JobKeeper: some tips and traps for business owners and employers

Employers need to work through JobKeeper arrangements carefully. Picture: Jake Nowakowski

The $70 billion JobKeeper scheme is arguably the biggest financial decision ever made by an Australian government. It will sink into a morass unless the rules are clear.

Today I will set out how the program can be used by enterprises, even though there are areas that need clarification.

The government wants to convey two clear messages, but I also have three pleas for help.

The senior levels of the government want to underline that their support for the self-employed, a key part of the JobKeeper package, is not a new event and that the government will be monitoring the actions of the Australian Taxation Office closely.

I am very grateful for that, but given the cultural anti-self-employed/small business attitudes in the ATO, legislation to protect the integrity of the rules should be considered.

Secondly, the government is resolute that the industry superannuation movement must sort out any problems created by the $20,000 access to superannuation proposed over the next six months.

If there is market impact from any Australian share selling, then so be it. But the government also believes the markets can absorb it.

We will see those effects play out in coming weeks with more sudden rises in selling when the market rises, as we saw in late trading last Friday and on Tuesday.

A plea for R&D

My first plea for help comes from the research and development industry. While there are anecdotal signs that the silly tech research games being played by AusIndustry are coming to an end (thank you minister Karen Andrews, but keep the pressure on) this vital area is running out of cash. Please bring forward the grants scheduled for later in the year. It will save a lot of jobs held by some of our top talents because the JobKeeper program bypasses many in this area.

Secondly, because the actions required to keep enterprises alive are radical, it is likely that when this over there will be a multitude of unfair dismissal cases that will destroy the businesses and jobs that are being saved. Legislation is required for a six-month moratorium on unfair dismissals.

Thirdly, more clarity is need in the JobKeeper package as to when the 30 or 50 per cent decline in turnover applies. At it now stands turnover must have fallen 30 per cent for businesses with turnover under $1bn, or fallen 50 per cent for turnovers over $1 billion, between March 2019 and March 2020.

A vast number of enterprises suffered limited impact in March because of payments that came from past contracts. But they know their revenue will be slashed in April, May and June and are planning major staff reductions. JobKeeper is a huge and complex program and it can’t be handled by the ATO on a case-by-case basis. There must be clear rules so that enterprises can estimate their turnover declines across April, May and June. There must be extended repayment schedules for those who get those estimates wrong.

And those working on an estimates basis will need reporting rules that confirm those estimates. Clarity here is needed urgently. Thankfully the indication I have received from government is that clarity is on the way.

JobKeeper guideposts

But while more tweaks are on the way, JobKeeper is already available to business, so here are some of the guideposts I have identified.

• Where staff are retained on their current salaries that are higher than the JobKeeper $1,500 a fortnight allowance, the scheme works well and will save countess jobs. It will enable a great many enterprises to survive. That’s why Josh Frydenberg deserves praise.

• Where an employee has a salary at or lower than JobKeeper, the business can retain the employee at no cost. Sometimes the person’s income actually rises. Again, it’s relatively easy to administer and many jobs are saved.

• The system gets complex when salaries of employees are above the allowance and the enterprise cannot or does not want to pay the extra amount to maintain that current salary and retain full time employment. In most cases these employees were going to be stood down.

• The current situation is that employers must still stand that person down and then offer them the JobKeeper allowances. In other words, their income falls to $1,500 a fortnight but they are still on the books. An alternative might be to negotiate a reduced hours arrangement which might involve a payment above the JobKeeper minimum. When dealing with people on awards, this is a complex procedure that will usually require legal help.

I can’t emphasise strongly enough that enterprises must discuss these complex situations one-on-one with each employee. No confusing emails.

The potential for later unfair dismissal claims is there which is why I again plead with the government to attempt to pass a six-month unfair dismissal moratorium. The ALP may oppose it but then any future chaos so created will be on their heads.

• Given the JobKeeper allowance is taxable some employees will prefer to go onto Centrelink because the payment is not much lower after tax and they have greater freedom to look elsewhere.

• Those on contract are much simpler to handle. As a self-employed person, they can receive the JobKeeper allowance and can do extra work provided their income stays below a fall of 30 per cent.

I hope the above helps. Move quickly but in carefully thought out steps. Best of luck.