May 05, 2020 / News

Business Consulting / COVID-19

JobKeeper – Deadline to notify your employees: $4,200 penalty each if you miss it

The JobKeeper Rules were amended on 1 May, following an announcement by the Treasurer on 24 April. This reflects the sound judgement of enacting framework legislation that delegated lawmaking power to the Treasurer, from which the JobKeeper Rules came, so that any required amendments could be implemented quickly.

“One in, all in” principle strengthened

It was already set out in the Fair Work Act that you couldn’t pick and choose amongst your eligible employees for payment of the minimum $1,500 per fortnight (and thus qualify for JobKeeper payments). This has been added to, through the JobKeeper Rules, by going back a step and requiring you to notify all of your potential eligible employees that you have enrolled in the JobKeeper program. The last requirement for a potential eligible employee to become an actual eligible employee is for the employee to give you notice that they agree to be your eligible employee. The intent is to guard against an employee missing out through lack of awareness. 

You must give the notice to your employees within seven days of enrolling in the JobKeeper program. For those who had enrolled on or before 1 May, you have until Friday, 8 May to provide the notice (unless you already did so, as we had recommended, back when it wasn’t compulsory). You must also convey to those employees that they must provide their nomination notice back to you in order to agree to be an eligible employee of yours, and provide instructions on what to do. Probably the best approach would be to provide the standard notice form (see here) with Section A already completed, and instruct the employee to complete Sections B and D, and return by e-mail as acceptance (it doesn’t appear that they have to actually sign). You must have the form back from the employee before you can include them in your April or later applications for JobKeeper payments. You don’t need to provide these forms to the ATO; just keep them in your records. 

Failure to provide the notice to employees leaves you liable for a penalty of $4,200 per instance.

Service entities who are the employer

New rules take account of service entities whose primary activity is to supply labour to related entities that carry on a business. Only the service entity can claim JobKeeper payments in relation to its employees. The business entities might predict a 30% or more decline in turnover (50%+ where turnover exceeds $1 billion), but that won’t necessarily translate to an equivalent decline in the service entity’s service fee income. The new rules look to the business entities’ turnover in place of the service entity’s. However, these rules apply essentially only to wholly-owned groups and GST groups. 

Many service entities exist outside of the above kinds of structures. However, the Commissioner has released Practical Compliance Guideline PCG 2020/4, which includes some examples of a service entity’s service fee income actually being reduced by the required percentage. The particular examples are regarded as low risk for offending the integrity provisions in the JobKeeper Rules.

16 and 17-year-old employees

Employees who are 16 or 17 years old will be excluded from JobKeeper payments from the fourth fortnight (commencing Monday, 11 May) onward. However, they can continue to be included if they are either independent or not in full-time study.  The employee notification form above has been amended to include additional disclosures for 16 and 17-year-olds.

Religious institutions

Stand-alone eligibility criteria for religious institutions and religious practitioners have been included, which take account of bespoke issues particular to them.

Other changes

Other changes have been made relating to charities excluding government revenue from their decline in turnover test, and for universities and international aid organisations.

Next steps

Talk to your trusted Nexia Edwards Marshall Advisor about these changes, or any new obligations of yours set out above.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.