Getting ready for JobKeeper 2.0

In late March 2020, extraordinary measures were put in place to address the impacts of restrictions put in place to manage the spread of COVID-19. In addition to the JobKeeper payment scheme, flexibilities were introduced into the Fair Work Act 2009 (FW Act) for JobKeeper eligible employers to support employers to keep employees on their books.

The Federal Government has passed a Bill to amend the FW Act to extend and amend the JobKeeper provisions. The effect of these amendments are that, following 28 September 2020, two categories of employers will be created:

  • Qualifying employers – being those employers who are eligible for JobKeeper payments after
    28 September; and
  • Legacy employers – being employers who received one or more JobKeeper payments prior to
    28 September, but no longer qualify for a payment after 28 September.

Qualifying employers will retain access to the full range of flexibility measures, whereas legacy employers will only have access to modified flexibilities, and only where they have a certificate from an eligible financial service provider (tax agent or qualified accountant) stating that the employer has experienced a 10% decline in turnover (unless they are an exempt small business).

JobKeeper 2.0 flexibilities under the FW Act will sunset on 29 March 2021.

What will change?

The key change introduced by the amending legislation relates to the capacity of legacy employers to issue JobKeeper enabling stand down directions.

Legacy employers may only issue a JobKeeper enabling stand down direction to reduce an employee’s hours of work:

  • Where they hold a 10% decline in turnover certificate (unless they are an exempt small business, which may instead give a statutory declaration in the prescribed form);
  • Where 7 days’ (up from 3 days’) notice is given prior to the implementation of the JobKeeper enabling standing stand direction, and enhanced consultation requirements are followed (see below);
  • Where they otherwise comply with the procedural requirements to issue such a direction;
  • Where the direction will not result in the employee working less than 60% of the ordinary hours that they worked at 1 March 2020; and
  • Where the direction will not result in the employee working less than 2 hours on any day.

Qualifying employers may continue to issue a JobKeeper enabling stand down direction to reduce an employee’s hours by any amount, including to no hours at all, provided that they comply with the procedural requirements to issue such a direction.

Legacy employers seeking to issue a JobKeeper enabling stand down direction will be subject to enhanced consultation obligations requiring:

  • Recognition of the employee’s chosen representative, if they choose one;
  • Provision of information to the employee and their representative (if any) about the nature of the direction, when the direction takes effect, and the expected effects of the direction;
  • Inviting the employee and their representative (if any) to give their views about the proposed direction;
  • Giving prompt and genuine consideration to any views expressed by the employee and their representative (if any) within the 7 day period.

What will stay the same?

Save for the additional consultation requirement for legacy employers, most of the procedural aspects of the JobKeeper flexibilities remain the same, notably:

  • The requirement to consult about proposed directions;
  • The requirement to comply with JobKeeper payment obligations;
  • The right for employees subject to reduced hours under a JobKeeper stand down direction to engage in reasonable secondary employment or to engage in training or development;
  • The requirement to recognise pre-stand down hours for the purposes of service based entitlements such as the accrual of annual leave or personal leave;
  • The Fair Work Commission’s scope to resolve disputes;
  • The requirement to pay employees the greater of their JobKeeper payment or the wages earned by them in the relevant period.

Qualifying employers and legacy employers will also retain the scope to give reasonable directions to employees around duties and location of work (including working from home).

What will stop?

The additional scope to request employees to take annual leave or to agree to take annual leave at half pay will come to an end on 28 September 2020, as originally planned, for both qualifying employers and legacy employers.

Employers may still direct employees to take excessive annual leave where pockets of excessive leave continue to exist, and employers and employees may continue to reach agreements for the taking of annual leave with half pay where the applicable industrial instrument provides scope to do so.

Will I need to issue new JobKeeper enabling stand down directions?

Qualifying employers will not need to issue new JobKeeper enabling stand down directions where their eligibility for JobKeeper payments is continuing beyond 28 September 2020. Agreements reached with employees about changing the days and times of their work will also carry over.

Any current JobKeeper enabling stand down direction previously issued by an employer that is not a qualifying employer will automatically cease to have effect on and from 28 September 2020. Affected employers who will become legacy employers will accordingly need to issue a new JobKeeper enabling stand down direction under the new laws.

What do I need to do between now and the end of September?

Employers who will not be qualifying employers after 28 September 2020, but may fit the definition of a legacy employer under the amendments should speak with their accountant (or other eligible financial service provider) about being issued with a 10% decline in turnover certificate.

Small business employers (as defined under the FW Act) may, instead of a certificate provided by an eligible financial service provider, have an individual with knowledge of the employer’s financial affairs make a statutory declaration that the 10% decline in turnover test is satisfied.

What is the relevant period for the 10% decline in turnover test for prospective legacy employers?

An employer will satisfy the decline in turnover test at a particular time where there is a 10% decline in current (not projected) GST turnover:

  • If the test time is prior to 28 October 2020 – during the quarter ending 30 June 2020;
  • If the test time falls from 28 October 2020 to 27 February 2021 inclusive – during the quarter ending 30 September 2020; or
  • If the test time is on or after 28 February 2021 – during the quarter ending 31 December 2020.

A new certificate must be obtained in each quarter. If the employer does not continue to meet the 10% decline in turnover test in any given quarter, any JobKeeper enabling stand down directions will automatically cease at the end of that quarter, unless withdrawn or revoked prior.

Is there anything else we should be thinking about?

Employers who may still have employees stood down pursuant to section 524 of the FW Act should seek advice regarding whether those stand downs continue to be valid. The Fair Work Commission has now considered a number of disputes under the “ordinary” stand down provisions of the FW Act.

Employers who have some, but not full capacity, for employees to return to work should consider implementing JobKeeper enabling stand down directions where available. Where such directions are not available due to eligibility considerations, please contact us to discuss your options.

Katie Sweatman
Partner
+61 3 9958 9605
katie.sweatman@kingstonreid.com