In response to the continuing economic effects from the COVID-19 pandemic, the Government announced a number of changes to the JobKeeper program on 7 August 2020.
Some of these changes affect eligibility conditions from 28 September 2020 and are explained in this article and infographic. The other significant change announced on 7 August is the change in the relevant employment date for an eligible employee from 1 March 2020 to 1 July 2020, with effect from JobKeeper fortnights starting on or after 3 August 2020. This expands employee eligibility.
This article discusses what the new relevant employment date of 1 July 2020 means for employers and employees.
1 March 2020 under JobKeeper 1.0
Under the original JobKeeper program, to be an eligible employee of an entity, an individual had to meet certain requirements including that on 1 March 2020:
- The individual was either:
- an employee of the entity (other than a casual employee); or
- a long term casual employee (employed by the entity on a regular and systematic basis for a 12-month period ending on 1 March 2020); and
- The individual met certain residency conditions (broadly that they are an Australian citizen, permanent visa holder or hold a certain special category visa); and
- The individual was aged 16 or over (modified from 11 May 2020 to require the individual to be aged 16 or 17 if they met the independence and study conditions set out in s 9(2)(aa) of the JobKeeper Rules, or aged 18 years otherwise.)
This meant that the following employees were not eligible for JobKeeper based on the 1 March 2020 employment date:
- Individuals who were employed after 1 March 2020;
- Casual employees who either had not been employed for at least 12 months on 1 March 2020 or had been employed for at least a year but not on a regular and systematic basis; and
- Individuals who were aged less than 18 years and didn’t meet the independence and study conditions (leaving aside the first three JobKeeper fortnights when employees aged 16 and 17 were eligible without having to meet these additional requirements).
1 July 2020 under JobKeeper 1.1
The JobKeeper Rules have been amended by the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 7) 2020 which were registered on 14 August 2020. The amending rules change the reference date for determining the eligibility of employees under JobKeeper from 1 March 2020 to 1 July 2020. This means that more employees will be eligible for JobKeeper.
The changes apply from JobKeeper fortnight 10, that is, JobKeeper fortnights starting on or after 3 August 2020.
A range of employees who were previously ineligible will become eligible under the new 1 July 2020 employment test including:
- Individuals (other than casuals) employed after 1 March but before 1 July 2020 who meet the age and residency requirements;
- Casuals who did not meet the definition of a long term casual employee by 1 March 2020 but have become long term casual employees by 1 July 2020; and
- Employees who did not qualify on 1 March 2020 due to their age or visa status but have become 16 or 17 and meet the independence and study conditions, turned 18, or obtained the necessary visa by 1 July 2020.
The JobKeeper rules require the wage condition to be met by the end of the JobKeeper fortnight. This means the wage condition would have had to be satisfied for fortnight 10 by Sunday 16 August. However, shortly after the legislative instrument was issued on 14 August, the ATO updated its web page guidance to confirm that for JobKeeper fortnights 10 and 11 (commencing on 3 and 17 August), employers have until 31 August to meet the wage condition for all employees who are now eligible for JobKeeper due to the 1 July 2020 employment test.
This is a pleasing development and results from extensive consultation with the profession. Entities also have until the end of August if they are enrolling in JobKeeper for the first time based on the 1 July 2020 employment test.
The eligibility of existing employees is preserved if they are already covered by JobKeeper based on the 1 March 2020 reference date. Retesting of their eligibility is not required.
The one-in all-in rule means that the following employees will need to be provided with a nomination notice:
- Any full-time or part-time employee hired between 2 March and 1 July 2020 who meets the age and residency requirements;
- Casuals who also meet the 12-month condition to be a long term casual employee; and
- Employees who previously failed the age or residency requirements on 1 March but satisfied them by 1 July.
The new rules also contain an amendment to the restriction in the JobKeeper rules that prevent any employee from nominating with an entity if they have already nominated with another entity. Under the amendments, an individual who has changed jobs between 2 March 2020 and 1 July 2020, and had previously nominated to be on JobKeeper with their former employer, can re-nominate with their new employer.
The new rules require employers to give a nomination notice to their employees who are now eligible based on the 1 July 2020 employment test within seven days of the commencement of the legislative instrument. The instrument was registered on 14 August 2020 which suggests 21 August is the deadline for giving nominations. However, on a closer reading of the instrument, it commences the day after it is registered. Accordingly, it commences on Saturday 15 August so the elapse of seven days is Saturday 22 August.
Section 36(2) of the Acts Interpretation Act 1901 provides that if the law requires something to be done by a Saturday or a Sunday, then that thing may be done by the next day that is not a weekend or a holiday. Accordingly, employers have until Monday 24 August to give nomination notices to employees who are now eligible for JobKeeper due to the 1 July 2020 employment test for JobKeeper fortnights starting on or after 3 August 2020. The Commissioner has no discretion to allow any further time.
The changes are welcome and ultimately mean more support for small business owners and employees as they continue to deal with the impact of the COVID-19 pandemic. Our profession has continued to advocate for fairness and ensuring the rules are workable and sensibly applied.
What happens next?
The announcements by the Government on 21 July 2020 and 7 August 2020 need to be reflected in legislative amendments. The current JobKeeper legislation prevents payments being made by the Government beyond 31 December 2020 so an amending bill requiring a sitting of Parliament will be necessary, and is likely to be complemented by a legislative instrument issued by the Treasurer which will set out the details of the new rules. Further details will be available once the legislative amendments are released and updated ATO guidance is published.
The Government estimates that the total cost of the JobKeeper Payment until March 2021 will now be over $100 billion. JobKeeper 2.1 represents a further increase in the cost of the program by $15.6 billion.
Further information on JobKeeper 1.1 is available from the ATO website. Or, head to our dedicated COVID-19 economic stimulus hub for more on JobKeeper, the Cash Flow Boost and other important measures.