Wrap up: JobKeeper changes enacted to amend the Fair Work Act, unpaid pandemic leave introduced into Awards and the NSW Government Small Biz Grant

IMG-7564.jpg

  • The Government’s JobKeeper legislative reforms have been passed in a package of Bills which include changes to the Fair Work Act 2009, and the economic and financial elements of the JobKeeper scheme.

  • The Fair Work Act 2009 amendments clarify employers’ abilities to stand-down employees, reduce hours, alter duties, direct annual leave be taken within the Coronavirus period.

  • The Full Bench of the Fair Work Commission amended 99 Awards to include unpaid pandemic leave and twice the amount of annual leave being taken at 1/2 rate of pay.

  • NSW Government Small Business grant of $10,000.

See details below.

1. IMPORTANT: JobKeeper changes introduced into the Fair Work Act 2009

The Fair Work Act 2009 has been amended (temporarily) to give support to the operation of the Government’s JobKeeper scheme in Australian workplaces. Its objective includes assisting Australian people keep their jobs and maintain their connection to employers during this unprecedented economic downturn and restrictions arising from the coronavirus pandemic and government initiatives designed to slow the transmission.

A new Part 6-4C applies only to employers and employees eligible for the JobKeeper scheme and has been introduced with an automatic repeal on 28 September 2020 (though a review by the Minister has been requested to be completed by 8 September 2020). The eligibility criteria remains unchanged - the Department of Treasury has updated and clarified its fact sheets which are found here and discussed in our #3 Update below.

The key points applicable to employers eligible to participate in JobKeeper scheme with respect to employees eligible to receive JobKeeper* subsidies, are:

  1. Stand down due to business down turn and Coronavirus initiatives: A right for an employer to stand down an employee to work fewer days or reduced hours where the employee cannot usefully be employed for the employee’s normal days or hours during the JobKeeper stand down period because of business changes attributable to the Coronavirus pandemic or Government initiatives (including Commonwealth, State or Territory initiatives) to slow Coronavirus transmission and it can be implemented safely having regard to the nature and spread of Coronavirus. Such a direction may include an employee not working on particular days, working for a lesser period or working for a fewer hours than the employee would ordinarily work (including nil hours).

    Note: This is an important distinction from the usual stand down provisions contained in section 524 of the Fair Work Act which should now give business greater confidence behind the reasons (and therefore lawfulness) behind their stand down direction and their requests to reduce hours.

  2. Alternative duties or change in place of work: A right for an employer to give a direction to an employee about the nature of the employee’s duties, within their skill and competency or to perform duties at a different place of work, including the employee’s home.

  3. Direction to take annual leave at full or half rates of pay: A right has been given for an employer to request the employee to take annual leave (at full or half pay for twice the period) which the employee must consider and cannot unreasonably refuse. In effect, the employer can direct the employee to take his or her annual leave. The employee’s annual leave quota must not be reduced below 2 weeks.

    NOTE: There is some criticism that the direction to take annual leave with a JobKeeper subsidy results in the subsidy being used by employers ‘running down the clock’ on their employees’ annual leave accrual. Worth keeping an eye on- there is a mechanism for Rules (subordinate legislation) to be issued by the Minister which has been foreshadowed during debate in Parliament will be used to issue further directions on the JobKeeper’s application.

  4. Consultation and notice: Employers are required to consult employees before issuing these directions. At least three days written notice of the intention to give a direction (or a lesser period if agreed) must be given by the employer. The employer needs to consider the employee’s views, consult the employee (or employee’s representative( and keep a written record of the consultation. The direction needs to be in writing (electronic means is acceptable). If you have already issued stand down orders to your team this consultation requirement does not apply.

  5. Changes in work arrangements: An employer and employee can agree to work different days or different times compared with the employee’s ordinary days or times of work, despite any limitations in an employment provision to the contrary. The Government explained that this is designed to encourage flexible work arrangements being struck to support the business and ongoing employment of employees, however the employee is required to consider the employer’s request for changed work arrangements and cannot unreasonably refuse it.

  6. No change in terms of employment/accrual of entitlements: The JobKeeper changes do not automatically modify the employee’s terms and conditions of employment. Some employers may retain employees without directing a stand down, reduction in hours or the taking of annual leave. These provisions apply only when the employer gives the JobKeeper directions. The employee’s entitlements remain the same and accrue at the same rate pre-JobKeeper direction. If an employee takes annual leave on half pay, entitlements accrue at 100% as if the direction had not been given.

  7. Other employment & training: An employee can request permission to work in secondary employment, participate in training or engage in professional development. The employer must consider and not unreasonably refuse such requests. Consider any training policies the company has that may apply as well as any restraints, non-competes or conflicting terms in the employee’s contract of employment.

  8. An employee is not obliged to comply with a stand down direction under this Part if it is in all the circumstances unreasonable. Unfortunately no examples been given as to what may be unreasonable, though carer’s responsibilities are relevant.

  9. The Fair Work Commission is empowered to conciliate, mediate and arbitrate disputes under this Part including the reasonableness in which an employee refuses a request by an employer (and vice versa).

  10. The employer cannot (even if by way of giving a stand down direction) reduce an employee’s hourly rate of pay.

  11. An employer who fails to pass on the JobKeeper subsidy payment in full to its employee or knowingly misuses a direction will face a civil penalty of $126,000.

  12. A JobKeeper stand down is not applicable where an employee takes paid or unpaid leave authorised by the employer. A direction given under this Part is not a redundancy. The usual redundancy provisions in the Fair Work Act remain unchanged.

*Note that casuals with less than twelve months service are excluded as are skilled visa workers.

A copy of the Bill is here and Explanatory Memorandum here.

 2. The Fair Work Commission amends 99 Awards to introduce unpaid Coronavirus leave and 1/2 pay annual leave

On 8 April 2020, the Full Bench of the Fair Work Commission has amended 99 Awards to include two weeks of unpaid pandemic leave as well as a mechanism to take twice as much annual leave at half pay.

The amendment takes effect from 8 April 2020 until 30 June 2020 and expressly excludes Awards in the construction, maritime, mining and resources industries where the Full Bench noted ABS research reporting 37% of the business in the mining sector having been adversely affected compared to 78% of businesses in accommodation and food services. It is also expected the short term impact will not be felt by these industries.

The decision summary is here and a copy of the variation is here.

3. NSW Small Business Grants

On 3 April 2020 the NSW Government announced a small business grant of up to $10,000 under a new assistance scheme. The NSW Government is putting $750million into the Small Business Support Fund for support to small business impacted by Covid-19. The fund was recently created as part of the NSW Government’s bushfire relief initiative and is said to have been highly successful in getting$42mil to 4200 business in the first 10 days of launching earlier this year.

The announcement indicates it will be available to eligible businesses who:

  • Have between 1-19 employees and a turnover of more than $75,000;

  • A payroll tax threshold below the NSW Government 2019-20 payroll tax threshold of $900,000;

  • Have an Australian Business Number as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020;

  • Be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020; [Note: No indication of meaning of ‘highly impacted’]

  • Use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice;

  • Provide appropriate documentation upon application. (to be confirmed what documentation they require)

The application for the grant will need to be made via services NSW, however applications are not open yet but expect to be open within the next fortnight. 

For more information, the NSW Government announcements page here.

COVID-19 UPDATE: Economic response #3 (Jobkeeper payments), the Banks and Fair Work Australia

  • The Government has announced this afternoon its third tranche of economic relief in an historic $130billion Jobkeeper payment bringing the total economic support package across all three packages to $320billion or 16.4% of GDP.

  • The Banks have announced they will allow commercial landlords to delay loan repayments by up to 6 months.

  • The Fair Work Commission has varied the changes to the Clerks Award affecting 1.56 million employees.

See details below.

1. NEW: Government relief package #3: “Jobkeeper payment”

This afternoon, the Federal Government announced the ‘Jobkeeper payment’, an initiative to help employers keep employees in their jobs. The initiative brings the Government’s total economic support in relation to the economy to $320 billion. In case you missed it, the PM’s announcement can be found here.

The Department of Treasury’s factsheet is here. The Parliament will be recalled to pass these changes.

The key features of the Jobkeeper payment are as follows:

 What is the Jobkeeper payment?

A payment of $1,500/fortnight (before tax), to be paid by eligible employers to their eligible employees, for a period of up to six months. Eligibility criteria is below.

The amount has been calculated to equate to around 70% of the national median wage.

What does the Jobkeeper payment target?

The Jobkeeper payment is being instituted to maintain connections between employees and employers, so that even if a business needs to ‘hibernate’ for a few months, its workforce can be sustained for when the business is able to start up again.

 How will payment be deployed?

The payments are subsidies for employers, meaning that the payments will be made directly to the employer, to then be paid to eligible employees via the normal payroll process.

What kinds of employers are eligible?

Eligible employers may include those with a company, partnership or trust structure. Sole traders and not-for-profits may also be eligible employers.

Employers will be eligible if:

  • an employer can demonstrate a reduction* in revenue of 30% relative to a comparable period a year ago (of at least a month) where the employer’s annual turnover is less than $1 billion; or

  • an employer can demonstrate a reduction* in revenue of more than 50% relative to a comparable period a year ago (of at least a month) where the employer’s annual turnover of $1 billion or more; and

  • the business is not subject to the major bank levy.

 *reductions are at least 1 month, are self-assessed and must have occurred since 1 March 2020.

 Which employees are eligible?

Full-time, part-time employees and casuals (employed on a regular basis), if they have been with their employer for the last 12 months.

The employee must have been employed as at 1 March 2020, and their employment with the business must be ongoing (even if they are not actually working – e.g. if they have been stood down or re-hired).

Australian residents, New Zealand citizens holding a subclass 444 special category visa, and migrants eligible for either the JobSeeker Payment or Youth Allowance, may be eligible employees.

An employee can claim Jobkeeper payment from one employer only.

When does the initiative start?

  • The first payments will be received by employers in early May from the Australian Tax Office (ATO).

  • Payments from the ATO will continue monthly, for up to six months.

  • Eligible employers may begin distributing Jobkeeper payments from today, to be reimbursed from May.

  • Eligible employers can apply for the Jobkeeper payment initiative online.

JobSeeker Payments: The Government also announced that it will relax the the partner income test for JobSeeker Payments to ensure that an eligible person can receive the JobSeeker Payment and associated Coronavirus Supplement providing his or her partner earns less than $3,086/fortnight (around $79,762 p.a).

2. NEW: Australian Banks announce deferral of business loan repayments up to $10million

The Australian Banking Association (ABA) has announced this afternoon (see media release) that participating banks will defer loan repayments for 98% of all businesses affected by COVID-19 for six months for business loan facilities of up to $10 million (an increase from the previously announced $3 million threshold), where your business is affected by COVID-19. Other loans and overdrafts are also available and all business customers have been encouraged to contact their banks.

FAQs for this announcement are linked here.

The ABA’s CEO, Anna Bligh has said “This will help protect many more thousands of small businesses from being evicted if they are struggling to pay the rent as it covers approximately 90% of commercial property owners who have loans with an Australian bank.”   

3. UPDATE: Clerks Award amended by Fair Work Commission

Following a joint application made by ACCI, Ai Group, the ACTU and ASU, on Saturday 28 March 2020, the Full Bench of the Fair Work Commission amended the Private Sector Clerks Award 2010. The amendments will impact 1.56 million employees and take effect from 28 March 2020 and remain in place until 30 June 2020 (unless extended by further application).

In what is a remarkable joint application, the ACCI and Ai Group acknowledged and commended the lead the ASU (supported by the ACTU) took in driving the changes. IR Minister Christian Porter (who intervened in the application) acknowledged and congratulated the parties in the agreement and acknowledged “their preparedness to respond collaboratively to find practical solutions to reduce hardship suffered by employers and employees created by this extraordinary crisis.”

A copy of the decision is here. The terms of the variation to the Award are on page 25 and a summary of the changes provided by the ASU are at page 23 of the decision.

The key changes which embrace greater flexibility are:

  • employees performing all duties within skill and competency regardless of classification;

  • adjusting the minimum shift down to 2 hours for part/time and casual employees working from home; adjusting Ordinary Hours of Work for employees working from home to spread between 6am and 11pm (weekdays) and 7am to 12.30pm (Saturday); agreed reduction in ordinary hours of work (at least 75% of F/T and P/T employees required;

  • taking extra annual leave at reduced rates;

  • reducing notice period an employer gives employees of annual leave for a close down to 1 week.

Don’t forget NSW amended the Long Service Leave Act and Payroll Tax benefits which is discussed in our post “COVID-19 Wrap Up” published on 27 March 2020, below.

COVID-19 Wrap-Up: A week's review of Government relief & other initiatives for SMEs

Its been a week like no other. We saw a big relief package announced by the Federal Government, announcements by the banks, state Governments and now further reforms coming through the Fair Work Commission on Award changes to hospitality Awards and the Clerks Award. With talk of a third relief package on its way, here is a wrap up for the end of the week.

AdobeStock_75706582.jpg

We highlight the latest round of initiatives and legal issues below, with links to further references (starting with the most recent developments). Other states’ developments are listed at the end.

1. UPDATE: Employee Relations - Fair Work Ombudsman guidance and changes to Awards

The theme for a lot of clients has been managing their staff and teams. We have been speaking to many about utilising the Stand Down mechanism under section 524 of the Fair Work Act, implementation of redundancies and how we can look at other creative options in retaining staff and managing the payroll runway.

As a quick update:

  • The Clerks-Private Sector 2020 Award is due to be amended on 27 March 2020 introducing a new Schedule I - Award Flexibility during the COVID-19 Pandemic. Its aim is “preserving the ongoing viability of business and preserving jobs during VOVID-19...”. The DRAFT changes include employees performing all duties within skill and competency regardless of classification; adjusting the minimum shift down to 2 hours for part/time and casual employees working from home; adjusting Ordinary Hours of Work for employees working from home to spread between 6am and 11pm (weekdays) and 7am to 12.30pm (Saturday); agreed reduction in ordinary hours of work (at least 75% of F/T and P/T employees required; taking extra annual leave at reduced rates; reducing notice period an employer gives employees of annual leave for a close down to 1 week. The Fair Work Commission is hearing this application today.

  • The Hospitality Industry (General) Award 2010 was amended urgently by the Fair Work Commission (see decision here) on 25 March 2020 to introduce measures accommodating the restrictions to access of licensed premises issued by the Federal Government on 23 March.

NSW Parliament passed a bill (linked here) amending:

  • the Long Service Leave Act 1955 to permit employers and employees to agree to an employee taking long service leave before the the worker becomes entitled to the long service leave period in periods of less than one month and permits an employer to give less than one month’s notice of when LSL is to be given and taken. Explanatory note is here.

  • the Payroll Tax Act 2007 increasing the amount for payroll tax liability for the financial year commencing 1 July 2020 and subsequent years to $1million and providing that an employer is only required to pay 75% of the payroll tax on wages for the financial year commencing on 1 July 2019 if all Australian wages paid or payable are $10mil or less. An employer who is part of a group is not eligible for this discount if the Chief Commissioner has been given information re other employers in the group and the amount of taxable wages and interstate wages paid or payable.

  • Also in NSW, certain fees and charges for small businesses including bars, cafes, restaurants and tradies will be waived (yet to be specified).

The Fair Work Ombudsman is issuing regular updates and guidance on their dedicated webpage found here. The IR Minister Christian Porter has also announced an additional $24million in funding to the Fair Work Commission to improve resourcing during this time. For employers considering restructuring their teams, standing down employees and redundancies, consider this material carefully and take your time to ensure all options are considered. There is little room for error and it is important to get it right.

2. Government’s 2nd relief package announced 22 March 2020

(a) Relief for directors from personal liability for insolvent trading: Businesses are being strongly encouraged by the Government to trade through this crisis - for the next six months, directors are temporarily relieved of their duty to prevent insolvent trading when debts are incurred in the ordinary course of business. This means that during the relief period, directors can cause a company to incur debt in the normal course of its business (for example an increase in overdraft facilities to help with operating expenditure) to support trading even if solvency is compromised, without fear of personal liability for breach of directors’ duty. The debt still needs to be repaid in accordance with its terms and dishonest or fraudulent trading (including phoenix activities) will remain subject to existing penalties. It’s not a carte-blanch immunity but it is encouraging business to keep going. The immunity applies:

  • for a debt incurred in the ordinary course of the company’s business;

  • the debt is incurred for the six month period for the date the new law commences or as extended; and

  • the debt has been incurred before any appointment of an administrator or liquidator during the immunity period.

(b) Statutory demands: The threshold to issue a statutory demand against a company for an outstanding unpaid debt has been increased from $2,000 to $20,000 and the time for a company to respond has been extended from 21 days to 6 months. Statutory demands are the most common pathway to liquidation, and this relaxation of the statutory requirements is intended to give companies more time to manage solvency. Similar changes apply to personal solvency under the Bankruptcy Act 1966 where the threshold for bankruptcy proceedings will increase from $5,000 to $20,000.  In both cases, this temporary relief will apply for six months. Refer to the Government’s fact sheet here. 

You can still chase aged debtors and pursue recovery of outstanding debts through the courts, but your ability to enforce a debt beyond obtaining a judgment will, in the short term, be subject to the expanded statutory demand regime described above.

(c) Statutory flexibility: ASIC now has a new power to offer relief from certain Corporations Act requirements, or can agree to take “no action”, if a company makes a formal request to ASIC. While this will provide some relief from certain statutory obligations, be wary of potential exposure to other stakeholders, particularly creditors and shareholders. Talk to us if you would like more advice on utilising this option.

(d) AGMs: ASIC will allow companies with a 31 December balance date to defer their AGM for 2 months. This means that such companies which would otherwise need to hold an AGM by 31 May will have an additional 2 months in which to hold their AGM. ASIC will take “no action” for such deferred meetings. The relief is for a very short 2 month period subject to ongoing review. Further, ASIC has offered some support for the use of technology to allow virtual or hybrid (part virtual part in-person) meetings but it’s support is limited to ASIC taking “no action”. This means relief from ASIC regulatory action only. Companies still need to check their constitutions and consider their obligations and exposure to shareholders under the Corporations Act. Refer ASIC’s statement here . You might also consider proactively promoting voting by proxy (where constitutions permit) to reduce in-person attendance at AGMs and general meetings, also consider use of technology mechanisms within the company constitution.

(e) Cashflow relief: Short term ATO changes enabling small and medium sized businesses to immediately write off certain assets will raise from $30,000 to $150,000. This will apply to business with up to $500m turnover and will reduce tax liability for eligible businesses and encourage spending. The increased threshold applies on a per asset basis for new or second hand assets first used or installed during the short period from 22 March 2020 and 30 June 2020. For more information contact your tax adviser and refer to the Government’s fact sheet here.

(f) Employer cashflow support: As widely reported in the media, the Government has further enhanced it’s cash payments for small and medium sized businesses and not for profits with substantial cash payments available to support employee wages. The changes and processes for obtaining such payments are set out in the attached fact sheet here.

(g) Supporting Apprentices and trainees: The Government has also announced wage relief of up to $7,000 per quarter per trainee/apprentice to help businesses retain apprentices and trainees from 1 January 2020 to 30 September 2020. Refer page 5 of the fact sheet above.

Keep a watch on the Government’s new Coronavirus Business Liaison Unit website which is at: https://treasury.gov.au/policy-topics/business-and-industry/coronavirus-business-liaison-unit.

3. What the other states are doing?

Australian Capital Territory

Six-month waiver of payroll tax for the hospitality, creative arts and entertainment industries, from March to August 2020.

Businesses with wages of up to $10 million can defer their 2020/21 payroll tax until 1 July 2022 (interest-free).

Twelve-month waiver for licensed venues of food business registration and on-licence liquor licensing fees from 1 April 2020. There will also be a waiver of outdoor dining fees for 2020/21.

Owners of small businesses with annual electricity usage below 100 megawatts will receive a rebate of $750.

See ACT Treasury link for more information https://apps.treasury.act.gov.au/budget/covid-19-economic-survival-package/local-business-and-industry (Australian Capital Territory Treasury).

Queensland

Businesses with annual payrolls of up to $6.5 million will be eligible for a two-month refund of payroll tax, a three-month payroll tax holiday, and for the rest of 2020, deferral of all payroll tax payments.

Businesses with annual payrolls over $6.5 million, if directly or indirectly affected by COVID-19, will be eligible for a two-month refund of payroll tax, and for the rest of 2020, deferral of all payroll tax payments.

A loan facility of at least $500 million will be instituted to support impacted businesses to retain employees and maintain operations. The loan facility will comprise low interest loans of up to $250,000, with an initial twelve-month interest free period.

An automatic $500 electricity bill rebate for all small and medium sized businesses that consume less then 100,000 kilowatt hours.

Waiver of liquor licensing fees for businesses affected by enforced closures.

See the following links for further information:

https://www.business.qld.gov.au/__data/assets/pdf_file/0024/290715/coronavirus-covid-19-business-support.pdf (Queensland Government - ‘Business Queensland’).

https://www.treasury.qld.gov.au/programs-and-policies/covid19-package/ (Queensland Treasury).

South Australia

Public servants with a family member who has lost their job and moved onto Commonwealth benefits can receive any accrued leave, to a limit of two retained weeks.

Six-month waiver of payroll tax for businesses with an annual payroll of up to $4 million.

Employers with an annual payroll over $4 million will be able to defer payroll tax payments for six months if significant impacts on cash flow can be demonstrated.

Waiver of 2020/21 liquor licensing fees for hotels, restaurants, cafes and clubs forced to close.

Further details see link: https://www.premier.sa.gov.au/news/media-releases/news/$1-billion-stimulus-package-to-save-sa-jobs,-businesses (Premier of South Australia).

Tasmania

$20 million in loans will be made available to businesses in the hospitality, tourism, seafood production and export industries with an annual turnover of less than $5 million (small businesses).

Loans will be offered interest-free for a period of three years.

A waiver of payroll tax liabilities will be available to small businesses in the hospitality, tourism and seafood industries, for the rest of the 2019/20 financial year.

Small businesses in other industries can also apply for a payroll tax waiver. Eligibility will depend on how significantly business has been impacted.

A new grants program for small businesses in the tourism, hospitality, construction and manufacturing industries will offer up to $5,000 for the hire an apprentice or trainee.

See further information at Page 3 of http://www.premier.tas.gov.au/documents/FACT_SHEETS_-_STIMULUS_PACKAGES_Final-V2.0.pdf (Tasmanian Government).

Victoria

Full refund of any payroll tax already paid for the 2019/20 financial year for businesses with a payroll of less than $3 million. These payments were set to begin this week.

Small and medium businesses may defer payroll tax payments for the first three months of the 2020/21 financial year. Payment will be due in January 2021.

Rent relief for commercial tenants of government buildings.

Waiver of liquor licensing fees for 2020.

Source: https://www.business.vic.gov.au/__data/assets/pdf_file/0005/1888997/Economic-Survival-Program-Fact-Sheet.pdf (Victorian Government – ‘Business Victoria’).

Western Australia

Any small business (one with a payroll between $1 million and $4 million) that pays payroll tax will receive a one-off grant of $17,500. Grants will be automatic and are expected be distributed from July 2020.

Businesses that pay less than $7.5 million in taxable wages each year may defer their payroll tax payment to 21 July 2020.

A planned change to the payroll tax exemption threshold has been brought forward. The increase to the threshold from $950,000 to $1 million, originally scheduled for January 2021, will now take effect on 1 July 2020.

Refer to WA Govt site for further details: https://www.mediastatements.wa.gov.au/Pages/McGowan/2020/03/COVID-19-economic-response-Relief-for-businesses-and-households.aspx (Government of Western Australia).

We will provide updates to this page as best we can and as developments arise. Will also open up comments on the blog below and will do our best to answer questions.

Best regards and stay safe

Amy Carr and the team at Inside Eagles