The Government has passed additional legislation to provide wage subsidies to businesses significantly affected by COVID-19. This subsidy is called the JobKeeper payment and is intended to be paid directly to employers by the Australian Taxation Office, who then provide the payment to their employees.
This article will discuss the eligibility criteria for employees receiving the JobKeeper payment and explain the components of the JobKeeper Eligibility Report. This report is designed to provide employers with the information to make an informed decision on which employees fit the basic eligibility criteria provided by the government. The results displayed in this report should not be the sole tool used to determine employee eligibility. Rather, we strongly suggest all employees be manually verified prior to commencing paying JobKeeper subsidies.
Additionally, this report makes no assumptions as to whether a business is eligible for JobKeeper subsidies. It is the employer's responsibility to determine eligibility. For more information about the subsidy and business eligibility, refer here.
Refer here for details on how to set up the JobKeeper payment in your payroll system so that it is being reported correctly to the ATO via STP.
Which employees are eligible for the JobKeeper payment?
As a minimum, an employee must have been employed by the employer on 1 July 2020 (including if the employee was stood down or rehired) and continues to be employed by that employer, in order to be eligible for the payment. This means any new employees employed after 1 July 2020 are not eligible for the payment. The initial reference date was 1 March 2020, however, this changed on 7 August 2020 and took effect from 3 August 2020. Additionally, eligible employees are employees who:
- are a full time, part time or fixed term employee at 1 July 2020; or
- a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer;
- are aged 18 years or older at 1 July 2020 (16 or 17 year olds can also qualify if they are independent or not undertaking full time study);
- are either an Australian resident (within the meaning of the Social Security Act 1991) or an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as at 1 July 2020;
- are not in receipt of government parental leave or Dad and partner pay under the Paid Parental Leave Act 2010 (Employees on parental leave from their employer are eligible);
- are not in receipt of any payment in accordance with Australian worker compensation law for an individual's total incapacity for work (Employees receiving workers compensation will be eligible for the JobKeeper if they are working, for example on reduced hours, but will generally not be eligible if they are not working);
- are not in receipt of a JobKeeper Payment from another employer.
The ATO provides detailed information on assessing employee eligibility - this can be accessed here.
The JobKeeper scheme has been extended from 28 September 2020 until 28 March 2021. There are two separate extension periods and new tiered payment rates for each period, which will be stepped down in two stages. A new 80-hour threshold applies to employees who are eligible for JobKeeper and determines which payment tier applies.
Extension Period 1 – From 28 September 2020 to 3 January 2021 the JobKeeper payment rates are:
- $1,200 per fortnight for all eligible employees who satisfy the 80-hour threshold; and
- $750 per fortnight for other eligible employees.
Extension Period 2 – From 4 January 2021 to 28 March 2021, the JobKeeper payment rates are:
- $1,000 per fortnight for all eligible employees who satisfy the 80-hour threshold before either 1 March 2020 or 1 July 2020; and
- $650 per fortnight for other eligible employees.
Employees will satisfy the 80-hour threshold if the total of the following is 80 hours or more in their 28-day reference period:
- actual hours they worked
- hours they were on paid leave
- hours they were paid for absence on a public holiday.
There are two periods – pre-March and pre-July – but employees only need to satisfy the threshold in one of these periods. The pre-March period is the 28 days which finish on the last day of the last pay cycle that ended before 1 March 2020. The pre-July period is the 28 days which finish on the last day of the last pay cycle that ended before 1 July 2020.
Because they are based on the date when the business’ pay cycle ends, the date ranges for the reference periods will not be the same for all businesses.
If businesses have a pay cycle longer than 28 days (for example monthly), they will need to perform a pro-rata calculation.
Alternative reference periods
There may be circumstances where the pre-March or the pre-July reference periods are not suitable for some eligible employees. If an employee does not satisfy the 80-hour threshold in the pre-March or pre-July reference periods, businesses should consider whether they satisfy it using an alternative reference period.
More information on the 80-hour threshold and reference periods are provided by the ATO, which can be accessed here.
JobKeeper Eligibility Report
The JobKeeper Eligibility Report easily allows employers to determine the eligibility status of their employees and whether they satisfy the 80-hour threshold. You can access this report by navigating to 'Reports' > 'Employees' > 'JobKeeper Eligibility Report'.
If you record employee visas using the Qualifications feature, you can add the qualifications to the report parameters. The report output will then identify which employees have any of the qualifications and classify them accordingly.
The eligibility status will either be:
- Eligible, ie based on all relevant employee data, the employee meets the eligibility test;
- Ineligible, ie based on all relevant employee data, the employee does not meet the eligibility test; or
- May be eligible, ie certain assumptions have been made based on relevant employee data, so best to double-check with the employee so a definite decision can be made.
If an employee is deemed either 'Ineligible' or 'May be eligible', the report will detail the reasons for such decision:
The assumptions we make when determining an employee as 'May be eligible' are as follows:
- Where an employee is not claiming the tax free threshold that means this job is not their primary source of income. An employee is not eligible for the JobKeeper payment if they are already in receipt of such payment from another employer. It is best to check with the employee whether they are already receiving the JobKeeper payment from another employer.
- Employees that do not have the 'Australian Resident for tax purposes' checkbox ticked on their tax file declaration may not be eligible because they are not an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder. It is best to check with the employee however on their visa status.
- Employees with a visa qualification may not be eligible if they do not possess the type of visa that falls within the eligibility criteria.
Employees configured with an employment type of 'Labour Hire' or 'Superannuation Income Stream' are considered ineligible.
To easily determine what tier eligible employees will be classified under, we have introduced two new columns in the report:
- 'Total hours in pre-March period' and
- 'Total hours in pre-July period'.
Click on the tooltip icon to view a calculation breakdown of how the total hours have been determined.
Using the example above, the figures displayed in these columns are calculated as follows:
- Pay Period: Looks at all finalised pay runs with pay periods that fall within the 28-day reference period ending on the last day of the last pay period before either 1 March or 1 July. Here, there are four weekly pay periods, but if there were only three pays within the reference period, or if there were two fortnightly pay runs or one monthly pay run, that is what is displayed. N.B For monthly pay periods hours are pro rata – see '% Days' below.
- Days in Pay Period: This is the number of calendar days covered in the pay run.
- Hours Worked: This is the number of hours processed in the pay run.
- Days in Reference Period: This is the number of calendar days covered in each pay run within the reference period.
- % Days: Days in reference period divided by days in pay period. This is relevant for calculating the pro rata period for monthly pay schedules as part of the pay period will normally fall outside the 28-day reference period.
- Hours in Reference Period: This is the number of paid hours processed in the relevant pay run including actual hours worked, paid leave and paid public holidays.
What the JobKeeper Eligibility Report Does Not Do
The JobKeeper Eligibility Report does not include incomplete or terminated employees. If you have reinstated an employee, you must ensure they are reactivated in the system so that they appear in the report.
The report does not cater for alternative reference periods where the pre-March and pre-July reference periods are not suitable, for instance, when:
- the total hours are less than 80 hours in the pre-March and pre-July periods but are not representative of the eligible employee’s total number of hours in a similar 28-day period;
- the eligible employee was not employed by you during all or part of the pre-March or pre-July reference period;
- an eligible employee started employment on or before 1 March or 1 July 2020 but their first pay cycle ended on or after 1 March or 1 July 2020;
- businesses that change hands or changes, including within a wholly-owned group.
Businesses will need to make their own assessment of total hours based on the alternative periods. Further information on alternative reference periods is available from the ATO here.
Should you have any questions, feel free to email us at firstname.lastname@example.org.