The enabling legislation was passed by Parliament last night, but this does not mean that all details have now been made available or even worked out yet. The law has been structured to allow the Treasurer to make ‘rules’ for the operation of the JobKeeper wages reimbursement system. These rules will set out the finer details for aspects such as employer eligibility and, no doubt, address anomalies and areas of concern as the system is implemented.

The rules are likely to appear on the Treasury website as they are finalised: https://treasury.gov.au/coronavirus/jobkeeper

Having regard to the information provided by Treasury to date, the key aspects of the system are set out below. These points are necessarily very broadly made and not intended to provide all detail. They are also subject to any changes as they are made part of the rules:

1. To be eligible, a business must suffer a reduction in turnover of at least 30% (for turnovers of less than a billion dollars).
2. A reimbursement of $1,500 per fortnight will be paid by the Australian Taxation Office for each eligible employee. The payments will be in arrears.
3. The payments for employees will be a reimbursement of amounts actually paid by the business, which will need to be at least $1,500 gross per fortnight. An employee paid less than this is not eligible for any reimbursement at all.
4. The payment will extend to the self employed if they are employees of their business. A sole trader and one partner in a partnership or one beneficiary of a trust who is not an employee are also to be included.
5. Severe penalties will be imposed where people enter into arrangements principally to secure a advantage under this system. Business restructures, changing employment arrangements and income manipulation to secure entitlement are high risk approaches to be avoided.

What needs to be done now?

If the business turnover is likely to be 30% less than last year in coming months, register the business https://www.ato.gov.au/general/gen/JobKeeper-payment/ for further information. This should be done if the business has not yet experienced the decline but may do so. It would only actually make a claim when the necessary conditions were met.

If there has been a 30% decline but it is not as easily demonstrated as comparing April 2020 turnover with April 2019 turnover (for example, because the business has not been trading for twelve months in its current form; there may have been a business acquisition in that period; a corporate restructure or major contract is distorting results) then start putting together a business case for submission to the Australian Taxation Office, which will have discretion to determine if a business is still eligible.

Employees for whom the $1,500 will be sought should be paid at least that amount as a gross payment. If they would not otherwise be paid that amount, for example they are casual or part time and earn less that that or they have been stood down without pay, it will be essential to be satisfied that the business will qualify and the employees will be eligible before a payment is made in anticipation of reimbursement. Specific legal advice should be considered where the terms of employment are to be varied or a stood down or retrenched employee is to be re-engaged.