The JobSaver Scheme Deconstructed
Updated: Aug 3, 2021
The rules pertaining to the JobSaver scheme have been released, and we have captured the key takeaways below. Full terms and conditions attached to this Scheme can be found here.
WHAT IS THE JOBSAVER PAYMENT?
One of the relief packages announced almost two weeks ago, the JobSaver payment will be fortnightly payments made to businesses, sole traders, or not-for-profit organisations in NSW on meeting the eligibility criteria.
The payments will cover costs incurred from the 18th of July 2021 onwards, and is equivalent to 40% of the weekly payroll for work performed in NSW:
minimum payment will be $1,500 per week.
maximum payment will be $10,000 per week.
Non-employing businesses, such as sole traders, trusts, and some partnerships may be eligible to receive $1,000 per week.
WHAT IS THE ELIGIBILITY CRITERIA?
To be eligible for JobSaver, you must:
have an active Australian Business Number (ABN).
demonstrate your business was operating in NSW as at 1 June 2021. You can use commercial rates notices & lease agreements to demonstrate this, and if this is not available, a combination of utility bills, insurance papers, supply invoices, registration papers, and contractor licenses can be used.
have had a national aggregated annual turnover between $75,000 and $50 million (inclusive) for the year ended 30 June 2020.
have experienced a decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period commenced 26 June, compared to the same period in 2019.
for employing businesses, maintain your employee headcount on 13 July 2021 while you continue to receive JobSaver payments. This means that the employer will not take active steps to end employment relationships - you can reduce hours or stand down employees under the Fair Work Act 2009, but cannot terminate employees. Employers will continue to be eligible if employees voluntarily resign.
for non-employing businesses, such as sole traders, show that the business is the primary income source for the associated person. If you have more than one non-employing business, you can only claim payments for one business.
HOW IS THE WEEKLY PAYROLL CALCULATED?
The weekly payroll is determined by referring to the most recent Business Activity Statement (BAS) provided to the Australian Taxation Office prior to 26 June 2021. For most businesses, this would be the March 2021 BAS (however, May IAS's have not been rejected in the applications we have lodged to date).
For businesses that operate in NSW only, the amount reported under item W1 (Total salary, wages, and other payments) must be divided by the number of days in the BAS period and multiplied by 7. This will give the Weekly Payroll Amount.
Details on what should be included in W1 can be found here.
For businesses that operate in other states or territories, you would ascertain the wages paid to employees who usually worked, or are based in NSW and apply the same calculations as above. That is, non-NSW wages need to be removed from calculations.
ABC Pty Ltd meets the eligibility criteria to access the JobSaver payments. It is designated as a small withholder for PAYG purposes, and reports and pays the withholding amount to the ATO each quarter. It lodged its March 2021 quarter BAS on 28 April, and reported the following details:
What is their weekly payroll amount for JobSaver purposes?
The ATO calculates that there are 90 days in this specified period. The weekly payroll amount is calculated to be $1,944.
Daily rate = $25,000 / 90 = $277.78 per day
Weekly payroll = $277.88 * 7 = $1,944.44 per week
On this basis, ABC would be entitled to $777.78 per week, but as this is below the minimum, $1,500 per week would be the JobSaver payment.
WHO IS NOT ELIGIBLE TO ACCESS THE JOBSAVER PAYMENTS?
Businesses that have not experienced a 30% decline in turnover over a two-week period compared to the same period in 2019. At the moment, this currently excludes the businesses that have grown since June 2019.
Entities that primarily earn passive income (rents, interest, or dividends), banks, government agencies, and local governments are not eligible for JobSaver.
Businesses that are in liquidation.
Businesses that registered their ABN after 1 June 2021.
The full list can be found here in attachment B of the terms and conditions.
HOW TO APPLY?
Applications are expected to open on 26 July and will remain open until 18 October 2021.
Businesses that have applied for the 2021 COVID-19 business grant will generally be eligible for JobSaver, but must provide additional information on employee headcount and payroll on making the application.
Businesses that did not apply for the grant will need to complete the application form and the level of information required would be dependent on whether the business sits within the highly impacted industries list or not.
FAQ'S REGARDING THE CURRENT RELIEF PACKAGES
Can employees be stood down during the current lockdown?
The rules, as currently issued, remain silent on whether you need to be paying employees to be able to receive the JobSaver payment. With businesses being mandatorily shut down in some cases or electing to close due to the pandemic, it would necessitate instances of standing down employees.
If an enterprise agreement, award, or agreement contains provisions relating to stand down in such circumstances, those provisions must be followed in the first instance. That is, if the enterprise agreements carry no provisions to stand down employees, the employer has no recourse to stand down employees without breaching the employment contract. Please reach out to your employment lawyer to discuss further.
In the absence of any other industrial instrument or contract, the Fair Work Act 2009 (Cth) (the Act) will apply.
Under section 524(1)(c) of the Act, an employer may lawfully stand down any one of its workers without pay during a period in which the employee cannot be usefully employed because of, amongst other reasons, a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
Note: section 524(1)(c) does not permit partial reductions in employee hours, only a full standdown. Care must be taken to consider "usefully employed", which provides that if the employee must be redeployed to another area of the business that is not in lockdown before standing them down.
You cannot stand down employees without pay solely due to a downturn in work/reduction in business.
Can employee's hours be varied?
Reducing employee hours is different from standing down an employee, and hours can be varied to the minimum/guaranteed number of hours as per the employment contract. If you wish to vary hours to below the guaranteed number of hours, this can be achieved by voluntary agreement with the employee.
It is unlawful for an employer to unilaterally direct an employee to vary their hours.
Can employers pay accrued leave to employees while on stand down?
Yes, where the employees consent to it, employers can pay accrued annual or long service leave whilst employees are on stand down. The employer cannot direct an employee to take annual or long service leave.
It should also be noted that payments of accrued leave will have an impact on the COVID Disaster payments being received from the Commonwealth.
If an employee working 40 hours a week, on being stood down, requests for three days of annual leave to be paid (24 hours), how much disaster payment would they be eligible for?
They would only be eligible for $375 per week in support payments (within the 8-20 hours of hours reduced) even though the employee has not worked the whole week.
Can the employer still receive JobSaver if the employees are receiving the Commonwealth Disaster Payments?
Yes, the employer would still be eligible for the JobSaver Payment even if the employees have all been stood down/have reduced hours and have been receiving the Disaster payments.
Are businesses that formed after June 2020 FY, i.e. new businesses, eligible to receive the JobSaver payments?
New businesses that do not have the June 2019 period to compare against can still be eligible for the JobSaver payment. This includes instances such as a new business being acquired, disposed, or restructures have taken place, Please contact Service NSW who will determine the appropriate period to compare against.
Can growing businesses that have suffered a 30% reduction in turnover based on recent performance be eligible for the JobSaver payment, even though their turnover currently exceeds the corresponding period in July 2019?
This seems to have been missed altogether in the release of the rules. We encourage business owners to contact Service NSW to ascertain whether any rules are in place, and we have reached out to the Chartered Accountants ANZ to pressure the Govt. to ensure growing businesses also qualify.
The commentary issued above are our understanding of the rules as published 25th July 2021 and does not constitute legal or financial advice. You should seek specific advice for your individual circumstances.