JobKeeper – a lifeline for Australian businesses but not without its traps

The Federal Government introduced its wage subsidy plan as a response to the COVID-19 global pandemic on 9 April 2020.  The scheme purports to incentivise employers to keep their workers employed with wage subsidies.

With the JobKeeper subsidy came changes to the Fair Work Act 2009 as part of the Coronavirus economic response.  The new scheme now allows employers who qualify to give eligible employees a direction to reduce their hours or days of work.  The Fair Work Act JobKeeper provisions also allow employers to alter the duties performed by employees and alter the location of the employees’ work.

The benefits of the scheme are clear:

1. qualifying employers receive $1,500 per fortnight for each eligible employee which is passed to the employee; and
2. qualifying employers have broader flexibility to manage their employees.

But the “one size fits all” nature of the JobKeeper scheme means that it is not without its traps.

What are some of the issues for employers under JobKeeper?

Some employers cannot afford to pay their workforce

Qualifying employers have to first pay their employees the $1,500 and then claim the money back from the ATO.  With some businesses experiencing a sharp decline in income, they may not be able to afford to pay the $1,500 and wait for the money to be reimbursed.  Some employers are turning to loans or alternatively, rejecting the JobKeeper scheme.

Direction vs agreement

If a qualifying employer gives an employee a JobKeeper enabling direction, the employee has to comply with it.  These directions cover:

1. JobKeeper enabling stand down directions;
2. changes to usual duties; and
3. change to location of work.

The Fair Work Act provides that if a direction is unreasonable then it will not apply.  Further, directions to alter location of work or usual duties must only be made if necessary to continue the employment of the employee.

Changing an employee’s work days or time under the JobKeeper scheme must be by agreement, although the employee cannot unreasonably refuse a request.

Importantly, any directions or agreements must be recorded in writing.

Penalties for abusing the JobKeeper system

JobKeeper is a one in, all in scheme.  Where an employer qualifies for the JobKeeper subsidy, it is not open to them to pick and choose which employees they consider are eligible for the subsidy.

If employers try to exclude employees from the JobKeeper subsidy, or if they fail to pass on the full $1,500 to the employee, they face criminal charges.

 What are some of the issues for employees under JobKeeper?

Reduction in hours of work

For some employees $1,500 does not come close to covering their fortnightly income.  Under the Fair Work Act JobKeeper provisions, a qualifying employer can direct the employee to work fewer hours and the employee has to comply with this.  For some employees, the reduction in income may cause financial hardship.

Lack of security for casual workers

Some casual workers qualify for the $1,500 fortnightly payment, even if they were not previously working enough hours to receive this amount.  As their employer has to pay the full amount to the worker, some employers are asking their employees to work more hours.

Increasing hours is not possible for some casual workers; they may be studying or have caring responsibilities.

The Fair Work Act JobKeeper provisions do not provide for the employer to direct the employee to work more hours, but the nature of casual employment means that employees may be asked to work additional hours.  In difficult economic times, the casual workers may feel unable to refuse such a request.  Employers must ensure that they continue to comply with the general protections provision of the Fair Work Act.

What are the next steps?

Employers must continue to comply with existing employment laws while receiving the JobKeeper subsidy.

Managing employees might be made more difficult with a remote workforce or with employees working altered hours.  This does not mean that employers cannot continue to manage their workforce through performance management, or that roles cannot be made redundant.

Navigating the JobKeeper scheme can be difficult for employers, if you have any questions regarding JobKeeper or managing your workforce, contact our Workplace Relations team.