Despite best intentions, JobKeeper creates problems for employers and employees
JobKeeper has all the right intentions – to keep workers in employment during the COVID-19 pandemic by subsidising employers to keep them on their books.
The $1500 fortnightly JobKeeper payment is the equivalent of about 70 per cent of the median wage. Around 900,000 businesses have expressed interest in the scheme, and in the first week more than 400,000 businesses enrolled, representing 2.4 million employees.
The government expects more than six million workers will receive the payment under the scheme. Many workers in sectors hit by the lockdown, such as retail, hospitality and tourism will earn more under JobKeeper than they did before the crisis.
However, both employees and employers have discovered problems with JobKeeper.
JobKeeper arrangements unaffordable for many employers
A downside for employers is that they first have to pay their employees the $1500, then claim the money back from the tax office at the end of each month. For many, that is $1500 they are not making while the lockdown continues, meaning they may have to borrow it.
Many employers are rejecting JobKeeper altogether, as they are unable to pay the $1500 per fortnight out of their own pocket for a month before they are paid back by the government.
Some employees want to work fewer hours or none at all
Some employers have complained their employees have said they don’t want to work at all, or want to work fewer hours during the crisis.
Instead, their workers are demanding they be given their JobKeeper $1500, regardless of what the employer is doing.
Employees being reclassified and rates of pay being reduced
Some employees have complained their employer has said they can keep their job only if they hand them back part of the JobKeeper payment.
Others have had their hours of work reduced and their position reclassified from full-time to part-time employment. They have been told their leave entitlements will only accrue on their new lower work hours, and their rate of pay will be reduced to $750 a week – the same amount the employer receives from the government under JobKeeper to keep the worker employed.
There are also examples of casual workers being told they will have to work longer hours to receive the $750 a week JobKeeper payment – and when they protest they can’t due to study or family commitments, they are fired.
Tough new penalties for abusing JobKeeper system
Both employers and employees must be aware that tough penalties exist under laws governing the administration of the JobKeeper program.
Employers enrolled in JobKeeper who do not pass on the full $1500 payment to employees could face ten years’ jail for fraud and deception under sections of the Criminal Code Act.
As the JobKeeper subsidy is paid to employers through the Tax Office, any fraud committed could come under the Taxation Administration Act for 12 months’ jail and fines of $10,500.
Employers receiving JobKeeper should also know that if their employee earns $2000 a fortnight, they will have to top up the $1500 JobKeeper subsidy by $500 to maintain their wage if they are working the same hours. According to the rules, employers can’t demand extra hours from staff to match the $1500 per fortnight subsidy.
The Tax Office says there is no room for employers to pick and choose which employee is eligible for JobKeeper payments – it’s one in, all in. It can be a criminal offence if employers breach this rule.
Changes to Fair Work Act intended to assist employers
Changes have been made to the Fair Work Act to help employers who qualify for JobKeeper deal with the economic impact of the virus.
This includes allowing temporary stand downs, altering work duties and hours, working from home, and orders to use annual leave. (Please see “Help, I can’t pay my employees any more” – options for employers during the coronavirus pandemic.)
Employer must come to agreement with employee
One of the principal problems being reported concerns changes being made to employees’ hours of work when their employer registers for the JobKeeper subsidy.
Generally, under the Fair Work Act, where an employer qualifies for JobKeeper, the employer is allowed to direct an employee to stand down or reduce their hours of work and determine what duties they are required to perform and where.
However, it says that the employer must come to an agreement with the employee about the days or times they work, and whether the employee takes annual leave, including at half pay.
The Fair Work Act does say that the employer must consult with the employee before giving a direction. The Act also says that if a direction is unreasonable, then the direction will not apply.
Lastly, the Act says a direction in relation to the duties or the location of work must only be made if it is necessary to continue the employment of the employee.
Minimum hourly rate and leave entitlements under JobKeeper
New provisions of the Fair Work Act for JobKeeper appear in the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020. (For more information about this Act, please see Australian government coronavirus response package infiltrates many corners of Australian law.)
Section 789GDB relates to the minimum hourly rate guarantee. It says the hourly pay can’t be less than the base pay per hour that applied before JobKeeper.
Leave entitlements continue as before JobKeeper under section 789GS, which states that redundancy pay and annual leave should accrue as normal. (For more information, please see Redundancy must still be paid when a business loses contracts.)
Employers must continue to comply with existing employment laws
Employers must ensure they comply with existing employment laws during JobKeeper, just as they were before it was introduced to help employers keep workers on their books.
The time to enrol for the initial JobKeeper period has been extended from 30 April to 31 May, when it is still possible to claim for the payments in April and May. JobKeeper ends on 28 September 2020.