JobKeeper Explained: Reducing Hours

JobKeeper has assisted many businesses to survive during the Covid-19 restrictions. It has been the support they need, and kept their staff employed.

But we bet you, and many other employers, have a lot of questions about what JobKeeper is, how it works, and what obligations and entitlements it brings you as an employer.

While we can’t give you answers on all of your JobKeeper questions (you may need an accountant for those), Employsure can help you better understand the workplace relations aspects of JobKeeper, including the additional powers given to employers under the scheme.

These additional powers are properly known as JobKeeper Enabling Directions. One of these rights allows employers to reduce the working hours of employers. The minimum reduction depends on whether you are a Qualifying Employer or a Legacy Employer.

How Can I Reduce an Employee’s Hours?

Under JobKeeper, a Qualifying Employer can direct an employee:

• not to work on a day or days they usually work, or

• work for a lesser period than they would ordinarily work on a particular day or days, or

• work a reduced number of hours compared to their normal hours.

This is a JobKeeper Enabling Stand Down Direction, which, if you are a Qualifying Employer allows you toreduce an employee’s hours as much as you’d like including to zero– although there are some criteria you have to meet.

If you are a Legacy Employer, additional conditions must be satisfied including demonstrating at least a 10% decline in turnover for the previous quarter and hold a certificate declaring this. Legacy Employers employers can use the stand down provisions to reduce employee’s hours provided that the direction doesn’t result in an employee working less than 2 hours in a given day or is not less than 60% of the employees ordinary hours as at 1 March 2020.

To do so, first all you have to meet the rules, and then if you do, the rest of the process is, with Employsure’s assistance, easy to follow through.

Jobkeeper Rules for Reducing an Employee’s Hours

Step 1 – When Can You Reduce Employee’s Hours under JobKeeper

Qualifying Employers

To make a JobKeeper enabled stand down direction, and reduce hours in this way, the rules for Qualifying Employers are:

1. Your business must qualify for the JobKeeper scheme at the time the direction is given

2. It must be the case that the employee cannot be usefully employed for their normal days or hours because of changes to the business attributable to the COVID-19 pandemic or government initiatives to slow the transmission of COVID-19 (e.g. government shutdowns of businesses)

3. The implementation of the direction must be safe

4. The direction must be reasonable in all the circumstances

5. Your business must be entitled to receive the JobKeeper payment for the employee in the period to which the direction applies

6. The employee’s hourly rate of pay cannot be reduced

Legacy Employers

To make a JobKeeper enabled stand down direction, and reduce hours in this way, the rules for Legacy Employers are:

1. Your business does not qualify for the JobKeeper 2.0 scheme but has satisfied the 10% decline turnover test and has a certificate from an authorised taxation agent confirming this for the relevant quarter.

2. It must be the case that the employee cannot be usefully employed for their normal days or hours because of changes to the business attributable to the COVID-19 pandemic or government initiatives to slow the transmission of COVID-19 (e.g. government shutdowns of businesses)

3. The implementation of the direction must be safe

4. The direction must be reasonable in all the circumstances

5. The employee’s hourly rate of pay cannot be reduced

6. The direction doesn’t result in an employee working less than 2 hours on a work day or less than 60% of their ordinary hours as at 1 March 2020

Step 2 – Directing an Employee To Work Reduced Hours

If you and your employee satisfy those rules, then you can begin the process of directing an employee to work reduced hours.

According to the JobKeeper legislation, there are a few things employers need to do before giving the direction.

• Before giving the direction, your business must consult the employee (or their representative) about the direction

Then, after consulting with the employee:

• A Qualifying Employer must give an employee 3 days’ written notice of your business’ intention to give the direction (or earlier, if genuinely agreed with the employee), for Legacy Employers the notice required is 7 days and has stricter consultation requirements, plus for all employers

• The direction must be in writing.

Once the consultation period and meeting is complete, the JobKeeper Enabling Direction can commence on the specified future date.

Recommended Documentation

Employsure recommends that you send each of your employees affected by such a decision two things – a letter of intention and a memo.

The letter should outline the intention of the proposed direction to change of hours and for Legacy Employers should also include when it would take effect as well as effect on the employee, and also offer an opportunity to discuss the change with the employee.

The memo, a more informative document, should lay out more clearly the changes in hours of work, how that will be implemented (if applicable) and what that means for the employee.

If you need assistance with documentation, Employsure can help you. Call us now for further information.