JobKeeper program: Australian Government wage subsidies during COVID-19
Last updated: April 30 2020
We’re living through tough times, with the COVID-19 pandemic causing uncertainties for businesses and their employees. Organisations are reacting quickly and pivoting their approach to business. Some, by law, are having to close temporarily, others are mandating their people to work from home, and some sadly are being forced to lay off or stand down staff.
In order to incentivise employers to keep workers in employment for as long as possible, the Federal Government announced that it will be significantly increasing its wage subsidy scheme in response to COVID-19. The scheme is called JobKeeper, and it was passed into legislation on April 8 2020. The scheme will reimburse eligible employers up to $1500 (before tax) per fortnight per employee. For full eligibility criteria, refer here.
There are eligibility criteria for both employers and employees. KeyPay is determined to make the employee component as straightforward as possible. So we’ve created a JobKeeper Eligibility Report to help you quickly identify eligible employees. Read more on that below.
What is the JobKeeper program?
This program is a wage subsidy scheme which stems from a $130bn economic stimulus package announced by the Government in response to COVID-19. The government expects up to 6m people to access the $1500 fortnightly wage subsidy. There will be a legal obligation on employers to ensure they pass the full subsidy onto their employees.
What criteria do employers need to meet for the JobKeeper program?
- Employers must register with the Government to access the scheme
- For employers who have a turnover of less than $1 billion, their turnover must be reduced by more than 30% relative to a comparable period a year ago (of at least a month)
- For employers with a turnover of $1 billion or more, their turnover must be reduced by more than 50% relative to a comparable period a year ago (of at least a month)
- The business must not be subject to the Major Bank Levy
- Sole traders, self-employed people, partnerships and trusts will also be eligible
In order to receive the subsidies on time, employers must be registered and up to date with BAS statements and Single Touch Payroll. Businesses can apply today, and they will receive reimbursements from the first week of May. Those reimbursements will be backdated to 30 March.
Read the full overview of JobKeeper payments for employers.
Which employee types are eligible for the JobKeeper program?
As a minimum, an employee must have been employed by the employer on 1 March 2020 and continues to be employed by that employer, in order to be eligible for the payment. This means any new employees employed after 1 March 2020 are not eligible for the payment. Additionally, eligible employees are employees who:
- were stood down before the commencement of this subsidy;
- are re-engaged by a business that was their employer on 1 March 2020;
- are at least 16 years of age as at 1 March 2020;
- are either full time and part time;
- are long-term casuals, ie casuals employed on a regular basis for longer than 12 months as at 1 March 2020;
- are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder as at 1 March 2020;
- are a resident for Australian tax purposes on 1 March 2020;
- are not in receipt of a JobKeeper Payment from another employer.
If a business receives the $1500 payment, they will receive the subsidy, to pay their employees.
Knowing if your employees are eligible in KeyPay
KeyPay's JobKeeper Eligibility Report
- The JobKeeper eligibility report is designed to provide an employer with the information to make an informed decision on which of their employees fit the basic eligibility criteria provided by the government.
- The eligibility of all employees should be manually verified before proceeding to claim the JobKeeper subsidy from the Australian Tax Office.
- The report makes no assumptions about the eligibility of the EMPLOYER to claim the JobKeeper subsidy. This should be determined by the employer.
Update: April 9
We’ve updated the JobKeeper Eligibility Report, allowing employers to include employee visa information. If you record employee visas using KeyPay’s qualifications feature, you can now add this to the report parameters. The report will then incorporate the visa qualifications to assess employee eligibility and classify them accordingly.
The report gives you a summary view of each of your employees that may/may not be eligible.
- Employees under 16 at the date of running the report are considered ineligible
- Employees that started after 1/3/2020 are considered ineligible
- Casual employees that started after 1/3/2019 are considered ineligible
- Employees configured with an employment type of 'Labour Hire' or 'Superannuation Income Stream' are considered ineligible
- Employees without the 'Australian Resident for tax purposes' checkbox ticked on their tax file declaration may not be eligible (from the fact sheet: "are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder;"
- Employees without the 'Claim tax free threshold' checkbox ticked on their tax file declaration are noted as 'may not be eligible' due to this being an indicator that they may have multiple employments.
- Employees with a visa qualification may not be eligible if they do not possess the type of visa that falls within the eligibility criteria.
- If you record employee visas using KeyPay's qualifications feature, you can add the qualifications to the report parameters. The report output will then identify which employees have any of the qualifications and classify them accordingly:
This new report is available under Employee Reports in KeyPay. For a step by step, check out our JobKeeper Eligibility Report support article.
A few things to note:
- IF you are eligible, you still need to pay your employees for the work they are doing based on the existing agreement
- The JobKeeper payment is paid to the employer as a supplement to assist with the payment of normal wages and is $1500 per fortnight per employee BEFORE tax.
- If the employee earns more than the allocated $1500 per fortnight, employers need to continue to pay the employee with no change
- If the employee normally earns less, they continue to get their pay, with a ‘JobKeeper top up’ (no additional super contributions on the top up amount)
How to prepare
For a detailed guide on how to prepare for JobKeeper payments, see the ATO JobKeeper page.
How to manage JobKeeper payments in KeyPay
Update: 24 April
When the ATO announced special conditions required to report JobKeeper payments via Single Touch Payroll. We put together a support article on managing JobKeeper payments to reflect the announcement.
Since then, KeyPay has released more helpful features that have further streamlined the overall management process:
- Employee Nomination Notices:
Once you’ve identified eligible employees, it is required that employees obtain and record employee consent before commencing JobKeeper payments.
To assist employers with this, we have created a mechanism where users can bulk publish nomination notices to employees via email. Additionally:
- Employees can complete the form online;
- Employee nominations are recorded automatically in the platform; and
- Any changes to nominations are tracked via the Employee Details Audit Report.
*Businesses have until 30 April to notify employees and receive completed employee notification forms to be able to claim JobKeeper payments for the month of April.
Refer to our JobKeeper Employee Nominations support article for a detailed walkthrough of the setup process.
- Processing JobKeeper Payments in Pay Runs
We added a new pay run action - "Add JobKeeper Payment" - that allows users to perform the 3 JobKeeper options available via a context panel:
- JobKeeper top-up
- JobKeeper start
- JobKeeper finish
The system will then create the relevant JobKeeper pay categories based on the actions performed, thereby ensuring pay category settings are configured in accordance with the ATO's requirements.
Refer to our support article for more details.
*If you’re an eligible employer, you have until 31st May to register for the JobKeeper scheme here with the ATO and have your eligible employees paid to be able to claim JobKeeper payments for April.
**KeyPay will be regularly updating this page with KeyPay how-to guides. For all legislative changes and updates, please refer directly to the ATO JobKeeper Payment page.**