Know Your Legal Rights – The Practicalities of the JobKeeper Payment

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BridgePoint Group’s Russell Debney provides a practical Q&A for Employers and Employment Arrangements

There is plenty of information around about the new JobKeeper Payments. Most employers will know where to get information about the payment and how to apply.

But what does it really mean in practice for employers once they have applied for the JobKeeper payment and turn their minds to the new arrangements with their employees?

Q: I am a SME and have managed to hold on to my employees so far, but I am struggling. Can I still apply for the new JobKeeper payments that will enable me to keep them employed?

A: Yes, but there are two main hurdles. Your business needs to qualify and so do your employees. For your business, you need to be able to show that your turnover will be reduced by more than 30% compared to a comparable period a year ago. And then your permanent and part-time employees must have been employed by you at 1 March 2020, or if casual, have been employed on a regular basis for more than 12 months.

Q: What if I am self-employed and don’t have employees?

A: You can also apply if the turnover condition applies.

Q: I stood down my employees without pay and would have them back if I can access the JobKeeper payments. Can I do that?

A:  Yes. You should think of a stand-down as being like a temporary, short-term pause in the employment relationship. The employees are simply not paid while the circumstances that led to them being stood-down remain. As soon as those circumstances cease, then the employees resume their employment on the same terms that applied before they were stood down. The $1,500 can then be applied as a subsidy to the salary cost. Although if the employee was earning less than $1,500 per fortnight, then you must still pay the entire $1,500 at least until the JobKeeper subsidy ends, even if that means a temporary salary increase to that employee. Employees will pay tax on receipt of a JobKeeper payment as they would on receipt of a normal wage payment.

Q: What if the employees were earning more than the $1,500 per fortnight?

A: Remember that the employment agreement, any relevant Award and the Fair Work Act have not changed. So you must pay the full salary and entitlements when the employees return. Some employers might choose to only end the stand-down if they receive the JobKeeper subsidy and also renegotiate the employment contract with the employee to reduce pay, hours of work or duties, for example. That is likely to be the case with most businesses where employees have been stood down.

Q: What if neither of those alternatives work for me, or my employees?

A: Once again, remember that the Fair Work Act and the National Employment Standards apply and either you or the employee could choose to terminate the employment under the rules. Some employees might choose to do that bearing in mind that their salary upon resumption of work is taxable in the normal way. The JobKeeper payments, on the other hand, are not taxable. You might also choose to restructure and make employees redundant. Whatever you do, comply carefully with the rules.

Q: I had already terminated or made redundant some of my employees. If I take them back can I get the JobKeeper subsidy?

A: Yes, providing the employee was employed on 1 March 2020. In that case, upon re-engagement, the employee will receive a minimum of $1,500 that will be fully subsidised by way of the JobKeeper payment. This is a new employment relationship that you should consider and document in the same way as you did before COVID-19.

So, get the terms right (especially in relation to the temporary nature of the JobKeeper component of the salary) and be aware of any relevant Industrial Awards or Enterprise Agreements.

Q: What if I have to stand down employees again following further restrictions?

A: The rules under the Fair Work Act and the National Employment Standards must be considered separately from the effect of JobKeeper payments.

If you need to stand-down again, then you must comply with the stand-down rules (something that many employers have not, it seems, done first time).

The circumstances in which a stand-down (compared to termination or redundancy) can be made are strictly limited to industrial action, machinery breakdown or a stoppage of work for which the employer cannot be reasonably held responsible. And then, the onus is on you to be prove that there are no alternatives available where the employees could be reasonably employed elsewhere in your business.

Even a significant downturn in business as a result of COVID-19 does not, in my opinion, satisfy the third condition. It must be more than that – a Government order to cease operating for example, or, as in the case of Qantas recently, a closure of the borders to international flights that in each of those cases results in a stoppage of work. If the reason for you wanting to cease paying employees is to reduce outgoings, then you are probably limited to termination, redundancy, or renegotiation and mutual agreement with your employees.

In all cases, remember to follow the rules and be aware of relevant, employment contracts, Industrial Awards and Enterprise Agreements that can all have provisions requiring notice, consultation and other provisions that may apply.

Q: What if I don’t get it right?

A: COVID-19 might be an excuse for the relaxation of many rules. But not in employment relationships where the rights of employees are well defined and rigorously protected.

When we get to the “other side”, and with the benefit of hindsight, employment lawyers are likely be lining up to take on employers who have not followed the rules.

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