COVID-19 | The JobKeeper Payment – What this might mean for your business [updated to be current as at 26 April 2020]

22 April 2020
Brett Feltham, Partner, Sydney Siobhan Mulcahy, Partner, Melbourne Steven Troeth, Partner, Melbourne

The Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth) (Payments and Benefits Act) and Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (Cth) (Omnibus Act) implement a framework for economic response payments known as the JobKeeper scheme and temporarily amends the Fair Work Act 2009 (Cth) (FW Act) by applying specific COVID-19 provisions.

Following the suite of legislative changes, the Federal Government introduced the Coronavirus Economic Response Package (Payments and Benefits) Rules (JobKeeper Payment Rules) which set the parameters for Qualifying Employers seeking the JobKeeper payment for their Eligible Employees.

The JobKeeper scheme has been described by Prime Minister Scott Morrison as “the biggest economic lifeline in Australia’s history”, with an expected cost to the Federal government of $130 billion.

Around 900,000 businesses expressed interest in the JobKeeper scheme prior to enrolment and enrolments in the JobKeeper scheme commenced on 20 April 2020.

A summary of the JobKeeper scheme

The JobKeeper scheme is designed to provide financial support to businesses and their employees, who are currently facing a substantial decline in turnover as a result of the COVID-19 pandemic and associated economic crisis.

In a nutshell, the JobKeeper scheme will subsidise Qualifying Employers who continue to employ Eligible Employees. The JobKeeper Payment Rules provides that the JobKeeper scheme will commence on 30 March 2020 and end on 27 September 2020 (unless extended by the Federal government).

It was the intention of the Federal government to use the JobKeeper Payment Rules rather than regulation to enable officials from the Australian Taxation Office (ATO) and Treasury to modify and update the JobKeeper framework as the scheme progresses. This provides flexibility to alter any current arrangements and to introduce and modify payments to appropriately respond to the impacts of COVID-19.

To be eligible for the JobKeeper scheme, both the employer and the employee must meet certain criteria.

Who is a Qualifying Employer?

A Qualifying Employer is an entity that:

  • carried on a business in Australia or was a non-for-profit body that pursued its objectives principally in Australia at 1 March 2020; and
  • meets the decline in “turnover test”.

An entity will be a Qualifying Employer if it can demonstrate it has suffered a decline in turnover.

The JobKeeper Payment Rules prescribes two tests – the basic test and the alternative test.

The basic test

An employer (including not-for-profits and self-employed individuals) will be eligible for the JobKeeper scheme if:

  • the entity has an aggregated turnover of $1 billion or more, the entity estimates its projected GST turnover has fallen, or will likely fall, by 50% or more;
  • the entity has an aggregated turnover of less than $1 billion, the entity estimates its projected GST turnover has fallen, or will likely fall, by 30% or more; or
  • where the entity is a charity registered with the Australian Charities and Not-for-Profit Commission, excluding non-government schools and universities, the entity estimates its projected GST turnover has fallen, or will likely fall, by 15% or more. On 24 April 2020 the Federal government announced that charities will be able to exclude government revenue from this calculation.

How aggregated turnover and GST turnover are to be calculated is set out in the JobKeeper Payment Rules.  Importantly, once the test has been passed, it is not necessary for an entity to continue to satisfy the test in the coming months.

The JobKeeper Payment Rules also provides that the ATO will have discretion to consider additional information that entities provide to establish whether the entity in question has been significantly affected by COVID-19.  Further, leniency may be granted where entities, in good faith, estimate a greater than 30% or 50% fall in turnover but actually experience a slightly smaller fall.

The alternative test

On 23 April 2020 the ATO published the Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020.  These additional rules provide alternative decline in turnover tests that are to apply where an entity is unable to satisfy the basic test and where there is an event or circumstance, internal or external, that is outside the usual business setting for the entity and which mean that there is not an appropriate relevant comparison period in 2019.

An alternative test will apply in various circumstances, including where an entity:

  • commenced business after the relevant comparison period in 2019 – this applies to entities that were not operating any business, but not to an entity that was operating one or more businesses and commenced a new additional business;
  • acquired or disposed of part of their business after the relevant comparison period in 2019, resulting in a change to turnover;
  • has restructured part or all of their business after the relevant comparison period in 2019, and that restructure has changed the entity’s turnover;
  • has had an increase in turnover by 50% or more in the 12 months immediately before the applicable turnover test period, 25% or more in the 6 months immediately before the applicable turnover test period, or 12.5% or more in the 3 months immediately before the applicable turnover test period;
  • has been affected by a drought or other natural disaster in the relevant comparison period in 2019;
  • has an irregular turnover that is not cyclical, such as can occur in the building and construction sector; or
  • is a sole trader or a small partnership and the sole trader or one of the partners did not work for all or part of the relevant comparison period because they were sick, injured or on leave during the relevant comparison period and those circumstances affected the turnover.

Only one alternative test needs to be satisfied, even where an entity comes within more than one of the above categories.

Special purpose employing entities

On 24 April 2020 the Federal government announced that changes will be made to the employer eligibility rules to address circumstances where a business uses a special purpose entity to employ staff rather than staff being directly employed by an operating entity.  The Federal government will provide an additional alternate decline in turnover test to apply to those employing entities that provide employee labour to group members.  In those circumstances, the alternate test will be by reference to the combined GST turnovers of the related entities using the services of the employer entity, and not simply the GST turnover of the employing entity itself.


Certain entities are automatically excluded from the JobKeeper scheme:

  • entities that are subject to the Major Bank Levy for any quarter ending before 1 March 2020 and their subsidiaries;
  • Australian government, State and Territory governments, local governments, foreign governments (and their agencies or wholly-owned corporations of these bodies);
  • companies where a liquidator or provisional liquidator has been appointed; and
  • if the entity is an individual, where a trustee in bankruptcy has been appointed to the individual’s property.

Companies in voluntary administration or receivership can still participate.

If an entity is deemed a Qualifying Employer, it will need to ascertain which of its employees are ‘Eligible Employees’.

Who is an Eligible Employee?

An individual will be an Eligible Employee if they:

  • were employed by a Qualifying Employer as at 1 March 2020, regardless of their income level;
  • are currently employed by a Qualifying Employer, including those stood down or terminated after 1 March 2020 but are then re-hired and are employed at any time during the fortnight in which the JobKeeper payment is payable;
  • are full-time, part-time, or “long-term casuals” (a casual employed on a regular and systemic basis for longer than 12 months as at 1 March 2020);
  • are at least 16 years of age at 1 March 2020 – on 24 April 2020 the Federal government announced that full-time students who are 17 years of age (or younger) and who are not financially independent will be excluded from the scheme going forward;
  • are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020 – this includes New Zealand citizens; and
  • are not in receipt of a JobKeeper payment from another Qualifying Employer.

The Federal government has characterised the JobKeeper scheme as being a “one in, all in” system, so that a Qualifying Employer cannot choose which of its Eligible Employee should participate.

Other visa holders, including employees employed under sponsored visa arrangements, will not be eligible for JobKeeper payments. “Short term” casual employees will also not be eligible.


Further, if an individual falls within one of the following exclusions, they will not be considered an Eligible Employee:

  • the employee is receiving parental leave pay pursuant to the Paid Parental Leave Act 2010 for any period of the relevant JobKeeper fortnight – those employees continue to receive their paid parental leave;
  • the employee is receiving dad and partner pay for any period of the relevant JobKeeper fortnight – those employees continue to receive dad and partner pay; and
  • the employee is receiving workers’ compensation in respect of their total incapacity for work (i.e. those working on reduced hours remain eligible).

Sole traders and the self-employed with an ABN may also be considered eligible to access the JobKeeper scheme, subject to certain conditions. In addition, where the business is operated as a partnership, company or trust, the entity can receive JobKeeper payments in relation to one nominated partner, beneficiary, director or shareholder who works in the business.

What are the JobKeeper payments?

The JobKeeper payment is a flat amount of $1,500 before tax per fortnight for each Eligible Employee (regardless of their usual salary or wage).  This has been determined to be equivalent to 70% of the median Australian wage (or 100% of the median wage for the tourism, hospitality and retail sectors).

The payments will be available to Qualifying Employers for a maximum of six months (i.e. 13 weeks) starting on 1 May 2020, with the first payment being backdated to 30 March 2020.  Employers are being utilised to pass on the JobKeeper payments as a means to support their continuing connection with their employees and allowing them to reactivate their operations more quickly once the COVID-19 crisis passes.

The Tax Commissioner must pay the JobKeeper payment to Qualifying Employers no later than 14 days after the end of the calendar month in which the fortnight ends.  Therefore, Qualifying Employers should expect to receive the subsidy payments from the ATO in arrears once per month.

Payment date
Amount per Eligible Employee
May $3,000 (for fortnights starting 30 March and 13 April)
June $3,000 (for fortnights starting 27 April and 11 May)
July $3,000 (for fortnights starting 25 May and 8 June)
August $3,000 (for fortnights starting 22 June and 6 July)
September $4,500 (for fortnights starting 20 July, 3 August and 17 August)
October $3,000 (for fortnights starting 31 August and 14 September)
How much should an Eligible Employee receive?

The JobKeeper scheme requires Qualifying Employers to adhere to a minimum payment guarantee (MPG). The MPG means Qualifying Employers must, at a minimum, pay Eligible Employees the greater of $1,500 or the amount payable to the employee under their usual contractual obligations. This means that an employee’s terms and conditions of employment are not altered simply as a result of the JobKeeper scheme.  If under an industrial instrument or contract of employment an employee is paid more than $1,500 a fortnight, an employer is still liable to pay that amount.  The JobKeeper payment will simply subsidise that cost.

For example:

Amount paid to Eligible Employee pre COVID-19 Amount paid to Eligible Employee pursuant to the JobKeeper scheme
Less than $1,500 per fortnight Flat $1,500 JobKeeper payment per fortnight (even though the usual salary/wages are less)
$1,500 per fortnight Flat $1,500 JobKeeper payment per fortnight
More than $1,500 per fortnight Normal salary or wage.

The $1,500 JobKeeper payment can be used to subsidise part of the employee’s normal salary or wage.

Superannuation obligations

Qualifying Employers are still required to pay superannuation guarantee contributions on the usual salary or wages of any Eligible Employee.

What this means is, for Eligible Employees who have been stood down and who would not otherwise receive any payment, Qualifying Employers are not required to pay superannuation contributions in respect of the $1,500 flat fortnightly payment, unless they choose to do so.

For Eligible Employees who are topped up to $1,500, Qualifying Employers will have normal superannuation obligations for the employee’s usual salary or wages but are not required to pay superannuation contributions on the top-up amount, unless they choose to do so.

For Eligible Employees that continue to receive their usual salary or wage, normal superannuation contribution obligations will continue to apply.

Registration, nomination, record keeping and other administrative requirements

Qualifying Employers must register with the ATO to access the JobKeeper payment in respect of Eligible Employees.  Further, a Qualifying Employer must notify all Eligible Employees within seven days of providing the Eligible Employee’s details to the ATO.

Subsequently, each Eligible Employee will need to complete the ATO JobKeeper Employee Nomination Notice published by the ATO (or an employer prepared equivalent) which requires the Eligible Employee to:

  • nominate their primary Qualifying Employer as their employer for the purposes of the JobKeeper scheme;
  • confirm they have not agreed to be nominated by another Qualifying Employer; and
  • confirm they do not have permanent employment with another Qualifying Employer (i.e. if an employee has casual and full-time/part-time employment with two separate employers, the employee must nominate the employer in which they hold full-time or part-time employment).

That completed nomination form must be retained by the Qualifying Employer but does not need to be provided to the ATO.

The Payments and Benefits Act also requires that entities create and retain records, both prior and post-payment, substantiating information provided to the ATO in relation to payments unless the ATO provides otherwise.

Contrived schemes and consequences

The Payments and Benefits Act includes robust “integrity protection” features. One of the features is the prevention of exploitation by way of contrived schemes. This means that if one or more entities enter into or carry out a scheme for the sole or dominant purpose of obtaining or increasing an economic response payment, the Tax Commissioner may make a subjective determination regarding whether there is an existence of a contrived scheme.

This has been legislated to protect the integrity of the payment framework and to ensure that entities that enter into contrived schemes do not obtain a payment (including an increased amount of payment) they would otherwise not be entitled to.

Interaction with the Fair Work Act

The temporary amendments to the FW Act made by the Omnibus Act have been implemented to support the practical operations of the JobKeeper scheme and will automatically repeal at the cessation of the JobKeeper scheme (i.e. sunset date of 28 September 2020).

The Omnibus Act inserts a new Part 6-4C in the FW Act which authorises a Qualifying Employer to take number of flexibility measures, including:

  • directing an Eligible Employee to work a reduced number of hours (compared with the employee’s ordinary hours of work), including reducing hours to nil;
  • directing an Eligible Employee to work for a lesser period than the period which the Eligible Employee would ordinarily work on a particular day or days; or
  • directing an Eligible Employee not to attend work on a day or days on which the Eligible Employee would usually work,

(collectively known as a JobKeeper enabling stand down direction)

  • directing an Eligible Employee to perform alternative duties provided it is within their skill and competency;
  • directing an Eligible Employee to perform duties at a place different from their normal place of work (including the Eligible Employee’s home) provided it is suitable and reasonable;
  • coming to an agreement with an Eligible Employee about annual leave arrangements (e.g. an Eligible Employee may take paid annual leave at half pay – noting, the annual leave balance cannot fall below two weeks); and/or
  • coming to an agreement with an Eligible Employee in relation to the days or times when the employee is to perform work, provided it does not reduce the employee’s overall ordinary hours of work.

An employer must consult an employee (or a representative of the employee) before giving a direction or before reaching an agreement.

JobKeeper enabling stand down directions

The Omnibus Act provides that a Qualifying Employer may give a JobKeeper enabling stand down direction to an employee when the Eligible Employee cannot be usefully employed due to the business changes associated with COVID-19 pandemic or government initiatives to slow the transmission of COVID-19.  Business changes can include store closures and simply less customers.  There does not need to a stoppage of work as required under the normal stand down provisions in the FW Act.

Qualifying Employers must:

  • continue to satisfy the ‘wage condition’ under the JobKeeper Payment Rules;
  • pay an Eligible Employee not less than the JobKeeper payment or the amount payable to the employee (inclusive of any loadings, allowances and penalties as prescribed by an applicable industrial instrument) in relation to the performance of work in a fortnight; and
  • ensure that the Eligible Employee’s base rate of pay (worked out on an hourly basis) is not less than the base rate of pay (worked out on an hourly basis) that would have been applicable to the employee if the direction had not been given to the employee.

For a JobKeeper enabling direction to be lawful, a Qualifying Employer must:

  • provide Eligible Employees with three days’ notice (or a lesser period by agreement) in writing;
  • follow consultation obligations with Eligible Employees (or their representatives) and keep a written record of those consultations;
  • ensure the direction is not unreasonable and is necessary to continue the employment of one or more employees; and
  • ensure the implementation of the direction is safe, having regard to (without limitation) the nature and spread of COVID-19.
Direction as to different duties

A Qualifying Employer can lawfully direct an Eligible Employee in writing to perform different duties if:

  • the employer directs the employee to perform any duties that are within the employee’s skill and competency;
  • those duties are safe, having regard to (without limitation) the nature and spread of COVID-19;
  • the employee has any requisite licence or qualification to perform the duties;
  • those duties are reasonably within the scope of the employer’s business operations; and
  • the employer becomes entitled to one or more JobKeeper payments for the employee.

An employee does not have to comply with a direction to change duties of work if it is unreasonable in all the circumstances.

Direction as to different work location

A Qualifying Employer can lawfully direct an Eligible Employee in writing to perform work from a different location (including the employee’s home) if:

  • the place is suitable for the employee’s duties;
  • if the place is not the employee’s home, it does not require the employee to travel a distance that is unreasonable in all the circumstances;
  • the performance of the employee’s duties at the place is safe, having regard to (without limitation) the nature and spread of COVID-19, and reasonably within the scope of the employer’s business operations; and
  • the employer becomes entitled to one or more JobKeeper payments for the employee.

An employee does not have to comply with a direction to change work location if it is unreasonable in all the circumstances, including where it impacts on caring responsibilities of an employee.

Agreement as to different days/times of work

A Qualifying Employer may request in writing, and an Eligible Employee may not unreasonable refuse, a request to perform their duties on different days and/or at different times, compared with the employee’s ordinary days/times, if:

  • the performance of the employee’s duties on those days or at those times is safe, having regard to (without limitation) the nature and spread of COVID-19, and reasonably within the scope of the employer’s business operations; and
  • the agreement does not have the effect of reducing the employee’s overall number of hours of work.

Where the employer makes a request to an employee to make such an agreement, the employee must consider the request and not unreasonably refuse the request.  What is reasonable will be fact specific, but for example, an employee who usually works weekends could reasonably be required to work on weekdays in a situation where their employer’s business can no longer trade on weekends as a result of COVID-19.

Taking paid annual leave

An employee must consider (and must not unreasonably refuse) their employer’s request to take annual leave, provided that the leave arrangement would not result in reducing the employee’s leave balance to fewer than two weeks.  The employer and employee can also agree to the employee taking twice as much annual leave at half the employee’s rate of pay for a period.

Effect of JobKeeper enabling direction

A JobKeeper enabling stand down direction, a direction to perform alternatives duties or to work from a different location, or an agreement between the employer and employee on working days/times or taking paid leave, will each have the effect of temporarily modifying employment rights and obligations to the extent specified in the direction or agreement.

All other terms and conditions of an Eligible Employee’s employment will not be affected.  If no such direction or agreement is made, existing rights and obligations (under the FW Act, a modern award, enterprise agreement, or a contract of employment) continue to apply.

Further, an Eligible Employee’s period of service is unaffected by any direction by a Qualifying Employer.  An Eligible Employee who is subject to a stand down direction or who takes annual leave at half pay in accordance with an agreement, continues to accrue leave entitlements in the usual way, and any entitlements to redundancy pay and payment in lieu of notice of termination are to be calculated as if the direction had not been given or agreement had not been made.

Dealing with disputes

The Fair Work Commission can settle disputes about the temporary operation of Part 6-4C of the FW Act, including by way of arbitration.  Similarly, the Fair Work Ombudsman has the power to enforce a number of the provisions relating to the JobKeeper scheme that are about ensuring minimum wages and conditions and misuse of JobKeeper enabling directions by employers.

Significant civil penalties will be imposed on Qualifying Employers who misuse the JobKeeper scheme.

To find out more on the JobKeeper scheme, please contact the Gadens Employment Advisory Team or your usual Gadens advisor.


For details of all our COVID-19 tips and updates, visit the Gadens COVID-19 Hub.


Authored by:

Brett Feltham, Partner
Stacey Nicolaou, Lawyer

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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