The Federal Government has clarified some key issues relating to the proposed wage subsidy program (‘JobKeeper Payment’).  Employers should note that at the time of this Alert, the legislation governing this program is currently being finalised and will come before Federal parliament in the week of 6 April 2020.  As a result of lack of finite detail, the information provided is general in nature and based on the information which is currently available.

The Government has now provided further information as to how a business will establish a ‘fall in turnover’ of either 30 (or 50) percent depending on the size of the business.  Current information indicates that a business will need to establish a fall in turnover for the relevant month or 3 months (depending on the “natural activity statement reporting period of that business”), compared with a year earlier.

The Government has also clarified that the Tax Commissioner (‘Commissioner’) will have discretion to consider additional information evidenced by a business to establish the business has been adversely affected by the impacts of the Coronavirus.  For example, the Tax Commissioner may take additional information into account where the business has not been operating for 12 months, or where there are extenuating circumstances which mean that the business’ turnover from 12 months ago cannot be compared with current turnover (for example, due to a business acquisition).  The Commissioner will also have the discretion to set out alternative tests to establish eligibility in specific circumstances.

Employers should also note that the latest information removes the previous indication that a casual employee must be ‘regular’ to access the program.  It is clear now that a casual employee will be eligible if they have been employed by their employer for at least 12 months as at 1 March 2020.  There is a continuing push from within the Hospitality industry in particular, to further relax this 12 months qualification.

Aitken Legal will continue to update employers with new information as it becomes available.

KEY CONSIDERATIONS FOR EMPLOYERS BEFORE MAKING DECISIONS ON JOBKEEPER PROGRAM

Aitken Legal recommends that all Employers exercise caution in relation to making decisions around the JobKeeper Payment scheme until the applicable legislation is passed through Parliament. Aitken Legal have identified the follow issues as areas of concern at present:

1. Rehiring employees who were terminated after 1 March 2020 – it is not clear whether an employer will have a right to deduct and reinstate entitlements paid to employees who were terminated after 1 March 2020, and who are subsequently rehired to access the program. We are also concerned that where an employee is terminated for redundancy reasons, and is then re-employed within a short timeframe, there is the potential for arguments regarding “genuineness” of the original redundancy.  Employers will need particular and considered advice about next steps in such circumstances

2. Reducing working hours – employers may consider a reduction in hours is necessary in present circumstances and may experience some difficulty reaching agreement with an employee to reduce their hours to, for example, hours which equate to the hours they would otherwise have to work to earn $1,500 per fortnight. Reductions in hours need to be done by consent and in accordance with relevant consultation requirements, and so employees who are paid more than $1,500 may be reluctant to agree to variations which see their earnings restricted to that amount only.  Employers will need advice about steps in such circumstances. 

3. Long-term casuals – the risk of nominating casuals for the JobKeeper payment, without clarifying the casual nature of the relationship, may be used as evidence of a permanent employment relationship, and potentially expose the employer to claims for back-payment of alleged unpaid permanent employee entitlements. All long term casual arrangements will need careful consideration and advice.

4. Further stand downs – employers tempted by the apparent safety that the JobKeeper payment provides may become careless with the standing down of employees and fall foul of the relevant stand down provisions of the Fair Work Act 2009. This could lead to future challenges on the legitimacy of the stand down and lead to claims for unpaid entitlements during the stand down.

Aitken Legal stands ready to assist with advice on the complexities of the program and associated matters such as the above, but again advises caution until the finer details of the legislation are known.