JobKeeper Payment Scheme rules relaxed and expanded after 28 September 2020

Last Friday (7 August 2020), the Government made an announcement to relax and expand the eligibility criteria for the JobKeeper Payment scheme after 28 September 2020. These rules are being referred to as " JobKeeper 2.0 ".

These announcements have been made primarily in the wake of the tougher COVID-19 restrictions (ie. Stage 4 lockdown) recently imposed in Victoria, and the new changes will be applied nationwide.

What are the relaxed and expanded changes?

Two important changes were announced to relax and expand the JobKeeper 2.0 eligibility criteria applying after 28 September 2020, including:

Adjustments to Employee Eligibility test - changed the testing date of when the employee must have been employed (full time, part time, or long term casual) before the start of JobKeeper, to now be 1 July 2020 (and was 1 March 2020); and
Adjustments to Decline in Turnover Test periods – you are now required to consider only one quarter (and not the preceding two quarters) before the new expansion periods under JobKeeper 2.0, as follows:

Expansion period 1 (28 September 2020 to 3 January 2021) – now need to consider the decline in actual turnover for the September 2020 quarter (compared to the September 2019 quarter); and
Expansion period 2 (4 January 2021 to 28 March 2021) – now need to consider the decline in actual turnover for the December 2020 quarter (compared to the December 2019 quarter).

So where are we today?

Since there have been numerous announcements relating to the JobKeeper Payment scheme in the last two weeks, it is now important to take a moment and review what the eligibility criteria are, as we understand them today (Monday, 10 August 2020).

We believe the best way to summarise this moving landscape of the JobKeeper Payment scheme is to explain the impacted eligibility criteria as they apply over time, between today and 28 March 2021.

There are now three key time periods to consider when assessing your eligibility for the JobKeeper Payment scheme, and we will consider each here.

"First Time Period" - Current JobKeeper Payment rules applying from today to 28 September 2020

First we need to stress that the current eligibility criteria in place, which were used to assess the eligibility of employers and employees as at 1 March 2020, are still in place and continue to run up until 28 September 2020.

We have prepared numerous Tax Alerts explaining the original JobKeeper Payment scheme eligibility criteria in the last four months, and they can be revisited using the following links, including:

Government Announces New JobKeeper Payment (31 March) – click here
JobKeeper Payment for Self-Employed and Sole Traders (3 April) – click here
JobKeeper Payment "Alternative Decline in Turnover Tests" Guidance Released (27 April) – click here
JobKeeper Payments Expanded to include Religious Practitioners (14 May) – click here

Importantly, if a business has not been eligible for the JobKeeper Payment to date, they can still apply during August and September and will need to meet the original JobKeeper Payment eligibility requirements.

"Second Time Period" - JobKeeper 2.0 Extension Period rules applying from 28 September 2020 to 3 January 2021

Eligible Employer Rules – the Decline in turnover test

To continue receiving JobKeeper payments between 28 September 2020 and 3 January 2021, employers will need to re-assess their eligibility and will need to demonstrate a significant decline in actual GST turnover during the September 2020 quarter (compared to the September 2019 quarter).

Importantly, these latest announcements have removed the requirement to also satisfy the significant decline in turnover during the June 2020 quarter (compared to the June 2019 quarter).

Eligible Employee – Test date extended to 1 July 2020

These latest announcements have changed the testing date for when an employee was employed by the business and this date will move from 1 March 2020 to 1 July 2020 .

Therefore, when a business is considering whether it is eligible for JobKeeper 2.0 after 28 September, this new (1 July 2020) testing date will be relevant when considering the following criteria for Eligible Employees test where the employee(s):

were for the eligible employer (or another entity in their wholly-owned group) either:

a full-time, part-time or fixed-term employee at 1 July 2020 ; or
a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer;

were aged 18 years or older at 1 July 2020 (if you were 16 or 17 you can also qualify if you are independent or not undertaking full time study).

Employees will continue to receive the JobKeeper Payment through their employer during the extension period if they and their employer are eligible and their employer is claiming the JobKeeper Payment. However, the amount of the JobKeeper Payment will change at the reduced payment rates detailed below.

Payment Rates Reduced

The value of the JobKeeper Payment amount will change from 28 September 2020 to 3 January 2021, and two different amounts will be based on the average weekly hours worked by Eligible Employees (and business participants) during the month of February 2020.

The JobKeeper Payment amount for the seven fortnights during the "Second Time Period" will be reduced as follows:

$1,200 per fortnight per employee or business participant who worked > 20 hours per week ("the higher rate"); and

$750 per fortnight per employee or business participant working < 20 hours per week ("the lower rate") .

This significant change to the JobKeeper Payment amounts after 28 September 2020 now raises a critical question; how do we assess whether an employee has "20 hours or more per week on average"?

The ATO has been given discretion to set out alternative tests for circumstances where an employee's (or business participant's) hours were unusual during February 2020.

We understand the ATO will be providing guidance on how the "20 hours or more per week on average" requirement will be interpreted (or tested), in particular, for new employees who started working with the business after the end of February but before 1 July 2020. Also, the ATO is expected to provide some clarification of how the average hours will be interpreted when pay periods are not completed on a weekly basis.

While the JobKeeper Payment will continue to be made by the ATO to employers in arrears, employers will continue to be required to make wage payments to employees at least equal to the relevant payment rate detailed above (ie. the wage condition).

"Third Time Period" - JobKeeper 2.0 Extension Period rules applying from 4 January 2021 to 28 March 2021

We note that the commentary here will be very similar to that explained under the "Second Time Period" heading above. In order to avoid some repetition, we have highlighted the specific changes relevant for the "Third Time Period" below.

Eligible Employer Rules – the Decline in turnover test

To continue receiving JobKeeper payments between 4 January 2021 and 28 March 2021, employers will need to re-assess their eligibility and will need to demonstrate a significant decline in actual GST turnover during the December 2020 quarter (compared to the December 2019 quarter).

Importantly, these latest announcements have removed the requirement to also satisfy the significant decline in turnover during the June & September 2020 quarters (against the June & September 2019 quarters).

Eligible Employee – Test date extended to 1 July 2020

This change has been explained under the "Second Time Period" heading above.

Payment Rates Reduced

The value of the JobKeeper Payment amount will change again from 4 January 2021 to 28 March 2021, and two different amounts will be based on the average weekly hours worked by Eligible Employees (and business participants) during the month of February 2020.

The JobKeeper Payment amount for the six fortnights during the "Third Time Period" will be reduced as follows:

$1,000 per fortnight per employee or business participant who worked > 20 hours per week ("the higher rate"); and

$650 per fortnight per employee or business participant working < 20 hours per week ("the lower rate") .

Again, we understand that there will be a requirement to nominate which payment rate will be claimed for each employee/business participant (based on hours worked before 1 March 2020). Furthermore, we understand the ATO will be providing guidance on how the "20 hours or more per week on average" requirement will be interpreted (or tested).

While the JobKeeper Payment will continue to be made by the ATO to employers in arrears, employers will continue to be required to make wage payments to employees at least equal to the relevant payment rate detailed above (ie. the wage condition).

We consider these latest announcements to relax and expand the rules have removed a few onerous requirements under JobKeeper 2.0 and we expect this will keep more businesses currently receiving the JobKeeper Payment inside the scheme going past 28 September 2020.

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Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

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