Eligible employees from 3 August
Context of the changes
The initial JobKeeper scheme was designed to only cover eligible employees who met certain conditions as at 1 March 2020. This meant that employees who changed employers after 1 March fell out of the JobKeeper system because neither their previous nor the new employer could claim JobKeeper for those individuals.
On 7 August 2020, the Government announced that the JobKeeper payment would be extended so that it applies to more recently engaged employees that were in an employment relationship with eligible employers on 1 July 2020. Accordingly, under the changes to the JobKeeper scheme, for JobKeeper fortnights beginning on or after 3 August 2020, the reference date for determining certain employee eligibility conditions is changed from 1 March 2020 to 1 July 2020.
Eligible employees from 3 August onwards
- the individual is employed by the entity at any time in the fortnight — including those stood down or re-hired; AND
- the individual does not receive the Government’s paid parental leave or dad and partner pay, or workers’ compensation payments for total incapacity for work, at any time during the fortnight; AND
- either an eligible employee for a JobKeeper fortnight ended before 3 August 2020 using the 1 March test (i.e. eligible under the old rules) OR you met the 1 July test:
1 July test
- on 1 July 2020 — the individual was either a full-time, part-time or fixed-term permanent employee, or a long-term casual employee (who isn't a permanent employee elsewhere); AND
- on 1 July 2020 — the individual was aged 18 or over (or if they were 16 or 17 years old on 1 March 2020 — they were independent or not undertaking full-time study); AND
- on 1 July 2020 — the individual was either an Australian resident for social security law purposes, or a tax resident and held a special category Subclass 444 visa.
The implications of the 1 July test are that individuals who either changed employers (on a permanent full-time or part-time basis), or reached the 12 month anniversary as a long-term casual employee, or reached the age of 18 during the period from 1 March to 30 June 2020, may now qualify for JobKeeper when they previously could not.
What employers need to do (ASAP!)
As an employer enrolled in the JobKeeper scheme, you will need to assess whether any additional employees will qualify for JobKeeper payments from 3 August.
If you have additional eligible employees under the above criteria, you will need to:
- Ensure that the newly eligible employees return the completed JobKeeper nomination notice form to you within 7 days of the legislation being registered - i.e. by 21 August.
- Ensure that the wage condition is met for the newly eligible employees - this is the requirement that the employer must have already paid at least $1,500 (less PAYG withholding and any salary sacrificed amounts) to the employee for the fortnight. For the JobKeeper fortnights beginning on 3 August and 17 August, employers have until 31 August to meet the wage condition (i.e. to make catch-up payments to those employees who are not eligible for JobKeeper under the extended definition but who would not otherwise have earned at least $1,500 during the relevant JobKeeper fortnights). More information about the wage condition is available on the ATO website.
IMPORTANT: an employee who does not return the completed JobKeeper nomination notice form to their employer by 21 August and/or does not receive at least $1,500 for each of the two relevant fortnights by 31 August will not qualify for JobKeeper payments for those two August fortnights (even if they meet all the other criteria).
Impact on the eligible employees as assessed under the old rules
For JobKeeper fortnights beginning on or after 3 August 2020, individuals who were already eligible employees for their employer for any JobKeeper fortnight under the original rules do not need to retest their eligibility with reference to the new 1 July 2020 date or satisfy any new nomination requirements.
In short, those employees who were already on the JobKeeper payments are not affected by the changes and will continue to qualify for JobKeeper provided there is no change to their circumstances and the wage condition continues being met for them.
What about sole traders and individuals trading through entities?
The amendments also allow individuals who have nominated as an eligible business participant with one entity (under the original rules) to re-nominate as an eligible employee of another entity in limited circumstances. To re-nominate, the individual must have ceased their business participation with the first entity before 1 July 2020, and commenced their employment with the new entity by 1 July 2020.
Long-term casual employees
One of the less obvious groups of individuals to benefit from the extended rules are the long-term casual employees of a business. A long-term casual employee is not eligible for JobKeeper unless they have been employed "on a regular and systematic basis" for at least 12 months. Those who were unable to meet the 12 month requirement under the 1 March test may now be able to qualify under the 1 July test by virtue of having reached the required 12 month period of employment after 1 March but before 1 July.
There is some ambiguity in relation to the "regular and systematic basis" requirement which is not defined in legislation. The ATO has now issued some guidance on this issue which we encourage you to review.
Remember the "one in - all in" rule!
Under the JobKeeper legislation, an employer enrolled in JobKeeper must offer the opportunity to nominate for JobKeeper to all eligible employees. This means that if additional employees become eligible as a result of these amendments, they all must be provided with the JobKeeper nomination notice form. An employee may choose to not participate in JobKeeper by not completing their nomination notice form, but employers are not permitted to "cherrypick" which eligible employees they enter into the JobKeeper scheme.
If you have any questions or concerns about determining eligible employees for the current and future JobKeeper fortnights, please get in touch with your Ruddicks adviser and we will guide you through the process. As always, the Ruddicks partners and staff are here to help with any questions you may have about the COVID-related assistance measures or any taxation matters.
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The content of this newsletter is general in nature. It does not constitute specific advice and readers are encouraged to consult their Ruddicks adviser on any matters of interest. Ruddicks accepts no liability for errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. This information is current as at 18 August 2020, and was published around that time. Ruddicks particularly accepts no obligation or responsibility for updating this publication for events, including changes to the law, the Australian Taxation Office’s interpretation of the law, or Government announcements arising after that time.
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