RSM Australia

Urgent action required by employers | JobKeeper Update

Tax Insights

The government has introduced further changes to the JobKeeper Payment, designed to include as many employees as possible.

Employers currently enrolled in JobKeeper V1.0 must:

  • Identify newly eligible employees (employees who did not satisfy the basic employee eligibility criteria at 1 March 2020 but do satisfy the criteria at 1 July 2020)
  • Provide these employees a nomination notice by 21 August 2020
  • Make any necessary ‘top up’ payments by 31 August 2020

The legislative instrument setting out the latest changes to the JobKeeper payment and the extension of the employment reference date to 1 July 2020, was registered on Friday 14 August 2020. 

The changes to the reference date have retrospective application and take effectThe government has introduced further changes to the JobKeeper Payment, making it easier for organisations to qualify. from the JobKeeper fortnights commencing 3 August 2020. The extension of the employment reference date means that an existing JobKeeper employer will need to review their employee records to identify any ‘newly eligible’ employees. Newly eligible employees are in essence, employees who did not satisfy the basic employee eligibility criteria at 1 March 2020 but do satisfy the criteria at 1 July 2020.

The explanatory statement to the legislative instrument is clear – the one-in all-in principle applies and employers currently enrolled in JobKeeper do not have a choice as to whether they extend the program to newly eligible employees or not. A JobKeeper employer who does not identify newly eligible employees, provide them with a nomination notice by 21 August 2020 and make any necessary ‘top up’ payments by 31 August 2020 will be in breach of the JobKeeper rules and may face significant penalties, both from the ATO and FairWork Australia.

The changes to JobKeeper V1.0 are designed to extend the program to include as many employees as possible and provides the opportunity for an employee who has changed employer post 1 March 2020, or who has been re-employed by their original employer, to regain eligibility for the program.

The changes, whilst simple in theory, are complex to apply from an administrative perspective and will require careful consideration and application by employers and their advisers.

The key elements and immediate actions required are detailed below.


Immediate Actions RequiredUrgent action required from employers for business JobKeeper eligibility

 

Employers currently enrolled in the JobKeeper program will need to action the following items as a matter of urgency:

  • Provide all newly eligible employees with a JobKeeper nomination notice by Friday 21st August.

  • Make ‘top up’ payments to newly eligible employees where required by 31 August 2020.

  • Notify the Commissioner in the approved form, of information about the newly nominated individuals and their nomination.


Details of eligible employees and the new rules around re-nominating and re-employing employees are discussed below:

Eligible employees

As a basic overview, the following employees are the most likely to be eligible under the extended employment reference date of 1 July 2020: Employee eligibility for JobKeeper

  • Employees engaged after 1 March 2020 and were in an employment relationship with a qualifying employer at 1 July 2020.
  • Employees who were not eligible at 1 March 2020 because they did not satisfy the definition of long-term casual, however have since become a long-term casual at 1 July 2020.
  • Employees who were not considered eligible at 1 March 2020 because they were not aged 16, but have turned 16 by 1 July 2020, and at 1 July 2020 were aged 16 or 17, were living independently or not undertaking full time study.
  • Were permanent residents or holders of a subclass 444 visa on 1 July 2020.

To ensure the program is extended to as many employees as possible, the government has relaxed the rules around re-nominating and re-employing employees. These rules are complex and must be considered carefully to ensure the notification requirements are satisfied and JobKeeper integrity rules are not breached.


Re-nominating employees (new employment by 1 July 2020)

Certain eligible employees and eligible business participants may be eligible to nominate with a new entity if they satisfy certain conditions at 1 July 2020. These conditions are summarised below:

Eligible employees

  • An employee who nominated as an eligible employee with one entity and has ceased employment with that entity before 1 July 2020, can re-nominate with a new employer provided they commenced employment with the new entity before 1 July 2020.

Eligible business participants

  • An eligible business participant who nominated with one entity who is subsequently employed by a new entity, can re-nominate with the new entity if they ceased being actively engaged in the first entity and commenced employment with the new entity by 1 July 2020.

IMPORTANT NOTE

An employee or eligible business participant who re-nominates with a new entity will be excluded from being an eligible employee or eligible business participant on the old entity.
 
In effect, the eligible employee or eligible business participant must have ceased to be employed or ceased to be actively engaged in the business between 1 March 2020 and 1 July 2020 to be re-nominated under this condition.


Re-employing a 1 March 2020 employee Nominating eligible employees for JobKeeper

If certain conditions are met, the JobKeeper eligibility status of a 1 March 2020 employee may be preserved even where the employee ceases employment with the employer between 1 March 2020 and 1 July 2020. Under certain conditions, the original employer may be able to re-employee the employee and claim JobKeeper.

An employee will qualify if the following conditions are satisfied:

  • The employee must be an employee who qualified at 1 March 2020 and nominated with their employer, has ceased employment between 1 March 2020 and 1 July 2020, and is later re-employed by the same employer.
  • The employee eligibility will be preserved provided the employee continues to satisfy the basic eligibility conditions and does not nominate with a new entity. The eligibility of that employee will not be preserved if the individual re-nominated with another entity.
  • The employee must have been eligible for a JobKeeper fortnight ending on or before 2 August 2020 in order to re-nominate with an eligible employer.
  • The employee can be re-employed after 1 July 2020.

Notification requirements for ‘re-employing’ a 1 March 2020 employee after 1 July 2020

Where an entity re-employs a 1 March 2020 employee post 1 July 2020 the employee must provide the entity with a notice in the approved form if the following conditions are satisfied:

  • The individual was a 1 March 2020 employee of the entity;
  • The individual ceased being an employee of the entity before 1 July 2020; and
  • The individual is re-employed by the entity after 1 July 2020.

The notice must be provided to the entity within seven days of being re-employed by the entity and state whether or not the employee has given a nomination notice to another entity. This notice will enable the re-employing entity to determine if they are able to rely on the original nomination notice provided by the employee.

If the employee has provided a nomination notice to another entity in the period between ceasing and recommencing employment with the original employer, they will not be eligible for the JobKeeper payment from the re-employing entity.


How can RSM help?

If you require advice on JobKeeper eligibility for your business and how the proposed changes may impact your employees or your business, please reach out to your local RSM office.

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