law

By Paolo Coniglio, 25.09.2020

jobkeeper 02 for employees

 

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The Coronavirus Economic Response Package (Payments and Benefits) Act 2020, commonly known as ‘The JobKeeper Subsidy Scheme’ has officially been extended to the end of March 2021. This additional stimulus is set to cost the Australian Government $15 billion over the estimated period, bringing the total cost of the JobKeeper scheme to $101 billion.

Whilst the existing scheme will continue until the 27 September 2020, the second stage of the JobKeeper scheme will run from 28 September 2020 until the end of March 2021 and will be restricted to those businesses that have been significantly impacted by the Coronavirus Pandemic over the July to September quarter and subsequently, over the October to December quarter.

Although in principle the JobKeeper extension works similarly to the initial scheme, a number of amendments to both the decline in GST Turnover and the employer/employee eligibility have been applied to the second part of the scheme.

Therefore, it is important that you become familiar with the changes introduced in this new phase.

JobKeeper Eligibility – Employers

The second stage of the JobKeeper Payment Scheme is available to both businesses who are currently eligible for the JobKeeper subsidy and to new entities, provided they meet the eligibility criteria.

This stage will also define two types of employers: Qualifying Employers and Legacy Employers.

Qualifying Employers

Qualifying Employers are businesses who will pass the GST turnover decline test. These businesses will:

  1. receive a fortnightly wage subsidy for all their eligible employees;
  2. have the ability to access most of the Fair Work flexibility provisions available during the first stage of the scheme.

To be eligible for the second stage of the JobKeeper Scheme, businesses and not-for-profits will still need to demonstrate that they have experienced a decline in turnover by the same percentages as the previous stage. The turnover decline percentages are:

  • 15% for ACNC – Registered charities (other than Schools and Universities);
  • 30% with an aggregated annual turnover of $1 Billion or less;
  • 50% with an aggregated annual turnover of more than $1 Billion.

Note: Childcare Centres outside Victoria are no longer eligible to the JobKeeper Payment Scheme.

What has changed in this new stage is the period and methodology applicable to the test:

  1. The test can only be run on the actual decline in turnover (not projected);
  2. The testing period relates to a whole quarter (not just an individual month) compared to the same quarter the previous year;
  3. The method used to assess the turnover decline (Cash or Accruals) must be the same as the GST reporting method from the Business Activity Statement;
    Note: Businesses not registered for GST can still choose between Cash or Accruals.
  4. The GST Turnover estimate must include sales of assets (previously excluded);
  5. The Activity Statement for the previous year (Jul-Sep 19 and Oct-Dec 19) must be lodged to access the scheme;
  6. Re-assessment is required every 3 months
    – Jul-Sep > to receive wage subsidies for the Oct-Dec period;
    – Oct-Dec > to receive wage subsidies for the Jan-Mar period.

Alternate Turnover Tests

Alternate tests have been formally issued on Wednesday 23 September 2020 and they are similar to the ones applied in the JobKeeper 1.0. More information will become available in the next few days.

Jobkeeper Eligibility

Legacy Employers

Legacy Employers are businesses that were eligible to the first stage of the JobKeeper Scheme but failed the GST turnover test for the second stage, however, they have still suffered a 10% decline in turnover compared to the previous year. These businesses will no longer be eligible to receive the wage subsidies, however, they will still be able to access some of the Fair Work Flexibility Provisions.

The 10% Decline Testing Periods vary to access the Fair Work Flexibility Provisions at different times:

  1. Apr-Jun 2020 Quarter > to access the Fair Work Flexibility Provisions until the 28th October 2020;
  2. Jul-Sep 2020 Quarter > to access the Fair Work Flexibility Provisions until the 27th February 2021;
  3. Oct-Dec 2020 Quarter > to access the Fair Work Flexibility Provisions until the 31st March 2021.

To be able to access the Fair Work Flexibility provisions these businesses will need to either:

  • obtain a Decline in Turnover Ceritificate from an eligible Financial Services Provider (can be your BAS or Tax Agent)

OR

  • Self-certify by issuing a Statutory Declaration in writing (if they employ less than 15 employees).

JobKeeper Eligibility – Employees

Eligibility Type

In principle, the eligibility type applicable to employees has not changed from JobKeeper stage 1. However, the ATO has extended the eligibility until 1 July 2020 to include additional employees (new/updated eligibility requirements in blue).

Eligible employees are employees who:

  •  are currently employed by an eligible employer;
  • where employed by such employer on 1st July 2020;
  • are employed as Full-Time or Part-Time employees
    (including employees on fixed-term contracts);
  • are employed as Casual Employees for over 12 months as of 1st July 2020;
  • have been stood down due to Government mandate;
  • are an Australian Citizen, Permanent Resident or New Zealander on a Subclass 444 Visa;
  • are not receiving JobKeeper payments from another employer;
  • are not receiving the JobSeeker Payment
    (although some exemptions will apply, depending on individual employee circumstances);
  • are employees re-employed after the 1st July 2020, who have come from a previous employer eligible to the JobKeeper scheme who has ceased to operate;
  • are employees re-employed after the 1st July 2020, previously employed by the same employer and previously receiving the JobKeeper subsidy payments.

The legislation update will also allow the ATO to share the key JobKeeper protected information with other Government Agencies, most importantly the Department of Human Services (Centrelink) to prevent individuals from ‘double-dipping’ from the two schemes.

Jobkeeper Employees' Eligibility

JobKeeper Payments to Eligible Employees

The subsidy payment will no longer be the same amount for all employees. Based on the number of hours worked per week, employees will now be classified into two ‘Tiers’:

  • Tier 1 > Employees who have worked more than 80 hours over a set period
    These employees will be granted a higher subsidy payment to their employer
  • Tier 2 > Employees who have worked less than 80 hours over a set period
    These employees will be granted a lower subsidy payment to their employer

The same classification assessment applies to Eligible Business Participants.

JobKeeper – Eligible Employees’ Tiers

Employees’ Tiers

Tier 1 employees are:

  •  Full-time employees;
  • Part-time employees that have worked 80 hours or more, over a set 28 day reference period;
  • Casual employees working for 12 months or more as of 1 July 2020, that have worked 80 hours or more, over a set 28 day reference period;
  • Eligible Business Participants who have actively contributed to the workplace for at least 80 hours or more, over a set 28 day reference period.

Tier 2 employees are:

  • Part-time employees that have worked less than 80 hours over a set 28 day reference period;
  • Casual employees working for 12 months or more as of 1 July 2020, who have worked less than 80 hours over a set 28 day reference period;
  • Eligible Business Participants who have actively contributed to the workplace for less than 80 hours over a set 28 day reference period.

Jobkeeper Employee Tiers

Employees – Regular and Systematic Base Testing

A casual employee is likely to have been working on a ‘Regular and Systematic basis’ if they had a recurring work schedule or maintained a reasonable expectation of ongoing work. The ATO has set out a range of testing to assess whether a casual employee has been working on a “Regular and Systematic basis’ and therefore entitled to the Tier 1 subsidy.

For more information: ATO – JobKeeper – Long-Term Casual Employees

Test 1 – Employee 80-hour Threshold

Regular and Systematic basis is determined by assessing if an employee has worked 80-hours or more during the 28 day pay period preceding either the 1 March 2020 or the 1 July 2020 (whichever is greater).
Note: This includes Annual Leave, Personal Leave, Long Service Leave and Overtime.

More information: ATO – JobKeeper 80-hour threshold for employees

Test 2 – Employee 80-hour Threshold (Alternate Period)

If an employer can prove that the circumstances of the February or June periods are not a suitable representation of the average hours worked by some of their employees, they can select the most recent 28 days of a ‘normal period’ which provides a more accurate representation of the average of hours worked by such employee.

Additional Alternate Reference periods are included by the ATO, for more information: ATO – JobKeeper Alternative Reference Periods

Test 3 – Employee being paid more or less than $1,500 for a set period

If an employer is not able to access a record of the hours worked by a relevant employee, then the Regular and Systematic basis can be determined by assessing if an employee has earned more or less than $1,500 over the relevant 28 day reference period.

Eligible Business Participants – Regular and Systematic Base Testing

Test – EBP 80-hour Threshold

Regular and Systematic basis is determined by assessing if an Eligible Business Participant has actively contributed to the workplace, exclusively during the 28 day period preceeding the 1st March 2020.

JobKeeper – Wage Subsidy Payments

Payment Periods

Oct-Dec Period

Tier 1 > eligible Employees / Business Participants will receive $1,200 subsidy per fortnight;

Tier 2 > eligible Employees / Business Participants will receive $750 subsidy per fortnight.

Jan-Mar Period

Tier 1 > eligible Employees / Business Participants will receive $1,000 subsidy per fortnight;

Tier 2 > eligible Employees / Business Participants will receive $650 subsidy per fortnight.

Jobkeeper Fortnightly Payments

Payment Requirements

The payment requirements and wage conditions of the second stage JobKeeper Payment Scheme have not changed from the initial stage:

  • Employers are still required to make payments to employees equal to or greater than the gross amount of the JobKeeper subsidy;
  • Top-Up payments must be made within the relevant Fortnightly pay period (with the exception of Fortnights 14 and 15 where Top-Up payments can be made by the 31 October 2020)
  • The ATO will continue to make the subsidy payments monthly in arrears upon the employer lodging their monthly declarations by the relevant monthly deadline;
  • Monthly actual and projected turnovers are still required to be submitted to the ATO in the monthly declarations. These figures do not affect the continued eligibility of the business in the JobKeeper scheme.

Jobkeeper Fortnights

JobKeeper – Apply for and Manage the Scheme

Managing the application to enter or stay in the Scheme changes depending on the circumstances of the business. These can be:

Businesses previously not eligible to JobKeeper 1.0 now eligible for JobKeeper 2.0

Similar to JobKeeper 1.0, these businesses will need to:

  1. Perform the relevant GST Turnover tests and keep copies of evidence the actual decline has occurred;
  2. Determine eligible versus ineligible employees and assess the correct Tier classification for eligible employees. Then set them up accordingly in their Accounting System through Single Touch Payroll;
  3. Obtain Employee Nomination Notices from all Eligible Employees and Eligible Business Participant (if applicable);
  4. Register their enrolment online via their ATO Business Portal (or through a BAS or Tax Agent)
    Note: Businesses must have set up myGovID on their phone and linked their ABN in Relationship Authorisation Manager (RAM) to access their Business Portal;
  5. Notify their employees in writing about their enrolment into the program and the subsidy amount they are expected to be paid and inform them about the ability of the business to access the Fair Work Flexibility Provisions;
    Note: ideally get a notification from employees confirming their understanding of the scheme and how this will potentially affect their work rights.
  6. Identify all employees who are required to receive Top-Up Payments for Fortnight 14 and 15 and top up their payments by no later than 31st October 2020, then continue to top up their salary on each fortnight for the following periods.
  7. Lodge the JobKeeper Monthly Declarations to the ATO to receive the subsidy by the relevant due date;
  8. Re-assess their GST Turnover for the Oct-Dec period in January 2021.

Jobkeeper Process

Businesses eligible for JobKeeper 1.0 and re-qualifying for JobKeeper 2.0

These businesses will be required to:

  1. Perform the relevant GST Turnover tests and keep copies of evidence the actual decline has continued to occur;
  2. Correctly identify Tier 1 and Tier 2 employees and set them up correctly in their Accounting system through Single Touch Payroll;
  3. Notify their employees in writing about their enrolment into the program, the new subsidy amount they are expected to be paid and inform them about the changes in conditions of the Fair Work Flexibility Provisions;
    Note: ideally get a notification from employees confirming their understanding of the scheme and how this will potentially affect their work conditions.
  4. Obtain Employee Nomination Notices only from the new employees entering the scheme;
  5. Identify all employees who are required to receive Top-Up Payments for Fortnight 14 and 15 and top up their payments by no later than 31st October 2020, then continue to top up their salary on each fortnight for the following periods.
    Note: businesses may need to amend their current payroll settings if they are set up to automatically top up some employees to $1,500 per fortnight to the new amount determined by the Tier assessment.
  6. Continue to lodge the JobKeeper Monthly Declarations to the ATO to receive the subsidy by the relevant due date;
  7. Re-assess their GST Turnover for the Oct-Dec period in January 2021.

Jobkeeper Process

Businesses eligible for JobKeeper 1.0, but no longer eligible for JobKeeper 2.0

These businesses will be required to:

  1. Perform the relevant GST Turnover tests to assess their eligibility;
  2. Notify their employees that they are exiting the JobKeeper scheme as of the 27 September 2020 and will no longer receive wage subsidies and therefore be able to pass the JobKeeper Top-Up Payment to their employees.
    Note: if they still qualify as a Legacy Employer, inform their employees about the retained ability to access some of the Fair Work Flexibility Provisions;
  3. Exit their employees out of the scheme from their Accounting System
    Note: the ATO does not require them to exit them out of the program;
  4. Stop lodging JobKeeper Monthly Declarations to the ATO;
  5. Re-assess their GST Turnover for the Oct-Dec period in January 2021 and see if they can re-enter the Scheme.

Jobkeeper Process

JobKeeper – Fair Work Flexibility Provisions for Employers

Under the temporary Fair Work Act, Qualifying Employers will continue to access some of the Fair Work Flexibility Provisions available during Jobkeeper 1.0. Those employers who wish to issue enabling directions, must follow the same procedural requirements set out during the first stage of the scheme. These include: issuing employees notices in writing, keep written records of all enabling direction requests and consultations. Finally, ensuring all issued directions are fair and reasonable.

Legacy Employers instead have access to a more restricted range of Flexibility Provisions and some of the procedural requirements have been modified to support employees.

This article will simply provide a summary of the Fair Work Flexibility Provisions for employers. More detailed information on the Fair Work Flexibility Provision is available on the Fair Work Ombudsman Jobkeeper page 

Summary of Fairwork Flexibility Provisions for Employers

Fairwork Flexibility Provisions

JobKeeper – Our Package Offer

The JobKeeper Payment Scheme represents an incredible opportunity for businesses to receive an important subsidy to keep their staff employed and their business afloat.
However, there are strict guidelines to adhere to and rigorous tests to pass to ensure the business continues to be eligible for the scheme. We understand that most small businesses will feel completely out of their depth to face these requirements. Evolution Cloud Accounting is here to help. We have prepared a JobKeeper Payment Package which will take care of all steps involved in the GST Turnover Testing, Template Communication emails to employees and ongoing monthly reports.

JobKeeper Payment Scheme – GST Turnover Actual Test ($220 Ex GST)
The Package includes:

  • Perform the GST Turnover Tests to verify your eligibility to the scheme;
  • Provision of email templates to notify your employees;
  • Exit Employees in your Accounting System and completing the Scheme;
  • Register new Eligible Employees to the Scheme (if deemed eligible);
  • Final Reconciliation tasks at the end of the Scheme (if deemed eligible).

JobKeeper Payment Scheme – GST Turnover Alternate Test ($220 Ex GST per Test)
The Package includes:

  • Perform a GST Turnover Alternate Test to verify your eligibility to the scheme;

JobKeeper Payment Scheme – GST Turnover Legacy Employer ($220 Ex GST)
The Package includes:

  • Perform the GST Turnover Tests to verify your eligibility to become a legacy employer;
  • Issue of the 10% Decline in Turnover Certificate;

JobKeeper Payment Scheme – Employee Tier Assessment ($30 per Employee)
The Package includes:

  • Perform Tier Testing for all Part-Time and Casual Employees;

JobKeeper Payment Scheme – Ongoing Monthly Reporting ($140 Ex GST per Lodgement)
The Package includes:

  • Submission of ongoing Turnover Monthly Reports to the ATO.

If you are interested in our new JobKeeper Package, send us a support request at support@evolutionclouds.com.au or click on Contact Us directly through our Website.

Disclaimer

This article has been developed for information purposes only. It does not purport to be comprehensive or to tender legal or financial advice.

Links ATO | Fairwork

https://www.ato.gov.au/general/jobkeeper-payment/employers/eligible-employers/

https://www.ato.gov.au/General/JobKeeper-Payment/Employers/Your-eligible-employees/?=redirected_URL

https://www.ato.gov.au/General/JobKeeper-Payment/Sole-traders/#Workoutyoureligibility

https://www.ato.gov.au/General/JobKeeper-Payment/JobKeeper-key-dates/#JobKeeperfortnights

https://www.ato.gov.au/General/Jobkeeper-Payment/In-detail/jobkeeper—timeline-of-content-updates

https://www.ato.gov.au/General/COVID-19/Government-grants-and-payments-during-COVID-19/?fbclid=IwAR0Ob-E46bnsNjN20kR0RU5SNUJhtCBfnJYE8Gx_me9Am9nJO4coNgmPnEw#Paymentstosupportbusiness

https://coronavirus.fairwork.gov.au/coronavirus-and-australian-workplace-laws/pay-and-leave-during-coronavirus/jobkeeper-wage-subsidy-scheme

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