COVID-19 – Employment & Small Business Stimulus Package Information Sheet
For the purposes of this information sheet, the employer is defined as one which is not covered by a modern award or registered enterprise agreement (“Employer”).
Small business stimulus packages
Effective immediately, it is possible that the Employer may be eligible for accessing the Australian Federal Government’s small business stimulus packages. Several States and Territories across Australia have also introduced stimulus packages which may be accessed by eligible businesses. The exact nature and extent of these stimulus packages are evolving daily, and various governments are announcing these as necessary. It is likely that further national packages will be announced in the future, and therefore Employers should regularly monitor announcements by the Federal Government and their applicable State or Territory Government to determine whether they are eligible for assistance.
One primary aim of the packages is to keep small businesses afloat by reducing their outlay in taxation. For example, the Victorian Government recently announced a $550 million stimulus package consisting of payroll tax relief for businesses with annual payrolls of less than $3 million. Under the initiative, the Victorian Government will refund all payroll tax paid by eligible businesses in the first 3 quarters of the 2019/20 financial year and will also waive payroll tax due in the final quarter of this financial year. This means that the maximum refund available to businesses is $113,975. Further information on this initiative and other measures being taken by the Victorian Government can be found here: https://www.sro.vic.gov.au/coronavirus. Information on the current options available from the Federal Government can be found on the Treasury website: https://treasury.gov.au/coronavirus.
Job Keeper Package
The government has also introduced the Job Keeper Package which is intended to ensure businesses retain their staff throughout this crisis. Under this stimulus package the government will subsidise the wage costs of eligible employers. These employers will receive a fortnightly payment of $1,500 per eligible employee, from the 30th of March 2020.
Who constitutes an Eligible Employer?
Employer eligibility is to be determined by percentage of turnover reduction;
- Businesses with turnover less than $1 billion must show that turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
- Businesses with a turnover greater than $1 billion, must show that turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and
- The Business is not subject to a major bank levy.
Who constitutes an eligible employee?
Eligible employees are employees who:
- are currently employed by the eligible employer (including those stood down or re-hired);
- were employed by the employer at 1 March 2020;
- are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
- are at least 16 years of age;
- are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
- are not in receipt of a JobKeeper Payment from another employer.
For further information on applying for the JobKeeper payment, and for information regarding recipient obligations, employers should refer to the below Australian Government fact sheet:
Additional Cash Flow Incentives
There may also be additional cashflow-assisting taxation incentives and deferrals available to the Employer. This information is available on the Australian Taxation Office’s website: https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/?page=1#Support_available_for_businesses.
Employers should discuss their eligibility for these stimulus packages with their accountants. If necessary, we can recommend trusted accountants based in Australia who would be able to assist or guide Employers through the eligibility and application process for these stimulus packages. Please contact our office if you would like a referral.
Reducing employee hours/pay
Reducing a casual employee’s hours is simpler than reducing a permanent employee’s hours as a casual’s employment commences at the start of their “shift” and concludes at the end of their “shift”. Further, a casual employee does not accrue leave entitlements (although in some states and territories they may accrue long service leave) and there is no ongoing job security. For this, they are paid a casual loading as compensation – normally a 25% increase on their base wage.
With respect to the permanent workforce (which covers both part-time and full-time employees), their employment is required to be ongoing with standard hours and standard salaries. There is always scope to negotiate with staff regarding their hours and salary – however, an Employer cannot force someone to do the same work for less money or unilaterally reduce their hours.
In the event an Employer takes unilateral action to reduce their permanent employee workforce, there is a possibility that an employee may allege they have been unfairly dismissed from their role. As a direct result, the Employer may find itself having to defend an action in the Fair Work Commission (“Commission”) which provides the first means of redress for an aggrieved former employee.
An alternative approach to dismissing employees is for the Employer to negotiate a reduction in pay and/or the amount of time worked by its employees. If an Employer chooses this option, they must ensure that their employees are aware of this and understand that the reduction in hours and/or pay is temporary and necessary for the common good of the business moving forward. Consultation is necessary and the employees must agree to the changes.
Importantly, Employers must be aware that a salaried employee cannot be paid below minimum wage. That is, even salaried employees must be paid greater than $19.49 per hour (as of the date of this information sheet).
If it becomes apparent that terminating the continued employment of individual employees or the entire workforce is necessary, an Employer may need to look towards redundancies.
A redundancy must be a “genuine redundancy”, which is:
- where the employer does not require the employee’s job to be done by anyone because of an operational change; and
- the employer has complied with any requirement under a modern award to consult regarding the redundancy.
In the event there is a possibility that the employee can be “redeployed” within either the enterprise or a related enterprise, the redundancy is not a genuine redundancy.
When an employee is made redundant, their Employer is unable to immediately re-employ someone in the same role, or a substantially similar role.
It is key to note that there is often a payment which is required to be made to a redundant employee based upon their term of employment. This is covered in section 119 of the Act, which can be viewed using the following link: http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/fwa2009114/s119.html
In the event an Employer is making 15 or more staff redundant, the Employer is required to notify Centrelink.
There is currently a significant amount of Australian media attention being paid to stand downs of employees. Notably, Qantas has stood down 20,000 employees without pay. This is technically permissible in accordance with the Act, however the use of the stand down procedure remains a grey area in Australian industrial relations law.
In this respect, the Commission has provided guidance that the stand down provisions are generally not available due to business downturn, notwithstanding that this downturn may not be due to any fault of the employer.
The relevant provision in the Act is section 524: http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/fwa2009114/s524.html
In the case of Qantas, it is commercially viable to stand down employees notwithstanding the risk that the Commission or the Court may find that the stand down was not lawful. For a small business, this risk is generally too great, and redundancy may be the only option.
The emergence of COVID-19 is likely to cause disruption and hardship to a significant number of employees in Australia.
For employees that wish to understand their rights with respect to their employment, a good starting point is the Fair Work website, which can be viewed here: https://www.fairwork.gov.au/.
It is also anticipated that many individuals will suffer mental health issues as a result of their employment being impacted by COVID-19. In this respect, there are numerous resources which can assist employees in managing this difficult period. In the first instance, we recommend Heads Up, which is aligned with Beyond Blue and can help employees manage their mental health and understand their rights under discrimination, privacy, and work health and safety legislation. The website can be viewed here: https://www.headsup.org.au/.
The Employee Assistance Professional Association of Australasia (“EAPAA”) also provide a list of reputable and experienced organisations that provide mental health services for employees. These can be found at the following link: https://www.eapaa.org.au/site/category/providers/australia/vic/.
The above link outlines a list of providers in Victoria with a short blurb highlighting their degree of specialisation and standing in this field.
Based on our preliminary research, the most established and accredited providers to consider are:
- SMG Health: (https://www.smghealth.com.au/)
- Cairnmillar Institute: (https://www.cairnmillar.org.au/)
The EAPAA is contactable by telephone on (02) 9882 2688 or via email on firstname.lastname@example.org.
Should you have any questions arising from this information sheet, please get in touch with the writer via email at Isaac.email@example.com or contact our office via telephone on (03) 9645 9500.
** This Information Sheet is for general information only and is not to be considered legal advice. Should you require advice regarding a specific matter, please contact Isaac Hanna of our office at Isaac.firstname.lastname@example.org