On 21 July 2020, in light of the continuing COVID-19 crisis, the Government announced it will extend the JobKeeper program by six months to 28 March 2021. However, the worsening economic conditions in Victoria due to the Stage 4 restrictions have caused the Government to rethink the eligibility conditions and make some further changes.
On 7 August 2020, the details of JobKeeper 2.1 were announced. This article discusses the announced changes to JobKeeper and what the redesigned rules mean for employers and employees beyond September.
The Government announced on 21 July 2020 that a modified JobKeeper program will continue for another six months beyond its legislated end date of 27 September 2020 until 28 March 2021. This follows a three-month review of JobKeeper which concluded that the case for extending JobKeeper beyond September is strong.
No changes will be made to the existing JobKeeper arrangements until 28 September 2020.
Under the JobKeeper 2.0 changes announced on 21 July 2020:
- A two-tiered system will apply so that employees who worked for 20 hours or more in the four-week period before 1 March 2020 will be entitled to a higher JobKeeper amount than those employees who worked less than 20 hours on average in February 2020.
- The fortnightly rate will be reduced from $1,500 in two stages:
- From 28 September 2020 to 3 January 2021, the full fortnightly rate will be $1,200 and the partial rate will be $750;
- From 4 January 2021 to 28 March 2021, the full fortnightly rate will be $1,000 and the partial rate will be $650.
- Unlike the current JobKeeper rules which require businesses to satisfy the decline in turnover test only once for a single month or quarter between March and September 2020, the new rules proposed to require businesses to continue to meet a modified decline in turnover test from September 2020 to March 2021. Under the new rules, to be eligible for JobKeeper:
- From 28 September 2020 to 3 January 2021, businesses will need to demonstrate that their actual GST turnover has declined by the requisite percentage in both the June and September 2020 quarters, relative to the corresponding quarters in 2019;
- From 4 January 2020 to 28 March 2021, businesses will need to demonstrate that their actual GST turnover has declined by the requisite percentage in each of the June, September and December 2020 quarters, relative to the corresponding quarters in 2019.
It is proposed that businesses will be required to demonstrate that their actual GST turnover has declined by the requisite percentage in consecutive quarters. This does not have regard for those businesses whose situations may have improved slightly in the June 2020 quarter but have deteriorated in the September or December quarters, such as those in Victoria that are subject to the Stage 4 restrictions.
Further change to decline in turnover test
Under the JobKeeper 2.1 changes announced on 7 August 2020, to be eligible for JobKeeper:
- From 28 September 2020 to 3 January 2021, businesses will need to demonstrate that their actual GST turnover has declined by the requisite percentage in the September 2020 quarter only, relative to the corresponding quarter in 2019;
- From 4 January 2020 to 28 March 2021, businesses will need to demonstrate that their actual GST turnover has declined by the requisite percentage in the December 2020 quarter only, relative to the corresponding quarter in 2019.
This is a sensible modification which will allow many Victorian businesses that did not suffer the requisite decline in their turnover in the June 2020 quarter but have since seen a significant deterioration in their revenue to now qualify for JobKeeper.
New employment date
A further change will see the relevant date of employment move from 1 March 2020 to 1 July 2020 which will allow more employees to be eligible for JobKeeper. While this is welcome, there are two considerations:
- The change will apply from 3 August 2020, i.e. JobKeeper fortnight 10. Given that amending legislation cannot be introduced into Parliament any earlier than 24 August, employers would need to satisfy the wage condition before they can determine if they are eligible to claim JobKeeper for these employees. Hopefully, additional time to meet the wage condition for fortnights 10 and 11 will be allowed.
- Section 9(3)(b)(iii) of the JobKeeper Rules prevents an individual from being an eligible employee if they have given any other entity, or the Commissioner, a JobKeeper nomination notice. While this is designed to prevent an employee claiming JobKeeper through two employers at the same time, as the law currently stands, an individual can only be an eligible employee of a current employer if they had not previously nominated with a former employer. Without a legislative amendment, individuals who are employed as at 1 July 2020 would be ineligible for JobKeeper if they had previously nominated with a former employer.
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 1.0 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.