The JobKeeper wage payment scheme was introduced to help Australian businesses survive activity restrictions that have been introduced in response the COVID-19 pandemic that began to affect Australia through March 2020. It is a payment made to eligible businesses and not-for-profits affected by the COVID-19 pandemic to support them in retaining employees. The JobKeeper Payment is paid to eligible employers at a flat rate of $1,500 per fortnight (pre-tax) for each eligible employee from 30 March 2020 for a maximum period of 6 months. More information from Ai Group about the structure and operation of the JobKeeper scheme is online here: https://www.aigroup.com.au/business-services/covid19-coronavirus/
The activity restrictions introduced in response to COVID-19 have prevented many Australian businesses from trading and working normally. Even for businesses that are not directly restricted, falling sales is severely limiting their ability to maintain their workforce. With immediate cash flow much diminished for so many businesses, the JobKeeper payment is instrumental in reducing the cost to businesses of keeping their people employed through this crisis. But as with any new payment scheme, several complexities have arisen in practice, in workplaces across Australia.
The questions and concerns of these member businesses provide a valuable insight into the way in which JobKeeper is operating in practice so far, at the coalface of Australian workplaces. While providing an invaluable support for employment and enhancing employer efforts to maintain connections with their employees, these concerns about JobKeeper neatly illustrate a range of anomalies and areas of confusion about JobKeeper in addition to those revealed to the public by the Treasurer on 22 May, and that have led to far fewer employees being covered by Jobkeeper – and money being spent on it – than was originally anticipated. There is clearly a need for the Government to address these anomalies and reconsider the current JobKeeper rules; too many businesses and employees are currently going without the support that was intended. The anomalies and concerns about JobKeeper are summarised in Chart 1 below.
The aspect of JobKeeper requiring clarification most frequently in April was employee eligibility, with 39% of emails from member businesses asking about the employee criteria. Their questions included: the status of casual employees; newly hired permanent staff; employees on different types of leave; eligibility dates; length of service; and whether recent redundancies could be reversed. There was also a degree of confusion about eligibility for employees on different types of temporary and permanent migration visas, and how to proceed with eligible employees who did not sign up or did not nominate the business as their employer.
About a quarter of the member businesses (24%) that emailed Ai Group simply asked for further information about JobKeeper including: where to find government information (which government department); how to find out who qualifies; how to communicate to employees; where to apply; when to apply; when the payments would start; and which time periods they will cover.
18% of the member businesses that emailed Ai Group were unsure about leave entitlements. These businesses wanted to know: how to treat annual leave and long service leave; how to apply JobKeeper payments to employees who were already on leave; and whether employees could be directed to take leave. Of these businesses, 4% of email queries asked particularly about eligibility and procedures for employees on parental leave.
Around 15% of emails from member businesses to Ai Group asked about how to include JobKeeper in their payroll systems. There asked: whether it was a top-up to normal wages or in addition to normal wages? Whether wages be should be reduced to the JobKeeper amount? and how to include JobKeeper in payroll calculations for on-costs and deductions? Of these, 3% of email queries asked specifically about how to include JobKeeper in superannuation calculations.
One of the unintended consequences of the payment scheme is the potential for internal friction in workplaces that participate. 14% of the member businesses that emailed Ai Group asked about the best way to address and manage such frictions. These businesses were keen to apply for the Jobkeeper scheme, but were very concerned that the structure of the JobKeeper payment might cause conflict within their workplace. For example:
- tensions between staff receiving JobKeeper who did not want to attend work in person (or at all) due to health concerns, while other staff were still coming to work.
- tensions caused by the ‘flat-rate’ nature of the JobKeeper payment, which means that payments need to be raised to a minimum of $1,500 per fortnight for all workers, including part-time, casual and lower-paid employees who usually earn less than $1,500 per fortnight. Some long-term casual employees are reportedly receiving sizeable pay increases for the duration the JobKeeper payment, regardless of the hours that they usually work or actually work during this period. This can be particularly problematic when other staff on higher pay and/or longer work hours do not receive any increase, or might even be receiving reduced pay due to reduction in their paid work hours.
- In other cases, employees who are normally on different pay rates are potentially all earning the same ‘flat rate’ amount. For businesses with a fairly regimented, traditional structure of pay grades and seniority (as set out in some industrial awards, for example), this was a cause for concern and was even regarded as a disincentive to take part in the JobKeeper scheme.
12% of the emails from member businesses to Ai Group’s Jobkeeper inbox asked about the eligibility criteria for the business. They asked about meeting (and documenting) their eligibility criteria including: declines in revenue; the time periods; comparison points (last month? last year?); expected revenue declines in future months; completing existing contracts; and future orders. Businesses that are part of a larger corporate entity sought clarification about whether all of the company group needs to qualify, or whether each company within a group is assessed separately. Other businesses asked what would happen if they qualify at the start of the JobKeeper scheme but experienced an unexpected recovery in revenue later? Would they need to pay back JobKeeper in those circumstances? Of these queries about business eligibility, 5% of businesses asked if they should pay their staff now, under the assumption of qualifying for JobKeeper (e.g. what amount to pay), when their business eligibility and the actual amount they would receive had not yet been confirmed by the ATO.
One tenth of businesses that emailed Ai Group about Jobkeeper were interested in stand down directions. This included: whether a business needed to confirm its eligibility for JobKeeper before resorting to stand down directions; whether employees that had already been stood down (before JobKeeper commenced) were eligible for JobKeeper payment; how to manage the intersection of stand downs, leave entitlements and Jobkeeper. Some of these businesses asked if they could use JobKeeper to reinstate employees who had been stood down or made redundant. Others asked for structured legal templates for communicating stand down directions to their staff.
A small number (3% of emails from member businesses) reported unexpected and unforeseen problems with employees not following directions to work once they qualified and were receiving the JobKeeper payment. These businesses asked if: failure to attend work was grounds to terminate employment; how to manage unexplained absences; eligibility for JobKeeper during periods of unexplained absences. This included a small number of businesses asked about how to manage disagreements with their employees regarding:
- employees’ concerns about attending their workplace in person;
- changing duties or task requirements as a result of the COVID-19 activity restrictions; and
- changing duration of work hours or times of work for operational reasons, as a result of the COVID-19 activity restrictions.
All the early indications suggest that JobKeeper is working very well so far, in keeping as many Australians as possible employed through this crisis. The early concerns and questions from businesses about how JobKeeper is operating in practice provide a good outline of the types of information and assistance that businesses will require from here, in order to keep JobKeeper running as smoothly as possible for the duration of the scheme.
Chart 1: Questions about the JobKeeper scheme emailed to Ai Group in April 2020*