Information is continuing to emerge on COVID-19 and the resulting legislative changes being instituted in Australia. We have compiled a list of important updates for Australian employers to be aware of. Our teams are closely monitoring the situation and will continue to provide the latest updates to keep you informed.
COVID-19 Updates - Australia
Last Updated – March 31, 2020
Employers significantly impacted by COVID-19 are eligible to receive a government subsidy, referred to as the “JobKeeper Payment”, so that they can continue to pay their employees and avoid terminations during the pandemic. The subsidy can be claimed by the employer every two weeks beginning on March 30, 2020. Each subsidy payment amounts to $1,500 AUD per employee. Employers can receive claims for a maximum of six months.
Employers are eligible to receive the JobKeeper Payment if:
- Turnover is less than $1 billion and has decreased by over 30% for at least one month; OR
- Turnover is $1 billion or more and has decreased by over 50% for at least one month; AND
- The business is not subject to the Major Bank Levy
Employers must establish that their turnover has decreased by 30% (or 50%) in the relevant month (or three month, depending on the natural activity statement reporting period) relative to their turnover in that period a year prior. For employers that have been operational for less than a year, or in cases where turnover a year earlier was not representative of the employer’s average turnover (e.g. due to large interim acquisition, employer is newly established, or employer turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the employer can provide to establish that they have been significantly affected by COVID-19. The Tax Commissioner also has discretion to set out alternative tests to establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). If done in good faith, employers are provided with some leeway for projecting a decrease in turnover greater than 30% (or 50%), but only experiencing a lesser turnover.
Employer can only receive JobKeeper Payments for eligible employees. An employee is considered eligible if they:
- Are currently employed by the eligible employer (including those stood down or re-hired)
- Were employed by the employer March 1, 2020
- Are full-time, part-time, or long-term casuals (Casual employees must be employed on a regular basis for longer than 12 months by March 1, 2020)
- Are at least 16 years of age
- Are an Australian citizen, the holder of a permanent visa, 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
- Are not receiving a JobKeeper Payment from another employer
Employers receiving the JobKeeper Payment of $1,500 AUD per eligible employee, must pay each eligible employee at least $1,500 AUD (pre-tax). Specific employer payment requirements, to be made every two weeks, are listed below.
- Employees that receive bi-weekly wages greater than $1,500 AUD (pre-tax) will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist employers in providing standard wage payment
- Employees that receive bi-weekly wages less than $1,500 AUD (pre-tax) must receive at least $1,500 AUD from employer
- Employees that have been stood down must receive a bi-weekly wage of at least $1,500 AUD (pre-tax)
- Employees who were employed on March 1, 2020, subsequently ceased employment with their employer, and then were re-engaged by the same eligible employer, will receive a minimum bi-weekly payment of $1,500 (pre-tax).
Employer has option of paying superannuation on any additional wage paid due to JobKeeper Payment. Payments will be made to the employer monthly in arrears by the ATO.
Employers can register their interest in the JobKeeper Payment here and can submit the official application online via the Australian Taxation Office (ATO).
Apprentices and Trainees
Employers with apprentice and trainee workers are eligible to receive wage subsidies. Subsidies of up to 50% of apprentice or trainee wages will be provided to the employer with a maximum subsidy of $21,000 AUD. Employers unable to retain apprentice and trainee workers will not receive subsidy.
Employer Cash Flow
Employers of eligible small and medium size businesses, as well as non-profits, have access to between $20,000 AUD and $100,000 AUD in tax-free cash flow boosts. To be eligible, the employer must have:
- Held an Australian Business Number (ABN) prior to March 12, 2020 that continues to be active
- An aggregated annual turnover under $50 million (generally based on prior year turnover)
- Made eligible payments you are required to withhold from (even if the amount you need to withhold is zero).
Eligible payments include:
- salary and wages
- director fees
- eligible retirement or termination payments
- compensation payments
- voluntary withholding from payments to contractors
All eligible entities that received initial cash flow boosts may be entitled to additional cash flow boosts. Initial cash flow boosts will be provided on April 28, 2020.
Employers are unable to place an employee on unpaid leave. The employer must have a discussion with the employee in which an agreement is reached between the two parties for the employee to go on unpaid leave. If an agreement is not reached, and the employee refuses to go on unpaid leave, the employer does retain the option to dismiss the employee on grounds of redundancy.
Reduced Working Hours
Employers can only reduce the working hours of an employee if the employee consents for the reduction to occur. If no agreement is reached, the employer retains the right to dismiss the employee on ground of redundancy.
Employer must follow the below process when making dismissals on basis of redundancy.
- Employer notifies the employee affected by the proposed changes
- Employer provides employee with information on the changes and the expected effects
- Employer and employee discuss steps which have been taken to avoid and minimize the redundancies
- Employee takes the time necessary to consider employees ideas or suggestions about the changes and any alternative options
Employer must complete and document this consultation process with any employee made redundant. Employer must provide redundancy/severance pay to terminated employees with continued service of a year or great. Payment amount is dependent upon the employee’s salary and years of continuous service.
Employers of small businesses may be exempt from paying severance when making an employee redundant. This only applies to certain industries. Small businesses are classified as having 15 or fewer employees at time of dismissal.