Questions & Answers

Question
I have a client who cannot afford to top up staff to the $1,500 JobKeeper level. But, there appears to be a one in all in rule. Is that right?

Answer
The Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 do not appear to have this specific requirement. However, the explanatory statement dealing with JobKeeper states:

“Once an employer decides to participate in the JobKeeper scheme and their eligible employees have agreed to be nominated by the employer, the employer must ensure that all of these eligible employees are covered by their participation in the scheme. This includes all eligible employees who are undertaking work for the employer or have been stood down. The employer cannot select which eligible employees will participate in the scheme. This ‘one in, all in’ rule is a key feature of the scheme.”

This suggests that if a staff member is still employed by the entity (e.g., including where someone has been stood down or a long term casual employee) and they are an eligible employee for these rules, then the employer cannot choose to leave them out of the application for the JobKeeper measure. However, the employee can choose not to be nominated.

The ATO guidance on this point states:

“If you decide to participate in the JobKeeper Payment scheme, you must nominate all your eligible employees. You cannot choose to nominate only some employees. However, individual eligible employees can choose not to participate.”

“The design of the JobKeeper scheme is that all eligible employees are paid the minimum of $1500 per fortnight and that the employer claims for each of these employees. Employers are not meant to pick and choose between their eligible employees.”

The key issue is ensuring that all employees are actually eligible. Many casual employees will not meet the definition because they are not long-term casuals, they have a permanent employer (that takes precedence regardless of whether that employer is eligible for JobKeeper), do not meet the residency requirements, or they have not provided the employer with the employee nomination form.

Question 2
A client pays employees monthly but JobKeeper requires fortnightly payments. How will this work?

Answer
Normally, the rules apply on a fortnightly basis and an employer will generally need to be able to demonstrate that at least $1,500 has already been paid to relevant employees during the fortnight in question. That is, the ATO will be basically reimbursing (in whole or part) the employer for amounts that have already been paid to the employee in the applicable fortnight.

However, some flexibility has been added into the rules. For example, transitional rules deal with the first two fortnights of this measure. The ATO explains this as follows:

“For the first two fortnights (30 March – 12 April, 13 April – 26 April), we will accept the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by you by the end of April. This means that you can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.”

Also, some flexibility has been added for situations where employees are paid monthly etc. Relevant comments from the Explanatory Statement are extracted below:

“If an employer’s ordinary arrangement is to pay its employees less frequently than fortnightly, then the payment can be allocated between fortnights in a reasonable manner. For example, if an employer’s ordinary arrangement is to pay an employee every four weeks, it may be reasonable for the purposes of satisfying the wage condition if the employee is paid at least $3,000 for every four week period.

The Rules provide that the Commissioner may treat a particular event that happened in a fortnight as having happened in a different fortnight or fortnights if the Commissioner’s opinion is that it is reasonable to do so. For example, an employee may be accidently underpaid in a fortnight with the result that the employee is paid less than $1,500 in that fortnight, and then receives back pay in the next fortnight in recognition of the underpayment. If this occurs the Commissioner may decide that it is reasonable to treat the employee as having received at least $1,500 in the earlier fortnight. The Commissioner could make similar arrangements where an employer pays an employee monthly and an accidental underpayment has occurred, for example on a one off basis, and the Commissioner considered that it is reasonable to do so.”