Employers granted extraordinary new powers under Morrison’s $130 billion JobKeeper scheme

Since this article was first published the JobKeeper legislation has passed parliament and new information is available.

Read our latest explainer about JobKeeper eligibility here.

Read our latest explainer about how JobKeeper will work here.

Federal parliament will today pass laws giving effect to the Morrison government’s historic $130 billion wage subsidy scheme, which will deliver fortnightly payments of $1,500 to an estimated six million workers affected by the COVID-19 pandemic.

More than 700,000 businesses are waiting to find out whether they’ll be able to access the program, and after today, businesses will have a lot more information about how flexible the Australian Taxation Office will be in granting applications over the coming month.

Attorney-General and Industrial Relations Minister Christian Porter has been negotiating with unions and the Labor opposition in recent days around the likely operation of the scheme, but it has now been confirmed parliament will move ahead with changes to the Fair Work Act rather than using the Fair Work Commission (FWC) to change Modern Awards.

However, under a union deal with the Morrison government, workers who suspect their bosses haven’t followed the JobKeeper rules — including passing on all government payments in full to staff — will be able to take their case to the FWC through binding arbitration.

Speaking to parliament on Wednesday morning, Morrison said the government is backing businesses to back their workers.

“JobKeeper will keep Australians in jobs and it will keep the businesses that employ those Australians in business, both now and into the future,” he said.

Opposition Leader Anthony Albanese confirmed Labor will support the Bill and attempt to introduce an amendment extending it to all casual workers.

But Labor won’t block the Bill over the amendment, with Albanese saying he would not let “the perfect be the enemy of the good”.

“There are over one million Australians who are casual workers, who will not be eligible for the JobKeeper program,” he said.

“[JobKeeper] fails to recognise that in the modern workforce, many workers defined as casual, but who have been stood down, have expectations and financial commitments based upon that regular work and income that they do.”

Once the new law has been ratified, the ATO will be empowered to begin administering the scheme and will be in a position to provide more information about what an eligible business looks like.

New powers for JobKeeper employers

Legislation tabled by Treasurer Josh Frydenberg on Wednesday will amend the Fair Work Act to give employers with new powers in a bid to enable the passage of JobKeeper payments to workers.

A set of principles have also been enshrined in the new law that clarify the intent of the legislation, to provide the ATO with a basis on which to determine employer eligibility for the scheme.

Under the new laws employers that qualify for the scheme will be able to present workers with written stand down directions, including reducing hours of work, and will be empowered to direct employees to perform new duties not strictly outlined in their job descriptions, within reason.

Businesses will also be able to direct workers to change the location of their work, in measures which the Morrison government say formalise work from home arrangements under the Fair Work Act.

These orders are to give JobKeeper recipient firms flexibility where an employee “cannot usefully be employed for the employee’s normal days” and are a temporary measure tied to the subsidy scheme, which will last six months.

Crucially, employers will be allowed to reduce their employees’ hours until their earnings equal the $1,500 fortnightly JobKeeper payments, opening the door for firms to limit their wage bills where employees maintain salaries higher than the payments.

However, JobKeeper directions, including stand down notices, cannot reduce an employee’s base hourly rate of pay. That means no pay cuts, even if firms direct employees to change their duties. These protections apply to salaried workers.

Employees must also be consulted before JobKeeper businesses utilise these new powers, and directions are supposed to be reasonable in the spirit of the continued employment of one or more workers.

The new laws also allow employers to come to arrangements for workers to use to take paid annual leave during the pandemic, including at half pay, provided employers don’t push remaining leave entitlements below two weeks per worker.

JobKeeper payments must be made fortnightly, and this includes additional wage payments on top of the subsidy. The ATO has been empowered to keep an eye on this activity, and will be using Single Touch Payroll (STP) functionality to do just that.

All new powers relating to the JobKeeper scheme only apply where an employer has been accepted to pass on payments for that employee. This means if a business has some employees under the scheme and some which aren’t, only those employees receiving JobKeeper subsidies can be subject to these new stand down orders.

Employers that fail to pass on government payments to workers could be fined up to $126,000 and could also face civil penalties up to $126,000 if they “knowingly misuse” new powers granted to them under the JobKeeper legislation.

“Serious penalties will apply to employers who misuse the provisions,” Frydenberg said.

Principles enshrined in law

Under the Bill, the Treasurer has been empowered to create rules to guide how the ATO determines eligibiltiy criteria for the scheme.

Some principles have, however, been enshrined in amendments to the Fair Work Act on Wednesday, including that the JobKeeper scheme will:

• Make temporary changes to assist the Australian people to keep their jobs;
• Help sustain the viability of Australian businesses during the COVID-19 pandemic;
• Continue the employment of employees;
• Ensure the continued effective operation of occupational health and safety laws; and
• Help ensure employees remain reasonably productive and continue to contribute to a business where possible.

It comes as business owners of all stripes deal with uncertainty over whether they’ll be able to access JobKeeper payments, after Treasury updating its guidance on which firms will be eligible last weekend.

Under updated guidance published last Sunday, businesses with less than $1 billion in annual turnover will have to show their their turnover has, or likely will, fall by 30% or more.

Previously Treasury had said JobKeeper payments would be extended to firms that could show a 30% reduction in turnover on a comparable period a year ago, of at least a month, meaning this updated guidance is more flexible.

More to come…

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