The first of the JobKeeper 2.0 legislative instruments has been released in response to the announcements earlier this month by the Treasurer Josh Frydenberg. The latest change to the JobKeeper program seeks to address a perceived flaw in eligibility for employees given the W shaped recovery by moving the bright line test date for employment from 1 March to 1 July 2020.
The change in test date means that an increased pool of employees are now potentially eligible for the JobKeeper program. The change in employment date is relevant for JobKeeper fortnights commencing after 3 August 2020 (ie within the existing JobKeeper program) meaning businesses could be eligible for increased subsidies until the end of September.
As a result of the “one in all in” principle, employers will need to reassess whether formerly ineligible employees are now eligible or whether newly hired employees can make the cut. Employers will still need to ensure the other existing conditions are met.
From a practical perspective, the impact on potentially eligible employees is broadly as follows:
|Eligible Employee 1 March||Ineligible Employee 1 March||New Employee 1 March – 1 July||Re-employing former employees|
|No change in circumstances||Remains eligible, no testing required on 1 July||
Testing required to determine if eligible on 1 July under existing criteria
|Testing required to determine if eligible on 1 July under existing criteria.
Determine if nomination given to previous employer and whether new nomination available
|Retesting not required if eligible on 1 March and re-employed pre 1 July 2020.
Retesting required if re-employed post 1 July 2020 including prior nominations
|Change in circumstances||Test ongoing eligibility under existing criteria – eg is the employee still employed|
Importantly, newly eligible employees for JobKeeper are not exclusively new employees. For example, long term casuals that have now reached the 12 month threshold and employees who have turned 16 years old could now meet the criteria at 1 July. In addition, employees who were eligible employees on 1 March 2020 and have ceased employment can be re-employed (even after 1 July) with a new nomination form being required.
Employees who have moved to a new employer by 1 July 2020 can re-nominate with that new employer. This is only possible in limited circumstances, for example, the employee must have ceased to be employed in the old business. The reason for the cessation of employment is not relevant for determining whether an employee can re-nominate with the new employer.
Employers have 7 days from commencement of the Instrument (14 August 2020) to provide notification to the ATO of newly eligible employees. Employers will still need to receive notifications for the newly eligible employees to be able to claim. Whilst not legislated, it is anticipated that the ATO may extend this timeline.
Given the timing of the release of the instrument and the end of the first fortnight to which it is applicable, it is anticipated that the ATO will provide extensions for making any additional payments required to meet the wage condition.
The instrument released on Friday only deals with the change to the employee test date, therefore we can expect additional instruments to be issued for the other announced changes (ie the extension to the turnover tests). We will continue to keep you updated on these announcements.
If you have any questions regarding these changes please do not hesitate to contact your ESV Engagement Partner.