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JobKeeper Wage Subsidy Scheme: Urgent Amendments to the Fair Work Act 2009 (CTH)

By Michelle Morton

30th April 2020

The JobKeeper wage subsidy scheme has recently been introduced which assists employers who have been affected by COVID-19 to continue to pay the wages of eligible employees.

On 9 April 2020, the Federal Government passed two Bills: the Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020 and the Coronavirus Economic Response Package (Payments and Benefits) Bill 2020.

These Bills function to amend the Fair Work Act 2009 (Cth) (“Fair Work Act”) to provide the framework for the JobKeeper wage subsidy scheme and afford greater flexibility to eligible employers moving forward during this period of uncertainty.

Without diving too deeply into the finer details of the eligibility criteria, eligible employers are entitled to claim a wage subsidy of $1,500 (before tax) per eligible employee per fortnight. This scheme will operate for a 6 month period starting from May 2020. An eligible employee is an employee (either full-time, part-time or long-term casual) who was employed on 1 March 2020 and can include employees who are on unpaid leave or working reduced hours, or who have been stood down or terminated and re-hired after 1 March 2020.

What is important to know is that the amendments to the Fair Work Act allow eligible employers to give “JobKeeper enabling directions” to their employees to unilaterally vary their terms of employment. Employers are now able to direct an employee to work fewer hours, fewer days, or no days at all (i.e. standing them down). Employees needn’t worry though, there are employee protections regarding these directions. An employer can only give a ‘stand down direction’ if the employee cannot be usefully employed for their normal hours due to virus-related business changes or an enforceable government direction. The direction must also be reasonable in all circumstances and the employer must be of a reasonable belief that the direction is necessary to continue the employment of one or more of their employees.

Under the amendments, employers may also unilaterally alter an employee’s duties and work location if it is safe to do so and within the employee’s skill and competency. The abovementioned employee protections will also apply.

Employers who qualify for this scheme can also request that eligible employees agree to change the days or times when they perform their work and/or take a period of annual leave (including taking double the leave at half the pay). A request of such nature must be agreed to by the employee, but they can only refuse on reasonable grounds.

If an employer gives a JobKeeper enabling direction to their employee, these directions will prevail over any existing terms under an employment contract, award or enterprise agreement. They are only temporary though; they only apply until 28 September 2020 unless withdrawn earlier by the employer.

Employers need to be aware that making these directions does not decrease their payment obligations to their employees. While you can reduce hours and days of work, employers cannot reduce the employee’s hourly rate of pay. The correct rate of pay must be paid for all work still being completed after a direction has been given – and if the direction involves a change of duties, the correct rate of pay is whichever is higher out of the base rate that applies to their previous duties or the base rate that applies to their new duties. The payment scheme is designed so that all eligible employees receive a minimum of $1,500 less tax per fortnight – this is the “Minimum Payment Guarantee”. Even if the employee would normally be paid less than $1,500, at a minimum the employer must pay that full amount. For an employee normally paid more than the minimum, it is expected that employers will pass on the full subsidy payment and then top up the employee’s remaining salary.

On the other hand, if employers do not pass on the full $1,500 JobKeeper payment, they will be liable for significant financial penalties under the Fair Work Act. Individuals knowingly involved in a breach of the Fair Work Act may be liable for up to $12,600 per breach while corporations could face penalties per breach of up to $126,000.

If an employee has a dispute regarding a JobKeeker Enabling Direction, the Fair Work Commission has been given the power to hear these disputes and make orders under the amended legislation.

If you would like to make an appointment to discuss your JobKeeper matters with our specialist team of workplace relations lawyers, please contact our office on (07) 4760 0100.

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