JobKeeper Extension Legislation Passed & Eligibility of Higher Rates
Key Summary:
 
Key Points in relation to the Higher rate of JobKeeper
 
  • To be eligible for the higher rate of JobKeeper, an eligible employee would have a total of 80 hours or more of “work, paid leave and paid absence on public holidays” in any reference period; or
  • The eligible employee satisfies the 80 hour test for an alternative period specified by the Commissioner if the standard reference period is not a suitable reference period for the employee.
Below are the extracts from the Explanatory memorandum: 

An employer’s entitlement in relation to the two different JobKeeper payment rates for an employee is determined by reference to the actual hours the employee worked, and any hours for which they received paid leave (e.g. annual, long service, sick, carers and other forms of paid leave) or paid absence for public holidays. This ensures that the test reflects the actual circumstances that occurred in the employee’s reference period by taking into account, for example, where additional hours were worked above standard hours.

It is expected that in working out whether a particular employee is eligible for the higher rate, employers will generally be able to rely on records that are already maintained in respect of that employee (for example, about their employment conditions, or pay and leave arrangements).

If an employee’s total hours were 80 hours or more for the employer over any applicable reference period then the employer is entitled to the higher JobKeeper rate in respect of that employee (item 27, subsection 9A(1)). If the total hours of work and equivalent paid leave are less than 80 hours then the lower rate applies.

Eighty hours over this four week period is equivalent to an average of 20 hours per week over this period. The introduction of the lower rate of JobKeeper payment is intended to significantly limit the circumstances in which certain part-time employees or long term casual employees, who might have been paid less than the wage condition amount in the period prior to the COVID-19 impacts, receive a higher amount through the JobKeeper scheme.

Reference periods for employees

For all employees, there are two standard reference periods that are comprised of the 28 day periods ending at the end of the most recent pay cycle for the employee ending before:
  • 1 March 2020 – the original reference date and is generally considered to be before COVID‑19 began to have a broad impact on the Australian economy; or  
  • 1 July 2020 – the additional reference date for conditions that apply to newly eligible employees of qualifying employers under the JobKeeper scheme for JobKeeper fortnights beginning on or after 3 August 2020.

These two 28 day periods comprise the last two consecutive fortnightly pay periods or last 4 weekly consecutive pay periods ending prior to 1 March 2020 or 1 July 2020. For employees who are paid on a different basis (for example, a monthly basis), the 28 day period will only cover a part of the pay cycle. However, other rules ensure that average hours over the pay period are identified on a pro-rated basis (see below).

A pay cycle for an employee of an entity is defined as a regular period for which the entity would usually pay the employee in relation to the performance of work by the employee (item 20, definition of pay cycle in subsection 4(1)). The pay cycle for most employees will be fixed and readily identified by employers.

Both reference periods are applicable to all eligible employees, irrespective of whether their eligibility is based on the 1 March 2020 or 1 July 2020 requirements. As employers do not have discretion to choose the reference period, they must have regard to any applicable reference period for any employee that results in the employer receiving the higher rate of JobKeeper payment in respect of that employee (items 20 and 21, definition of reference period in subsection 4(1) and section 4A).

The standard reference period for employees is the 28 day period ending at the end of the most recent pay cycle for the employee before 1 March 2020 or 1 July 2020 (see item 21, table item 1 of subsection 4A(1)(a)). These reference periods are intended to align with the employer’s existing payroll and rostering systems for their employees. This alignment is therefore expected to reduce compliance costs for employers in determining which JobKeeper rate applies in respect of qualifying employees. Under industrial law, employers are generally required to keep records of hours worked by casual or irregular part-time employees that are paid on an hourly basis. For other types of employees, standard hours of employment would normally be stipulated in an award, enterprise agreement or employment contract and employers must keep records of the number of overtime hours worked by these employees (or starting and finishing times for overtime).

The Commissioner has a further power to determine, by legislative instrument, an alternative reference period for the hours worked test for particular employees if the standard reference period is not a suitable reference period for the purposes of determining the hours of employees that are a particular class of employees. The Commissioner can also determine an alternative reference period for a religious practitioner or business participant if the standard reference period is not a suitable reference period. The Commissioner is an appropriate delegate as the administrator of the JobKeeper scheme and has the relevant administrative expertise and information to exercise this power effectively. This power is explained further below.

Example 1: Working out hours over the reference periods

Emma has been employed by a bus company on a permanent part-time basis as a bus driver since 2010. Her standard working hours prior to the impact of COVID-19 were 15 hours per week but most weeks she worked some further paid hours at her employer’s request depending on the availability of other company drivers. The pay cycles of the bus company occur fortnightly and end on Fridays.

To determine the rate of JobKeeper payment the bus company can receive in respect of Emma as an eligible employee for JobKeeper fortnights beginning on or after 28 September 2020, the bus company considers which of the reference periods for Emma is most beneficial:
  • Using the 28 day period ending at the end of the most recent pay cycle before 1 March 2020 – the relevant pay cycle fortnights are from 1 February 2020 until 14 February 2020; and 15 February 2020 until 28 February 2020. During this 4 week period, Emma worked 15 hours in week 1, 22 hours in week 2, 18 hours in week 3 and in week 4 she did not work and took 15 hours of annual leave. Emma’s hours of work and paid leave in this reference period total 70 hours.
  • Using the 28 day period ending at the end of the most recent pay cycle before 1 July 2020 – the relevant pay cycle fortnights are from 23 May 2020 until 5 June 2020; and 6 June 2020 until 19 June 2020. During this 4 week period, Emma worked 15 hours in week 1, 20 hours in week 2, 10 hours in week 3, and 10 hours in week 4. Emma’s hours for work in this reference period total 55 hours.

Under the two reference periods, the bus company qualifies for JobKeeper payments in respect of Emma based on the most beneficial reference period. This is the 28 day period at the end of the most recent pay cycle before 1 March 2020. However, the hours Emma worked under this reference period still falls short of the required 80 hour threshold for the higher rate of JobKeeper payments.

As Emma’s employer continues to be eligible for the JobKeeper scheme because the company’s actual turnover has declined by 55 per cent in the quarter ending 30 September 2020, the company is entitled to receive the JobKeeper payment. The company receives the lower rate of $750 per fortnight in respect of Emma for the JobKeeper fortnights beginning on or after 28 September 2020 and ending on or before 3 January 2021.

For the JobKeeper fortnight beginning on 28 September 2020, Emma worked 30 hours a week for both weeks. Although the bus company pays Emma remuneration that exceeds $750 for the fortnight, the bus company is only entitled to claim the lower JobKeeper rate of $750 for that JobKeeper fortnight in respect of Emma by reference to the JobKeeper rate calculated based on her hours worked in the reference period.

The bus company will need to undertake a further test of its actual decline in turnover for the quarter ending 31 December 2020 to work out if it qualifies for JobKeeper payments for JobKeeper fortnights starting on or after 4 January 2021. If the bus company qualifies for JobKeeper payments for this later period, it can receive the lower JobKeeper rate of $650 a fortnight in respect of Emma if it meets the wage condition, and Emma remains an eligible employee.

Where the relevant pay cycle for an employee is longer than the 28 day reference period (such as a monthly pay cycle) then a pro-rated calculation is used to determine the applicable hours of the longer pay cycle that are attributable to the 28 day period (item 27, subsection 9A(2)).

Example 2: Working out hours for employees on monthly pay cycle

Employees of Lai Industries Inc. are paid on a monthly pay cycle that ends on the 15th of each month. Antonio has been a permanent employee of the company since 2006.

To determine the rate of JobKeeper payment Lai Industries Inc. can receive in respect of Antonio as an eligible employee for JobKeeper fortnights beginning on or after 28 September 2020, Lai Industries Inc. considers which of the reference periods for Antonio is most beneficial:
  • Using 28 day period ending at the end of the most recent pay cycle before 1 March 2020 – the relevant pay cycle is from 16 January 2020 until 15 February 2020 (31 days). During this period, Antonio worked for 85 hours and took 80 hours of combined annual and long service leave. For the purposes of the JobKeeper payment, Antonio’s hours of work (pro-rated) for this reference period is just over 149 hours, worked out as follows: 28/31 x (80 + 85) hours = approx. 149 hours.
  • Using the 28 day period ending at the end of the most recent pay cycle before 1 July 2020 – the relevant pay cycle is from 16 May 2020 until 15 June 2020 (31 days). During this period, due to the impacts of COVID‑19, Antonio only worked for 85 hours. For the purposes of the JobKeeper payment, Antonio’s hours of work (pro-rated) for this reference periods is 76.8 hours, worked out as follows: 28/31 x 85 hours.

Lai Industries Inc. qualifies for JobKeeper payments in respect of Antonio based on the most beneficial reference period, which is the 28 day period at the end of the most recent pay cycle before 1 March 2020. Under the hours worked for this reference period, Antonio meets the required 80 hour threshold for the higher rate of JobKeeper payments.

Accordingly, Antonio’s employer is entitled to the higher JobKeeper payment rate in respect of Antonio for JobKeeper fortnights beginning on or after 28 September 2020 provided that the other conditions are met.
 

For further details please refer to the Explanatory Statement on the relevant legislation:
 
https://www.legislation.gov.au/Details/F2020L01165/Explanatory%20Statement/Text