By Debbie Innes, Addison Partners
During this coronavirus crisis, there have been some significant announcements from the government in regards to your employees.
Job Keeper
The Federal Government has announced (as part of its Coronavirus Stimulus Package) the introduction of a new JobKeeper Payment to assist eligible employers (and self-employed individuals) who have been impacted by the Coronavirus pandemic to continue to pay their workers.
The JobKeeper payment is a subsidy that will be paid through the tax system (i.e., by applying to the ATO) to eligible employers (and self-employed individuals) impacted by the Coronavirus. Eligible employers will be able to claim a subsidy of $1,500 per fortnight, per eligible employee, from 30 March 2020 (with payments commencing from the first week of May 2020), for a maximum period of six months.
This subsidy will be paid by the ATO monthly in arrears and will ensure that an eligible employee receives a gross payment (i.e., before tax) of at least $1,500 per fortnight. Self-employed individuals (i.e., businesses without employees) can also qualify to receive the JobKeeper Payment.
Employers will be eligible for the JobKeeper subsidy where:
• for a business with a turnover of less than $1 billion – its turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
• for a business with a turnover of $1 billion or more – its turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and
• the business is not subject to the Major Bank Levy.
• Self-employed individuals (i.e., businesses without employees) and not-for-profit entities (including charities) that satisfy the above requirements will be eligible to apply for the JobKeeper Payment
To establish that a business has faced either a 30 (or 50) per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier.
Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus.
The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.
This payment is made to the employer and then paid to the employee through your normal payroll software and is subject to pay as you go withholding. The payment is not made directly to the employee. The payment may be absorbed into the employee’s wages if they are paid more than $1,500 per fortnight and not paid on top of their normal wage in this example.
We are eagerly awaiting the release of the legislation surrounding this Payment so we are clear on the details, in particular, the rules around the downturn tests.
Award Changes
Changes to all Modern Awards
The Fair Work Commission has just issued a statement proposing, on its own initiative, to vary approximately 80 Modern Awards to:
• provide up to two weeks unpaid leave for an employee required to self-isolate or is otherwise prevented from working because of measures taken by government or medical authorities in response to the COVID-19 pandemic; and
• allowing an employer and employee to agree to take double annual leave on half pay
Restaurant Industry Award 2010
On 31 March 2020, the Fair Work Commission (the Commission) made a determination varying the Restaurant Award. The determination inserts a temporary new Schedule, which applies from an employee’s first full pay period on or after 31 March until 30 June 2020. The new Schedule I adds award flexibility during the outbreak of coronavirus for:
• employees’ classifications and duties
• full-time and part-time employees' hours of work
• directions to take annual leave. For more information, see Restaurant Award flexibility during the outbreak of coronavirus
Clerical Award
On 28 March 2020, the Fair Work Commission (the Commission) made a determination varying the Clerks Award. The determination inserted a temporary new Schedule, which applies from an employee’s first full pay period on or after 28 March until 30 June 2020. Schedule I adds award flexibility during the outbreak of coronavirus for:
• employees’ classifications and duties
• minimum engagement/pay for part-time and casual employees
• span of hours changes while working at home
• full-time and part-time employees' hours of work
• directions to take annual leave.
For more information, see Clerks Award flexibility during outbreak of coronavirus.
Our Advice
During these uncertain times, it is more important than ever to stay connected with your employees. Keep talking with them about the situation, be as honest and direct as possible. Try to work with your employees to come up with solutions that will suit both parties.
We have been using the following as guide to have these difficult conversations:
1. Start with reflection e.g. “3 weeks ago we were trading well and would never have perceived things would get so bad…..”
2. Deliver news e.g. “as a result, we need to let you go or reduce your hours….”
3. Explain what that means for them e.g. “here is a letter/final pay slip/separation certificate….”
4. Go to the heart – e.g. confirm you want to stay connected with them and we want to support them in this if you can and that you will be in touch if there are any opportunities once things settle and can be a referee for other work.
We are here to help! Addison Partners accountants can assist you with your cashflow taking these payments into consideration. We have a dedicated Human Resources division, led by our HR Specialist, Debbie Innes who can assist you with everything employment related.
Please call Addison Partners Taylors Beach office on 4052 1500 to arrange a time for an initial conversation on your HR or accounting needs.
