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COVID-19 Blog

JobKeeper Scheme - Fair Work Act Amendments

Posted by Lisa Qiu on 16 Apr 2020

On 9 April 2020, the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 came into effect and, amongst other amendments, amended the Fair Work Act 2009 by inserting a new part, Part 6-4C (“JobKeeper Amendments”).

The objectives of the JobKeeper Amendments are to provide employers who receive JobKeeper payments with greater flexibility to make changes to the terms and conditions of employment of their employees in an effort to reduce the financial impacts of COVID-19 on Australian businesses.

You can read about the  eligibility requirements of the JobKeeper payments here.

 Specifically, the objectives of the JobKeeper Amendments are to:

  1. make temporary changes to assist the Australian people to keep their jobs, and maintain their connection to their employers, during the unprecedented economic downturn and work restrictions arising from:
  1. the COVID-19 pandemic; and,

ii)            government initiatives to slow the transmission of COVID-19

b)            help sustain the viability of Australian businesses;

c)            continue the employment of employees;

d)            ensure the continued effective operation of WHS;

e)            help ensure, where reasonably possible, employees

  1. remain productively employed; and,
  2. continue to contribute to the business of their employer where it is safe and possible for the business to continue operating.

The objectives of the JobKeeper Amendments are achieved by enabling employers who are entitled to JobKeeper payments, to make JobKeeper enabling directions. These directions enable employers to make changes to an employee’s:

  • hours of work;
  • duties;
  • location of work; and/or,
  • usual days or time of work.

JobKeeper enabling directions must be reasonable (nb direction may be unreasonable depending on the impact of the direction on any caring responsibilities the employee may have). The employee must also not be able to be usefully employed for their normal hours or duties for reasons attributable to COVID-19/government initiatives. The implementation of the direction must also be safe having regard to factors including but not limited to COVID-19 spread, and necessary to continue the employment of one or more employees of the employer.

Moreover, the direction must:

  • have involved consultation with the employee;
  • be in writing;
  • be given at least 3 days before the direction was implemented; and,
  • be in effect until it is withdrawn or until 28 September 2020, when the JobKeeper Amendments automatically lapse.

The JobKeeper Amendments also require two pay guarantees to be met – the minimum wage guarantee and the minimum hourly rate guarantee.

Minimum payment guarantee

The minimum payment guarantee provides that an employee must receive the greater of the two:

  1. JobKeeper payment of $1,500 per fortnight; or,
  2. Amounts payable to the employee for the work performed during the fortnight including bonuses, loadings, allowances, overtime/penalty rates and leave payments.

Example 1: Employee directed not to attend work for 4 weeks as there is no work. Employee entitled to receive $3,000 for the 4 weeks ($1,500 per fortnight JobKeeper payment)

Example 2: Employee’s usual hours not affected and continues to work 38 hours per week at $30 per hour. Employee is entitled to receive usual wages of $2,280 per fortnight, with employer receiving $1,500 JobKeeper payment as a wage subsidy.

The minimum payment guarantee applies to an employee who is receiving a JobKeeper payment.

Minimum hourly rate guarantee

The hourly rate of pay guarantee provides for employees the subject of a JobKeeper enabling direction, their hourly rate of pay cannot be reduced (but their hours can be reduced).

Example 1: Employee is the subject of a JobKeeper enabling direction to have their hours of work reduced from 40 hours per week to 20 hours per week. Employee’s hourly rate of pay is $30.  Her new wage has been reduced from $1,200 per week for 40 hours of work, to $600 per week for 20 hours of work. As she earns less than $1,200 per fortnight, she is entitled to the $1,500 per fortnight JobKeeper payment (as per the minimum payment guarantee).

Example 2: Employee is the subject of a JobKeeper enabling direction to have their hours of work reduced from 40 hours per week to 30 hours per week. Employee’s hourly rate of pay is $30. Her new wage has been reduced from $1,200 per week for 40 hours of work, to $900 per week for 30 hours of work. She therefore earns $1,800 per fortnight and is entitled to be paid $1,800 per fortnight, with employer receiving $1,500 JobKeeper payment as a wage subsidy.

The minimum hourly rate guarantee only applies to an employee who is the subject of a JobKeeper enabling direction to have their hours, duties or location of work changed.

Annual leave

The JobKeeper Amendments also enable employers to direct employees to take twice the amount of annual leave at half pay, so long as the leave accrual remaining is no less than 2 weeks. Employees must consider the request and must not unreasonably refuse a request. 

JobKeeper directions do not constitute a break in the employee’s continuity of service and therefore do not affect the accrual of leave entitlements, or calculations in relation to payments of notice or redundancy. 

Resolving disputes

The Fair Work Commission is able to hear and arbitrate disputes between employers and employees under the JobKeeper Amendments.

Employee claims and disputes are already beginning to increase in response to actions taken by businesses during COVID-19. Employers are advised to seek independent legal advice and to contact Coleman Greig’s Employment Law Team if they have questions about how to navigate changes to employment during COVID-19.