SME Alert: Changes to JobKeeper incoming
As part of the response to COVID-19, the Federal Government enacted the JobKeeper scheme, which had the specific aim of helping employers stay afloat and keep paying salaries while dealing with the economic impact of the pandemic.
While the original JobKeeper will finish on 27 September, the Federal Government has already legislated to extend JobKeeper forward for two new periods, with it now scheduled to end 28 March 2021.
It is important that all employers that are currently on JobKeeper understand how the next stages of JobKeeper will work and how they will be affected.
In today’s post, we will explain the changes to the scheme and highlight other points to be aware of.
What are the changes?
Most importantly, JobKeeper will now continue into two periods, being 28 September 2020 to 3 January 2021, and subsequently 4 January 2021 to 28 March 2021.
There will be changes to both the eligibility criteria and the payment rates.
What are the new payment rates?
Currently, eligible employees and business participants are paid $1,500 per fortnight. For employees working more than 20 hours per week, from 28 September 2020, this will be reduced to $1,200 per fortnight, and then to $1,000 per fortnight from 4 January 2021.
For employees who work less than 20 hours per week, the payment will be reduced to $750 from 28 September 2020, and then to $650 per fortnight from 4 January 2021.
What is the new eligibility criteria for business?
Additional turnover tests will apply from 28 September 2020 for each of the two periods of the JobKeeper extension.
For each period, businesses will need to demonstrate that their GST turnover has fallen in the preceding quarter relative to a comparable period (generally, this will be the corresponding quarter in 2019).
In order to meet the eligibility criteria for JobKeeper payments under the extension, businesses and not-for-profits will need to demonstrate that they have experienced certain declines in their turnover. These are:
- 50 per cent for businesses with an aggregated turnover of more than $1 billion;
- 30 per cent for businesses with an aggregated turnover of $1 billion or less; or
- 15 per cent for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities).
There have been no changes to these percentage drops compared to the initial version of JobKeeper.
What is the new eligibility criteria for employees?
At a minimum, in order to be eligible an employee must have been employed by their employer on 1 July 2020, and they must continue to be employed by that employer. This is inclusive of any stand-down periods. Any new employees that were employed after 1 July 2020 will not be eligible for payments.
In addition, employees must meet the following requirements:
- They must be a full time, part time or fixed term employee, or a long-term casual employee (employed on a regular and systematic basis for at least 12 months) and not a permanent employee of any other employer;
- Aged 18 years or older as at 1 July 2020 (16 or 17 year olds can also qualify if they are independent or not undertaking full time study);
- Are either an Australian resident (within the meaning of the Social Security Act 1991) or an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as at 1 July 2020;
- Are not in receipt of government parental leave or Dad and partner pay under the Paid Parental Leave Act 2010 (Employees on parental leave from their employer are eligible);
- Are not in receipt of any payment in accordance with Australian worker compensation law for an individual’s total incapacity for work (Employees receiving workers compensation will be eligible for the JobKeeper if they are working, for example on reduced hours, but will generally not be eligible if they are not working at all);
In addition, only one employer can claim JobKeeper payments in respect of an employee – that is, employees can’t be paid JobKeeper by multiple employers.
Many industries have been hit hard by the coronavirus impact and the government response, with many employers relying on JobKeeper to stay afloat and hold onto its employees. It is important that employers ensure that they meet the eligibility requirements to continue claiming JobKeeper. If you are a small business and are unsure about how the upcoming changes will affect your JobKeeper eligibility and payments, get in touch with our experienced team today.
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