$1,500 per fortnight JobKeeper Payment – For employers to keep their Employees

On 30 March 2020, the Federal Government announced the new $1,500 per fortnight JobKeeper payment. Here is what we know so far…

What it’s for;

  • To support employers in keeping their staff employed during the crisis
  • To ensure businesses have the staff they need to restart once the crisis passes without needing to rehire staff.

Key Details

  • Payment will be $1,500 per eligible employee per fortnight (paid monthly)
  • Payments will be determined based on pay periods from 30 March 2020 for 6 months.
  • ATO will make payments 1 month in arrears. Payments to commence in first week of May 2020.

Eligible Employers

  • Employers with up to $1 billion in turnover (including not-for-profits) will be eligible for the subsidy where they expect at least a 30% reduction in turnover (sales) relative to the same period last year.
  • Sole traders without employees are still eligible for the JobKeeper payment where their turnover has decreased by at least 30%
  • The ‘period’ used to determine eligibility needs to be at least 1 month long. For example, compare March 2020 with March 2019.
  • We anticipate companies and trusts with working directors only, will also be eligible (this is to be confirmed)

Eligible Employees

  • Were employed by the relevant employer at 1 March 2020; and
  • Are currently employed by the employer (including those who have been stood down or re-hired); and
  • Are full time, part-time, or long term casuals (a casual employee employed on a regular basis for 12 months as at 1 March); and
  • Are at least 16 years of age; and
  • Are an Australian citizen, hold a permanent visa, are a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
  • Are not in receipt of a JobKeeper Payment from another employer.

Measuring the Downturn

  • It will be essential to maintain good records to be able to demonstrate a downturn in your revenue in order to be eligible.
  • Its also important to know that while you may not be eligible straight away, that this can change as turnover declines.

How it Will Work

  • The ATO will make payments direct to employer bank accounts
  • The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria.
  • If an employee ordinarily receives at least $1,500 per fortnight (before tax) they should continue to be paid their usual salary as agreed with the employer. The JobKeeper payment will subsidise the employer’s cost of retaining that employee. Super will be payable on the full salary.
  • If an employee ordinarily receives less than $1,500 per fortnight (before tax), the employer must pay them at least $1,500 per fortnight (before tax). The JobKeeper payment will fully offset the amount paid to the employee. Super is only required to be paid on the original salary, but employers can pay super on the full $1,500.
  • If an employee has been stood down (ie there is no work), the employer must pay them at least $1,500 per fortnight (before tax). The JobKeeper payment will fully offset the amount paid to the employee. No super is payable on the $1,500 if they are not working.
  • If an employee was employed with the employer on 1 March 2020, but ceased employment AND they have now been re-engaged by the same employer, the employer must pay them at least $1,500 per fortnight (before tax). The JobKeeper payment will fully offset the amount paid to the employee. No super is payable on the $1,500 if they are not working.

What you can do now

  • Consider whether you are experiencing the necessary 30% decline in turnover now or expect to do so in the coming months
  • Wait for more updates from the ATO (and Link) on how the reporting process will work

Claiming Payments

  • Employers must elect to participate in this scheme when applications open.
  • Eligible employers will need to notify the ATO of eligible employees on a monthly basis.
  • Employers must ensure that eligible employees are paid at least $1,500 per fortnight (before tax)
  • The employer can decide to pay superannuation on any additional amount payable to an employee because of the JobKeeper Payment
  • Once determined, employers will need to notify eligible employees that they will be receiving the JobKeeper payment.
  • Each month the employer will need to declare their continuing eligibility to the ATO
  • The ATO will make payments to employer bank accounts 1 month in arrears

What Link is Doing for Our Clients

Link will be managing this process for all of our current clients.

If Link does your payroll, then we’ll manage most of the process. If you do your own payroll, then we’ll work with you on the process.

FAQ

What if an employee has multiple jobs? Only 1 employer can claim the JobKeeper payment per employee. Each employee will need to notify their primary employer to claim the JobKeeper payment on their behalf. As a general rule, the employer who is applying the tax free threshold will be the primary employer.

What if I have already stood down or terminated employees? Eligible employees who are re-engaged by an employer who were on the books as at 1 March 2020 will also be eligible.

What if my employees are now receiving Centrelink support? If you re-engage your employees under the JobKeeper payment, the employee will need to notify Centrelink about the change in their circumstances (to avoid overpayments).

What if I am a sole trader with no staff? You will still be eligible for the JobKeeper payment.

EXAMPLES

Employer with multiple employees getting paid >$1,500 per fortnight

Sara runs a landscaping company, and employs five full-time gardeners. Sara is paying her employees $1,700 per fortnight before tax. She expects that her turnover will decline by more than 30 per cent over the coming months and that she will either need to lay staff off, or reduce their wages significantly. As a result of the JobKeeper Payment, Sara will be able to keep employing every gardener, and only needs to pay the $200 wage cost per fortnight before tax per employee above the $1,500 per fortnight (before tax) JobKeeper Payment.

Employer with employees on different salaries

Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The employees are:

  • Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
  • Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.

Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:

  • The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income
  • The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.

Employer with employees who have been stood down

Zahrah runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time beauticians, but the government directive that beauty salons can no longer operate has required her to shut the business. As such she has been forced to stand down her three beauticians without pay.

Zahrah’s turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of her three beauticians for up to six months. Zahrah will maintain the connection to her employees, and be in a position to quickly resume her operations.

Zahrah is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Zahrah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.

If Zahrah’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.

Sole Trader no Staff

Melissa is a sole trader running a florist. She does not have employees. Melissa’s business has been in operation for several years. The economic downturn due to the Coronavirus has adversely affected Melissa’s business, and she expects that her business turnover will fall by more than 30 per cent compared to a typical month in 2019.

Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight before tax, paid on a monthly basis.

Worker with multiple jobs

Michelle currently works two permanent part-time jobs, at an art gallery during weekdays, and at the local café on the weekend. Due to the impact of the Coronavirus, the gallery has closed and Michelle has been stood down without pay under the Fair Work Act. Michelle continues to work at the café delivering take-away orders.

Michelle can only receive the JobKeeper Payment once, from the employer from whom she nominates as her primary employer. As Michelle only claims the tax free threshold from her job at the art gallery, this will be treated as her nomination of the art gallery as her primary employer.

The art gallery is eligible for the JobKeeper Payment. The art gallery will pass the JobKeeper Payment on to Michelle, so she will receive $1,500 per fortnight before tax. During the application process, the art gallery will notify the ATO that Michelle receives the payment from them. The art gallery is also required to advise Michelle that she has been nominated to the ATO as an eligible employee to receive the payment.

The café is not eligible to receive the JobKeeper Payment for Michelle. The income that Michelle receives from her job at the café does not change her entitlement to the JobKeeper Payment she receives from the art gallery.

Employee made redundant after 1 March

Miles worked as a permanent part-time personal trainer at a gym for six months and was made redundant on 20 March 2020 in response to the Government directive that gyms close. Miles was not entitled to redundancy pay due to his length of service.

In response to the announcement of the JobKeeper Payment, the gym decides they want to re-engage Miles so they are well placed to resume their operations once the Coronavirus restrictions are lifted.

After being made redundant, Miles had registered an intent to claim with Services Australia for access to the JobSeeker Payment and the Coronavirus Supplement. Miles is single, with no children and in total he would be eligible to receive $1,124.50 before tax per fortnight.

If Miles chooses to be re-hired by the gym, under the JobKeeper Payment he will receive $1,500 a fortnight before tax while he is stood down. Miles will need to advise Services Australia of his income. He is no longer eligible for the JobSeeker Payment and the Coronavirus Supplement from Services Australia as a result of receiving the JobKeeper Payment.

Find out more information here: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet_supporting_businesses_6.pdf