Reduced JobKeeper subsidy available beyond September

UPDATE: Legislation to support the extension and modification of the JobKeeper scheme was subsequently passed by Parliament on 1 September 2020 – catch up here.

The Morrison Government has announced its intention to extend the JobKeeper wage subsidy scheme beyond September, but payments will reduce whilst business eligibility for the scheme will tighten.

For the last three months of 2020, the JobKeeper payment will reduce to $1200 per fortnight or, $750 per fortnight for employees working fewer than 20 hours per week. By the New Year through to March 2021, these amounts will reduce further, to $1000 per fortnight and $650 per fortnight, respectively.

Businesses hoping to continue to participate in the JobKeeper scheme beyond September will have to prove they’ve experienced the relevant decline in turnover in all previous quarters to remain eligible for the program. This means, for those applying for it for the first three months of 2021, it will be necessary to demonstrate the business lost money in the June, September and December quarters.

The decision to reduce the JobKeeper payment results from criticism over the original construction of the scheme, and a desire to “wean businesses off this temporary crisis support”, according to Finance Minister, Mathius Cormann. Much criticism has been levelled over the flat payment of $1500, currently payable for all eligible employees nominated within the scheme, regardless of how much or how little an employee typically works or earns. It has been reported that approximately a quarter of recipients of the $1500 JobKeeper payment have earned more money under JobKeeper than they did pre-pandemic, with the average additional earnings being in the vicinity of $550 per fortnight.

A Treasury review of the program found that JobKeeper “has a number of features that create adverse incentives” while the Prime Minister noted that methodically constructing a “two-tier” system at the beginning of the pandemic had not been available to the Government because, “we needed to move quickly and get these payments in place”.

Despite the extension to the JobKeeper payments beyond September, it is unclear whether there will be further changes to the Fair Work Act 2009 (the Act) to support the extended operation of the JobKeeper scheme. Amendments to the Act, which were passed by Parliament just prior to Easter, currently permit employers to issue JobKeeper Enabling Stand Down Directions or other JobKeeper Enabling Directions to temporarily reduce an eligible employee’s working days or hours or modify their duties or location of work, whilst the worker is nominated for the JobKeeper subsidy.

As it currently stands, the provisions permitting JobKeeper Enabling Stand Down Directions or other JobKeeper Enabling Directions to be enforced will conclude on 28 September 2020. If these provisions aren’t also extended, some employers may be claiming the reduced JobKeeper wage subsidy for employees beyond September but won’t be able to rely on issuing a JobKeeper Enabling Stand Down Direction or other JobKeeper Enabling Direction to manage an employee’s hours/days of work or modify their duties, etc.

Additional background on the extended operation of the JobKeeper scheme is available from the Treasury website.