As legislation giving life to the Morrison government’s $130 billion wage subsidy scheme passed parliament on Wednesday, new details were revealed about how businesses will be expected to pass taxpayer funds onto their employees.
Amendments to the Fair Work Act grant extraordinary new powers to businesses accepted into the JobKeeper program, but they come with some hefty responsibilities and penalties for breaking the rules.
The Morrison government has sought to give businesses enough flexibility to continue to trade through the COVID-19 pandemic where possible, or shut down their operations if needed, while still administering $1,500 fortnightly payments to workers.
The intention is clear: the program is designed to help employers keep workers on their books and pay them a wage over the next six months. But only firms accepted into the scheme will be able to wield additional powers, and only in relation to employees receiving JobKeeper payments.
Here’s what we know so far.
For a detailed explanation of JobKeeper eligibility, see our latest explainer here.
How do employers pay JobKeeper recipients?
The basic model here is the Australian Taxation Office (ATO) will make payments to business through their nominated financial institution, which will then pass those payments on to workers (to avoid any doubt: that’s mandatory).
These payments will start flowing from the first week of May to employers accepted into the scheme. Applications will open imminently after the Coronavirus Economic Response Package (Payments and Benefits) Bill 2020 receives Royal Assent on Wednesday. Payments will be backdated to March 30.
JobKeeper recipient employees must be paid $1,500 at a minimum every fortnight for the duration of the scheme (six months).
Workers entitled to greater amounts based on their existing wage arrangements must be paid that amount in full for the corresponding amount of work they perform during that fortnight.
The basic test here is JobKeeper workers should receive the greater of their normal salary or the wage subsidy payment.
Employers are not allowed to reduce the hourly base rate of pay of employees, stipulated in their employment agreements.
Although JobKeeper recipients can be subject to stand down directions (see below), which allow businesses to limit the number of hours employees work, and thus the total pay they receive.
However, irrespective of the number of hours worked, JobKeeper recipient employees must be paid the $1,500 fortnightly subsidy at a minimum.
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This includes employees which would usually only work a few hours a week. If they’ve been signed up for JobKeeper, they must be paid the subsidy in full every fortnight for the duration of the scheme.
Workers on annualised salaries? The usual applicable workplace instruments set out in National Employment Standards apply here. Basically, this involves working out the base rate of pay into an hourly form.
Another note: businesses are required to keep in-depth records of all transactions and payments relating to JobKeeper, and there are some pretty hefty consequences if this is not done. So write it all down and check it all twice, folks.
What new powers do JobKeeper recipient employers have?
There is a ream of new powers granted to employers accepted into the JobKeeper scheme under changes to the Fair Work Act passed by parliament on Wednesday.
The basic philosophy has been to enable employers to reduce their workforce, where required, while still being able to pass on the JobKeeper payment in full without cutting the hourly base rate workers are otherwise entitled to.
Stand down directions
Employers have been given the power to stand down JobKeeper recipient employees, including by reducing their hours in cases where those workers “cannot usefully be employed” for their normal days or hours because:
- Business changes due to the COVID-19 pandemic (less trade, closed stores); and/or
- Government initiatives to slow coronavirus transmission (trading restrictions).
Stand down directions are only applicable if they can be implemented safely, including with regard to the “nature and spread” of the coronavirus.
Employers are still required to pay workers subject to stand down directions, and cannot reduce an employee’s hourly base rate of pay stipulated in their employment agreements. This means stand down directions cannot reduce hourly pay rates, only hours worked.
“Cannot usefully be employed” is a well-known Fair Work Commission (FWC) test, and employees will have access to binding arbitration processes through the FWC if they suspect any rules have been broken.
Workers must be notified of these requests in writing at least three days ahead of time, and may reject unreasonable requests.
Other terms and conditions of employment (including enterprise agreements) beyond these specific reforms remain unchanged. However, in cases where a JobKeeper stand down direction is made, it applies despite other usually applicable terms in an employment contract or enterprise agreement.
JobKeeper directions can only be made in relation to workers entitled to receive JobKeeper payments. That means you can’t issue a JobKeeper stand down notice to a casual worker not receiving wage subsidies.
Workers subject to stand down directions accrue leave at the same rate they would have if the direction had not been given.
Workers can also request to pursue secondary employment or professional development during a stand down direction. Employers must not unreasonably refuse these requests.
Changing employee duties, location and times
There are also new powers enabling employers to direct employees to change the nature of their duties, within their skill sets, or to perform those duties from a different place than normal, such as from home.
Again, these directions must be presented to workers in writing ahead of time, and may be rejected if unreasonable.
Such directions must satisfy the following:
- Duties performed must be safe (having regard to coronavirus);
- The employee must be licensed and qualified for those duties; and
- Duties must be “reasonably in the scope” of the employer’s business operations.
In regard to changing the location of work, these directions may be given to JobKeeper recipients in the following circumstances:
- The place is suitable for that worker’s duties;
- If the place is not the worker’s home, it should not be unreasonable for them to travel there (this includes coronavirus hotspots);
- Performance of worker duties at this place is safe (having regard to coronavirus); and
- Does not impact on the caring responsibilities of that worker.
JobKeeper employers can also agree with recipients to work on different days or at different times, provided:
- Doing the work at a different time or on a different day is safe (again, coronavirus); and
- The change does not reduce that worker’s number of hours worked.
JobKeeper recipient employees are required to consider all requests from employers, and aren’t allowed to “unreasonably refuse” an employer’s request for an agreement to changed arrangements.
Annual leave agreements
Employees receiving JobKeeper payments are also required to consider an employer’s request for them to take paid annual leave, and to agree to take annual leave at half pay.
Employers can also propose employees taking twice as much annual leave at half pay, however, these requests must not result in the employee’s leave balance falling below two weeks.
These requests must also be reasonable and employers must have information to support a reasonable belief that such a course of action is necessary “to continue the employment of one or more employees”.
Workers which take leave at half pay accrue leave entitlements as if the direction had not been given.
Who enforces all this? And what if a business breaks the rules?
The legislation provides for Fair Work Commission (FWC) oversight of arrangements outlined in the JobKeeper package.
Workers which suspect their employers have broken the rules in relation to stand down, duties or annual leave provisions in the new laws are entitled to take their case to the FWC, which can lead to arbitration.
In cases where workers and employers can not come to an agreement about directions outlined in the JobKeeper laws, the FWC will also be available to settle those disputes with orders as it considers appropriate.
The Fair Work Ombudsman will also be able to use its powers to investigate suspected contraventions of JobKeeper law.
JobKeeper powers are subject to typical workplace protections, including unfair dismissal and taking adverse action against JobKeeper recipient employees for their reasonable refusal to accept an agreement is also prohibited.
Failure to comply with the rules surrounding JobKeeper powers carries a $12,600 fine for individuals and a $63,000 fine for a corporation.
Here are the no-nos attached to these new civil penalties outlined in the JobKeeper law specifically:
- Failure to comply with an FWC order related to JobKeeper directions;
- Failure to pay a worker the greater of their normal wage or the JobKeeper subsidy;
- Reducing the hourly rate of pay of an employee as a result of a JobKeeper direction; and
- Failure to consider or unreasonably refuse a request from an employee working reduced hours for secondary employment or training.
However, there are much tougher penalties for firms which give JobKeeper directions they know aren’t authorised by the new provisions (detailed above). These fines could be as high as $126,000 for an individual or $630,000 for a corporation.
The commissioner of taxation is also allowed to penalise businesses for defrauding the tax office in relation to JobKeeper payments, or otherwise not playing by the rules.
Businesses which defraud the ATO in relation to JobKeeper payments could be on the hook for criminal as well as civil penalties.
This includes cases where the ATO has overpaid a particular firm, either because a mistake was made or the material provided to the ATO was false or misleading.
The ATO has broad powers under the new laws to claw back funds which it deems were improperly paid.
False or misleading statements could cost a business up to 75% of the amount they were overpaid as a result of the false information, on top of back payments.
Making false or misleading statements to taxation officers can also carry a prison sentence of up to 12 months, while obtaining financial advantage by defrauding the ATO carries a possible prison term of 10 years.
Under the JobKeeper laws, the Treasurer has been empowered to make rules relating to reviews of ATO decisions.