Today another bill was introduced to parliament for JobKeeper. If you need a midnight read the bill can be found here It has now passed the house of reps and is currently with the senate.

We've summarised the bill below for you along with the new mandatory code of conduct for commercial tenancies.

If you want a refresher on what has already been announced you can find our previous update here.

JobKeeper

To recap the JobKeeper is designed to keep employees connected to businesses (ie still employed) and reduce the amount of people flocking to Centrelink for unemployment benefits.

If your business has seen a reduction in turnover by 30% since 1 March the government will pay you $1,500 per fortnight per employee you continue to pay.

There have been a lot of questions on what this means in practice and the legislation has finally been released with the details.

There have been new provisions made for 'JobKeeper-enabling stand down' This is effectively the changes applied to the Fair Work Act for the next 6 months (to 28th September). It is designed to make it easier for employers and employees to navigate this time.

'If a person cannot be reasonably employed and usefully employed in the present circumstances because of the extreme circumstances that we’re facing, there’ll be an ability for an employer to give a JobKeeper-enabling stand down'

What this means in practice is the following :

1. You can reduce the number of hours employees work, this could be a slight reduction, or could be a reduction down to nil
2. You can change the type of work the employee performs as long as the employee has the capability and any required licences to do that work. An example was given that a chef could be asked to deliver coffee
3. You can change where the employee works, as long as it's reasonable, ie you can direct an employee to work from home instead of the office. Note that you can't direct an employee to work a substantial distance away from home or the normal place of work
4. You can change the normal days an employee is to work as long as the employee agrees, note if it's reasonable the employee has to agree
5. Note that you cannot change the normal rate of pay for employees. If they are paid $30 an hour normally, they still need to be paid that amount
6. Employers can direct employees to use Annual Leave, as long as they have more than 2 weeks of leave remaining at the end of the pay period. An employee could therefore work 10 hours and take 10 hours leave to bring them to the $750 a week JobKeeper minimum payment level
7. It's important to note, that no matter how many hours an employee works, they are still to accrue Annual and Personal leave at the same rate they normally would. So if they usually work 40 hours, but are now only working 10, they still accrue leave on the normal 40 hours
8. Employees who have had hours cut can go and get secondary employment in order to supplement income

My english understanding, along with some examples, please note this assumes the business does of course qualify for JobKeeper payments :

IF BUSINESS IS CLOSED, PEOPLE NOT WORKING

1. Employer will get $1,500 per employee per fortnight from the ATO
2. Employer will pay each employee $1,500 per fortnight
3. Employer must have given written stand down instructions to employees
4. Employer can direct any employee to take annual leave as long as they have more than 2 weeks left at the end of the pay period
5. Annual Leave direction doesn’t need to be the full 38 hours per week, just simply to take the employee to $750 per week or $1,500 per fortnight
6. No super payable if employee isn’t working, super payable if taking annual leave
7. Leave still accrues at the employees normal rates before the stand down

IF BUSINESS IS STILL OPEN, FULL TIME

1. Employer will get $1,500 per employee per fortnight from the ATO
2. Employees work normal hours
3. Employer pays employees normal weekly wage. If they earn more than $750 per week normally, they get paid as usual. If they normally earn less than $750 they get paid $750 per week.
4. Super is payable on normal hours worked, super is not payable on the top up amount if an employee normally earns less than $750 a week
5. Leave still accrues at the employees normal rates

IF BUSINESS IS STILL OPEN BUT REDUCED HOURS

1. Employer will get $1,500 per employee per fortnight from the ATO
2. Employer will pay each employee $1,500 per fortnight
3. Employer can direct an employee to work the number of hours that would get them to $750 per week wages (based on normal hourly rate), ie this could be a reduction in hours compared to normal
4. Employer can direct employee to take annual leave (as long as more than 2 weeks left at the end) for the number of hours that would get them to $750 per week
5. Employer must have given written instructions to employees if reducing hours or taking leave
6. Employer can direct a combination of hours worked and annual leave if the employee cannot be usefully employed for those number of hours
7. No super is payable if employee isn’t working (ie on the top up hours), super is payable if taking annual leave

Example 1

So in this example let’s say someone's normal hourly rate is $25/hour (ie $950/week)

The business has seen downturn and only has work for the employee to do 30 hours per week.

Assuming all the correct JobKeeper stand down provisions were adhered to the employee would work 30 hours per week, at the normal pay rate of $25/hour and would be paid $750.

The employee would be paid Super on this amount as they are working the hours, and they would accrue leave at the normal working hours of 38 hours per week

Example 2

Let's assume the same 38 hour normal week at $25/hour

But in this example let's assume the business has a significant downturn and there is only 15 hours of work per week for the employee.

Again assuming the correct JobKeeper stand down provisions were adhered to the employer could have the employee take 15 hours of Annual Leave per week on top of the 15 hours a week they are working to get to a total of $750 per week gross payments. It's important to note the employee must have 2 weeks annual leave left at the end of the pay period, otherwise they cannot be directed to take Annual Leave.

What else has to happen?

The employer must give the employee notice in writing of an intention to give a direction to change hours of work, days or work or annual leave etc.

This notice needs to be given 3 days prior to the direction, or the employee needs to agree to a lesser notice period.

The employer needs to have consulted the employee before giving the direction

Employers must keep evidence of the written notice to the employee.

The direction then remains in place until such times as it is withdrawn, or another directive is given. This must cease on the 28th September 2020.

It's important to note we aren't HR specialists, and have simply summarised the Bill before parliament. If you have a HR manager, or outsourced provider you normally deal with, it's always a good idea to get them to help you dot the i's and cross the t's, especially the directive to change.

This has certainly clarified the process and what employers are able to agree with employees so that everyone can continue to be employed, whether full time, reduced hours or simply getting the JobKeeper amount.

Commercial Tenancies Code

The National Cabinet’s mandatory Code of Conduct for commercial tenancies (Code), released on 7 April 2020, aims to impose a set of good faith leasing principles for negotiations between landlords and tenants. Specifically, the Code relates to measures the two parties can agree on and implement to alleviate financial stress and hardship stemming from the COVID-19 pandemic.

The code will be legislated by the States, and will be mandatory. To be eligible you need to have a turnover of less than $50million and be eligible for the JobKeeper rebate.

The details :

Landlords must not terminate leases for non-payment of rent & tenants need to continue to comply with lease obligations. Interest and charges cannot be applied to accounts.

Landlords must freeze rent increases for the period of the pandemic and a reasonable period afterwards.

Landlords must pass on rent reductions proportionate to the turnover reduction of the tenant.

Landlords must pass on any statutory reductions such as land tax etc to tenants.

An Example :

Let's assume a tenant has had a reduction in income of 60% and they normally pay $10,000 a month in rent. They could expect a proportionate reduction in rent.

In this example they would be expecting $6,000 proportionment reduction.

As the code stands 50% of the reduction needs to be provided as a complete waiver of rent, ie rent free. And the other 50% needs to be a deferral of rent over a minimum of 24 months.

This would mean $3,000 of rent would not be payable by the tenant, and the $3,000 would be amortised over a minimum 24 month period.

Care should also be taken to ensure that any repayment of the deferred rent does not compromise the ability of the tenant to recover from the crisis.

Next Steps

Don't forget we have already applied to the ATO if you are eligible for the JobKeeper payments on your behalf. We are waiting on Xero to release a new payroll category to make reporting the JobKeeper payments easier, but if you need to run payroll in the next few days please get in touch and we can put in an interim measure.

Please also remember none of these payments will be made until May.

Any questions as always just let one of the Growthwise team know.