FAQ FOR EMPLOYERS
The Federal Government and the New South Wales State Government have recently implemented changes to assist businesses to keep workers employed during the COVID-19 pandemic. These changes are constantly evolving, making it hard for employers to keep abreast of their rights and obligations.
Here are answers to some of the most commonly asked questions.
How can I keep paying wages during the downturn?
On 9 April 2020, the Governor-General signed into law a $130bn wage subsidy program known as the ‘JobKeeper’ payment. Eligible businesses can receive a payment of $1,500 per fortnight per eligible employee, which must be passed on in full.
It’s estimated that around six million workers will benefit from the package, which is aimed at helping employers and employees maintain their working relationship during this crisis.
Eligible businesses can receive a payment of $1,500 per fortnight per eligible employee. This is a flat payment, regardless of actual salary or hours worked, and must be passed on to the employee in full.
Where an employee’s total remuneration is (or was prior to being stood down) less than $1,500 per fortnight (before tax), the employer must provide the employee at least $1,500 per fortnight (before tax). Where an employee earns more than $1,500 per fortnight, employers can use the payment to subsidise the employee’s wages.
The subsidy is available from 30 March 2020 to 27 September 2020, with payments made monthly and in arrears. Payments will commence in the first week of May 2020 and backdated to 30 March. If you think your business is eligible, register with the ATO now and you will receive further instruction on how to complete an online application.
Who is eligible for the JobKeeper subsidy?
Businesses are eligible if they have suffered a reduction in turnover and are not subject to the Major Banking Levy. Turnover thresholds are set at different levels depending on your annual revenue and status.
Employees are eligible if they were employed by an eligible employer as at 1 March 2020 on a full-time, part-time or casual basis. Casual employees must have been employed for at least a year.
An ‘eligible business’ is one which:
- If it has an annual turnover of less than $1 billion, has suffered a reduction in turnover of 30% or more compared to a comparable period one year ago; or
- If it has an annual turnover of more than $1 billion, has suffered a reduction in turnover of 50% of more compared to a comparable period one year ago; or
- If it is a charity registered with the Australian Charities and not-For-Profit Commission (ACNC), has suffered a reduction in turnover of 15% or more compared to a compatible period one year ago;
- Is not subject to the Major Banking Levy.
Sole traders without employees, partnerships, trusts and not-for-profit entities may all qualify if they meet the above criteria.
An eligible employee is one who:
- Was employed by an eligible employer as at 1 March 2020;
- Was full-time, part-time or a casual who was regularly and systematically employed for the 12 months leading up to 1 March 2020, or a sole trader;
- Is at least 16 years of age;
- Is either an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
- Was a resident for Australian tax purposes on 1 March 2020; and
- Is not in receipt of a JobKeeper Payment from another employer.
Employers who fail to pass on government payments to workers could be fined up to $126,000. They could also face civil penalties of a further $126,000 if they “knowingly misuse” the new powers granted to them under the legislation.
Can my employees use their leave entitlements?
Several amendments allow employees and employers more flexibility in utilising leave. This includes:
Changes to the Long Service Leave Act (NSW) to allow employees to take long service leave in smaller blocks and with less notice than before.
Variations to 99 modern awards to offer workers access to two weeks’ of unpaid ‘pandemic leave’ before 30 June 2020.
Amendment to Long Service Leave Act – New South Wales
On 25 March 2020, the NSW government passed changes to long service leave entitlements to offer greater flexibility for employers and employees. The amendments allow employees to take long service leave:
- In shorter blocks, such as one day per week;
- Without the traditional one-month notice period, if there is mutual agreement.
The legislation is operative from 25 March 2020 to 25 September 2020 inclusive, with the possibility of extension to a full year.
Fair Work Commission – Variation to Modern Awards
On 8 April, the Fair Work Commission changed 99 modern awards to offer workers access to ‘pandemic leave’. The changes mean that around 4.4 million workers can access two weeks of unpaid leave, as well as stretching out their annual leave by taking twice as many days at half-pay. These are temporary changes, lasting until 30 June 2020 unless extended.
Employers can require employees to take paid annual leave during the pandemic, including at half pay, as long as the direction does not leave the employee with less than two weeks’ worth of remaining leave.
Awards covering construction, maritime and resources were excluded as they are less affected by COVID-19.
Can I stand down my staff?
Many businesses cannot carry on normal operations during this time. They may have been ordered to shut or had to pivot their business to survive.
The JobKeeper legislation contains provisions that allow employers to change employment terms for eligible employees. This means standing down workers or changing their duties and/or location of work.
Section 524 of the Fair Work Act also allows an employer to stand down an employee without any requirement to pay them for a period in which they cannot be usefully employed due to a stoppage of work arising from any circumstances for which the employer cannot be reasonably held responsible.
The JobKeeper legislation contains provisions that allow employers to change employment terms in ways that support the scheme. This means standing down workers or changing their duties and/or location of work (for example, working from home). Employers and employees can agree to change the days and times of work or use annual leave in flexible ways.
If employees cannot do their usual duties, or work their usual days or hours, the stand down provisions may be available if the legal requirements are satisfied.
Employers can direct employees to perform tasks that are not in their job description as long as they are within their ability. Any direction or agreement must not be unreasonable, and employers must give three days’ notice. JobKeeper directions, including stand down notices, cannot reduce an employee’s base hourly rate of pay even if employees have changed duties.
All new powers are tied to the JobKeeper payments. If a business has some eligible employees, and others who are ineligible, the stand down orders can only be applied to those receiving the JobKeeper subsidy.
Fair Work Act
Section 524 of the Fair Work Act allows an employer to stand down an employee without any requirement to pay them for a period in which they cannot be usefully employed due to a stoppage of work arising from any circumstances for which the employer cannot be reasonably held responsible.
In assessing whether the stand down provisions under the Fair Work Act apply, consider:
- Has there been a “stoppage of work” as opposed to a downturn in business?
- If so, does the stoppage of work mean that the employees can no longer be usefully employed?
If the above criteria are met, it may be possible to utilise the stand down provisions under the Fair Work Act. Employers must also review the relevant employment contract or enterprise agreement to check whether they include stand down provisions.
Standing down employees unlawfully may leave you vulnerable to a claim for unpaid wages. It is important to check that you can exercise the option to stand down workers and that it is done correctly.