- Current JobKeeper and JobSeeker arrangements unaffected until the end of September.
- JobKeeper extended a further 6 months to March 2021 at a reduced rate.
- From 28 September, JobKeeper benefits will follow a “two-tiered” payment system based on each employee’s pre-COVID working hours (February 2020 month).
- The payment rate for eligible employees and business participants will reduce to $1,200 per fortnight, and $750 per fortnight for those who worked less than 20 hours per week pre-COVID.
- From 4 January 2021, the JobKeeper rate will again fall to $1,000 per fortnight, and $650 for people working less than 20 hours a week pre-COVID.
- New tough turnover test means businesses will need to prove a sustained downturn over six months (June quarter and September Quarter VS 2019) to qualify from October onwards.
- Extension of temporary boost to JobSeeker unemployment benefits similarly at a reduced rate. $550 Coronavirus supplement reduced to $250 – although up to $300 per fortnight can now be earned without impacting the benefit.
- Unanswered questions around extension of JobKeeper and connections to other stimulus measures such as rent relief and moratorium on eviction eligibility for which have been tied to the JobKeeper program.
JobKeeper 2.0 as it happened
With the full economic impact of COVID-19 still unknown and Australia facing a second wave of coronavirus infections, the government has heeded business calls for an extension of Government stimulus measures.
Under the current program, JobKeeper payments of $1,500 per fortnight (for eligible employees) would conclude on 27 September 2020.
Following a Treasury review, Prime Minister Scott Morrison and Treasurer Josh Frydenberg announced on Tuesday that the current JobKeeper program would be extended a further six months to 28 March 2021.
As of 28 September, “JobKeeper 2.0” will feature a two-tiered payment system and reduced benefit as JobKeeper is phased out – see below.
Extension to JobKeeper Payments
Current fortnightly JobKeeper payments of $1,500 per employee are unaffected and will continue until 27 September 2020.
As of 28 September, JobKeeper payments will be revised via two tiers with reference to their employee working hours in February 2020.
For eligible employees who worked at least 20 hours a week pre-COVID, payments will be:
- $1,200 / fortnight (from 28 Sept – 3 Jan 2021)
- $1,000 / fortnight (from 4 Jan – 28 Mar 2021)
For eligible employees who worked less than 20 hours a week pre-COVID, payments will be:
- $750 / fortnight (from 28 Sept – 3 Jan 2021)
- $650 / fortnight (from 4 Jan – 28 Mar 2021)
Revised Eligibility Test
The new eligibility test is ultimately tighter, as the 30% decline in revenues must be reflected over a sustained period as noted below.
Eligibility will also be based on actual GST turnover, rather than projected GST turnover to qualify for JobKeeper 2.0. Further, the required decline in GST turnover will remain the same. That is: 15% for not-for-profits; 30% for business under $1b; and 50% for business over $1b.
In order to be eligible for the JobKeeper payment in the December 2020 quarter, employers will need to demonstrate that they have met the relevant decline in turnover in both the June and September quarters to be eligible for the JobKeeper payment in the December 2020 quarter. In order to be eligible for the payment in March 2021, employers will need to demonstrate that they have met the relevant decline in turnover in each of the previous three-quarters June, September, December.
The drivers behind extending Jobkeeper
A Treasury review has found a “strong” case to extend JobKeeper beyond its legislated end-date in the last week of September, with the government scheme putting a “brake” on job losses and providing an “economic lifeline”.
The program will run to 28 March 2021, at a further cost of $16 billion, taking the entire JobKeeper program to $86 billion. The announcement comes after the Treasury released a snapshot of its JobKeeper review findings earlier, revealing that up to one in four of the 3.5 million workers currently covered under the program was earning $550 more than they would ordinarily. Mr Frydenberg said the payment would be extended for those who needed it most.
While there are currently 3.5 million workers covered under JobKeeper, the Treasury expects the new eligibility rules to see the figure fall to just 1.4 million workers for the December 2020 quarter, before dropping to 1 million workers in the March 2021 quarter.
Finance Minister Mathias Cormann said the review confirmed JobKeeper was working and that the case for an extension for companies still impacted by government-ordered shutdowns had been made.
“The Government recognises the need for JobKeeper to be extended, we are conscious that there will still be businesses that will continue to be severely impacted by the coronavirus crisis. But we also want to ensure that ultimately we can transition businesses back into a situation where they are able to pay for the wages of their employees out of their income.”
Updates to JobSeeker
Trade Minister Simon Birmingham says the government’s upcoming cuts to the JobSeeker payment are designed to motivate people to return to work, with the Prime Minister announcing the $550 JobSeeker Coronavirus supplement would be reduced to $250 – meaning a single recipient would receive $815 per fortnight when combined with the base payment. However, JobSeeker recipients will now be able to earn up to $300 of employment income without affecting the payments.
Since the announcement, we have had some interesting inquiries – the main one being the connection (if any) of the JobKeeper extension to the rent relief provisions and the moratorium on evictions. When announced, these measures were directly connected to JobKeeper eligibility. Therefore an extension to JobKeeper may suggest an extension to other relief measures.
We are following up these matters and will advise on the same when we have some guidance.
At CharterNet, we will continue to keep you updated as things develop. Always feel free to get in touch if we can help clarify anything.