April 2020 | Kieran Kelly
The JobKeeper wage subsidy announced by the Federal Government last week was greeted with open arms by businesses and employees across Australia.
Affected businesses will qualify for the subsidy if:
- they have a turnover less than $1 billion and turnover has decreased by at least 30%; or
- they have a turnover greater than $1 billion and turnover has decreased by at least 50%.
Employees will be eligible if they:
- were employed by an eligible business as at 1 March 2020, even if their employment was subsequently terminated but they were subsequently re-employed;
- are employed on either a full-time, part-time or casual basis (provided that casual employees have been employed for at least 12 months); and
- meet residency requirements.
The fact sheet released by the Government provides additional useful information, including that:
- employers can nominate eligible employees at their discretion;
- not-for-profit entities and self employed individuals may also be eligible;
- the $1,500 payment is a flat rate that must be passed on, even if it is higher than the employees usual wage;
- current employees who continue to perform their usual duties must have the difference between the subsidy and their wage topped up; and
- employers are not required to pay superannuation on the $1,500 subsidy.
Can I stand down an employee as my business weathers the storm?
Given the safety net that will shortly be in place we have been asked if it is permissible to stand employees down as a cost saving measure.
It is critical that employees be stood down only if there is a basis under either the Fair Work Act, an Enterprise Agreement or an employment agreement.
Under the Fair Work Act an employee can only be stood down if they cannot be “usefully employed” as a result of a stoppage of work for which the employer is not responsible. This is a high bar.
We suggest that employees be made aware of the tasks that are required of them. If an employee refuses to carry out these duties, the employee may be in breach of their employment agreement.
While employers can select the employees who will receive the JobKeeper payment, caution should be taken as singling out certain employees may lead to adverse action claims (for example on the basis that an employee was not nominated for the payment for a discriminatory reason).
Who should I nominate for the JobKeeper Payment?
There may be a temptation to nominate any eligible casual employees and to rehire employees who have been stood down since 1 March 2020.
We suggest care be taken before deciding who should be nominated.
In respect of casual employees, it is important that you ensure that the employee is not “misclassified” as a full-time employee and able to claim entitlements.
Likewise with rehiring employees, care must be taken. If an employee has been made redundant, rehiring the employee a short time later may give rise to a suggestion that the redundancy was not “genuine” and was in fact an unfair dismissal.
Should I change my employee’s terms of employment?
We have been asked if it is appropriate to change the terms of employment of employees to reflect a necessary reduction in hours/pay and the pending JobKeeper subsidy.
Before doing so you should:
- consider whether a reduction in hours/pay is in accordance with any applicable Award or Enterprise Agreement and is consistent with the employee’s employment agreement; and
- speak to your employees and seek their agreement to any change.
It is important to be cautious before making any substantial change to an employee’s terms of employment without consultation as this may amount to a redundancy and an entitlement to a redundancy payment.
Wait and see
While the proposed changes are promising, much of the detail is unknown at this stage and will be known when the Government passes the necessary legislation, which is due to happen shortly.
We therefore suggest that employers wait for the legislation to be passed and its detail understood before deciding on the best course for their business.
If you require our assistance in relation to any employment related matter, please contact Jonathan Harris or Scott Freidman on (02) 9231 2466.