Facebook Live Event 10: Answering Your Questions On The Job Keeper Wage Subsidy

Published April 01, 2020 Views: 6

1/04/20

Ed continues to answer a host of questions about the proposed job keeper wage subsidy, including how it applies to casuals, employees on annual or unpaid leave, and more.

To help your business navigate the COVID-19 crisis Employsure’s founder and Managing Director Ed Mallett is hosting live events on Facebook, to discuss the latest events, burning questions Employsure’s clients are asking and to offer business and management tips. At the end of every session, Ed will answer a few questions that come through the comment section.

Facebook Live Event 10: Answering Your Questions On The Job Keeper Wage Subsidy

  • Transcript

    Ed: Hi, everyone, Ed here. Just checking in with our daily mid-day Livestream chatting to you about all things workplace relations in Australia and New Zealand as we see it, and the challenges that you may well be facing as a business. The observant amongst you will notice I’ve been supporting small business today and I’ve had my hair cut. It was interesting actually having a chat to them about how they’re going. They seem to be pretty busy at the moment which conversely once I left my haircut, I went to try and get my coffee at my local coffee shop that’s decided to shut down disappointingly.

    So this is a sort of really interesting phase I think we’re entering into for small business where despite the fact that say the coffee shop has been told that they don’t need to shut they’ve decided to. There may be commercial pressures for that I’m not one to judge those. But some businesses are now moving to shutting even though they’re allowed to be open. So I’ve said it before, I’ll say it again don’t rush to that for non-commercial reasons, try to follow the government advice rather than going well beyond that, typically if it’s having a negative commercial impact on you.

    If frankly there’s just no sustainable business for you to be doing then I obviously understand the potential of shutting up there. But for what I could see it was a pretty busy coffee shop and I can’t quite understand why they’ve decided to shut down at this stage. It may relate to some of the questions I’ve seen from people saying that their staff don’t want to work, what do they do in that case. I’m just gonna address that quickly before looking at some of the other questions I’ve been seeing coming through particularly around JobKeeper.

    If you’re having a situation where your staff member says, “I know we can be open but I don’t want to work.” Now, typically what they’re doing there assuming they’re a permanent member of staff, they’re refusing to obey the management instruction to come into work at that time. So technically it’s actually a potential disciplinary issue. But in the circumstances, I suspect you wouldn’t wanna be as heavy-handed as that. So you might say to the staff member, no problem, disappointing, we’re doing all we can to ensure social distancing. Excuse me. To ensure social distancing but I understand your view. What we’ll do is put you on unpaid leave during this time. So that would be a possibility.

    If you’re feeling more generous than that you might agree to give them paid leave and allow them to run off any accrued annual leave for example, what they have. And I’ll come back to how that might relate to JobKeeper later on. But there’s not an obligation to put someone on paid leave if they’re saying to you that they don’t want to work because of Coronavirus even though it’s possible either in your workplace or from home, and you are doing all you can to follow government advice on social distancing for example.

    So I saw a few questions coming through last night on that. In that regard, I did my very best to keep up with the questions that were flowing through yesterday in response to the Livestream. It was a very busy day on the Livestream, I think we had the best part of 15,000 small businesses logging in to look at the Livestream yesterday. Thank you very much for your interest, I hope that you’re finding it useful in that regard.

    We had the best part of 1,000 questions as well, so I was doing my best to get through as many of those as I could last night. And hopefully, I got back to you. If I didn’t, let’s blame Facebook because they actually blocked me as a spammer. At about 10 p.m. last night, I was told that I was replying to too many comments and that I needed a break from that or I was gonna be deemed a spammer. So I duly took a half an hour break and then came back and tried to do some more.

    But I didn’t get to everyone so what I’m gonna do today is…because what the prevalent concern at the moment is JobKeeper and how it works rather than moving on to this stage three looking at the opportunities that might be arising for businesses in the context of the COVID-19 crisis. So I’m gonna go through some of those FAQs before turning to the stream of questions already coming through to see if I can help in that regard.

    I found that a lot of the questions I was responding to last night was really reinforcing the starting point which is this is not yet law. So as much as it might frustrate the government for anyone to be saying this, do not rush out and make commitments to people based upon a government press release, it has to go through the legislative process in order to become law. And what you’ll find in that legislative process, however quickly it runs and we’d anticipate it taking a week to two weeks to get through, there will be twists and changes in it. They might be as significant as the opposition questioning whether this can really be paid by the government, it’s a huge sum of money, can they realistically support that financially?

    It might be less substantial than that and you start to look at more granular issues which come up in some of the questions that you have been asking. So classic one would be the 30% downturn the factsheet the press release seems to say that it needs to be measured on at least a month, and it will be relative to March last year. So I’ve seen a range of questions along the lines of is it only March that we can compare it to? Can it be a longer period? Is it done on a cash or revenue basis or even a profit basis?

    Other questions have included that actually I hadn’t started my business in March last year but I am suffering a downturn through to because I’d only just started my business last year, I’m doing better than I was last March, but I’m not doing as well as I was in January and February, what do I do? So a whole bombardment of issues there but the broad question is this is how will the 30% work? Now that’s to be determined but my view is that given the range of issues that we saw coming up in the questions yesterday, there was a huge variety of different circumstances for businesses that what they will need to do is find a way of determining a downturn that uses a broad and pragmatic approach, and doesn’t start to exclude volumes of businesses on technicalities. Because if they do that ultimately the objective of the legislation might be achieved which is to save jobs.

    If we find that people are getting excluded because they can’t quite get to the 30% maybe there are 29% or that actually their March was okay, but their April is not gonna be so good but they’re excluded as a consequence. All of those sort of tripwire issues I suspect will get thrashed out in the legislative process. And my hope is that what comes out is a pragmatic approach which enables people to do what the government is trying to achieve and that is to retain jobs. I don’t know that though, that’s just an opinion and a hope that we will see played out over the next couple of weeks.

    Another regular and interesting question I was answering last night is in relation to visa holders. So very few visa holders will be entitled to receive the JobKeeper benefit, or to put it more accurately you will not receive the JobKeeper credit in response to paying visa holders. Don’t confuse that with not being allowed to employ those people or not being allowed to pay those people, or indeed not being allowed to have those people either on a stand-down or agreed unpaid leave without pay.

    So just to dig into what I mean by that, so the way JobKeeper will work is this, is that if you are either paying your staff salary at the moment wages for work they’re undertaking, maybe wages for things like annual leave that they’ve accrued and are now taking, then you should if you’re a qualifying business get a credit in the subsequent BAS process.

    Now if any of those staff members are visa holders for which you do not qualify for the credit then you won’t get the 1,500 bucks per fortnight for those particular people. In order to protect yourself therefore against spending money upfront for people that you may not get the credit for, you might choose to seek to agree on paid leave with them. It may be that your business has been shut down and consequently, have a stand-down situation for them and you may not pay them the $1,500 because you’re not gonna get accredited. That’s quite different of course to feeling like you’ve got to remove them from your business making them redundant otherwise dismissing them.

    And there’s a big tripwire there which will, I think, impact particularly smaller businesses that we have sponsored employees typically the legislation requires that if they are out of work and removed from the sponsored role, they need to leave the country in a certain period of time. And one of the aspects of that is that the sponsoring business is required to pay for them to leave the country particularly buying for their flight for them to leave. Which could be a pretty expensive thing in current circumstances if you’re having to fly people back to say the UK and so forth if it’s even possible to find tickets and so on.

    So that’s both an administrative and a cost headache that you could have if you misinterpret what this rule means for visa holders. It’s not that you have to dismiss people, it’s simply that the many visa holders won’t be…you won’t be entitled to get the credit by virtue of the application through the BAS system. So you might choose to otherwise not pay them by standing them down or putting them on unpaid leave so that you are not out-of-pocket come credit time.

    So that was another theme of questions that I saw. One of the trickier batches of questions that I was looking through and was educating myself on as I went through last night such as the pace that we’re moving at here, was the question as to superannuation and tax. So the $1,500 is it gross or net? So it seems from the factory that it will be $1,500 gross and that through the BAS process you will be required to pay tax on that at PAYG if it is being paid as wages. And I stress that if for the moment because there seems to be two things envisaged by the government here.

    There seems to be a circumstance in which you have people working for you or they are on annual leave, or otherwise paid leave, and you are paying them sums of money in response to a contractual or award entitlement. Which means that you’re essentially paying them wages. Now if you are paying them wages they will get paid in the normal way there will be PAYG on those wages in the normal process.

    Now in the context of that process, you will receive a $1,500 credit per fortnight if eligible for those people. So, essentially that $1,500 will have tax deducted from it through the BAS process meaning…Let’s use round figures here this isn’t strictly accurate. But let’s say the employees actually are gonna receive $1,000 per fortnight net at the taxation, if it’s wages. The second circumstance that the government seems to envisage is that you will give the employee a sum of money $1,500 per fortnight that is not wages.

    So, for example, they could be on otherwise unpaid leave having agreed that with them. But you say hey guys, notwithstanding that you’re being unpaid at the moment I’m gonna give you $1,500 as some sort of JobKeeper credit. It’s not actually in return for services that you have provided to me, I’m not paying you wages, I’m just giving you that chunk of money because the government is gonna give me a credit for it in time.

    So I’ll come on to the question of how you afford that if your business isn’t operating in a moment in due course. But that seems to be envisaged by the government. The fact sheet says that you are giving the person $1,500 gross but it’s unclear how that is meant to be taxed through the BAS system. Whether you’re meant to consider it wages or not. It seems like it might not be considered wages. And the reason for that is the government seems to be saying in that circumstance you wouldn’t have to pay the superannuation guarantee on that sum of money.

    So you would be paying them $1,500 as a JobKeeper sum of money, you’re not required to pay superannuation guarantee on that. You are if you’re just paying them wages in the ordinary way for work that they are providing to you over and above or $1,500 and above in terms of the amount that you are paying them.

    Clear as mud probably if you’ve got any particular questions on that I’ll try and answer them but the short point is this, the $1,500 is gross, it’s unclear how it will be taxed in the circumstances where it’s not being paid as wages. But it’s just being paid on presumption that you’ll subsequently get the credit. If it’s being paid as wages you should pay superannuation on it. If it’s being paid as some sort of credit it seems like you don’t have to. Hopefully, we’ll get some clarification soon.

    A subset of that question is when you get the credit back through from the ATO will you be taxed on that $1,500 you’re receiving? I’m not an accountant, I stress that you should go and speak to your accountants about this. But my understanding is that that wouldn’t be income in your hands therefore, you won’t get taxed on it as income.

    Related to that someone asked last night whether they would have a problem if they were receiving some form of funding through say a debt facility or some other guarantee at the moment would that be counted as revenue which would impact their ability to show a 30% downturn. Just referring back to my earlier question that I think a broad-brush approach be taken out. I don’t see that as likely to be considered revenue which would impact your ability to show that your revenue is down year on year or over whichever period you’re required to compare.

    So there’s a handful of questions, some other themes that were coming out were essentially how a business is going to afford this. And interestingly actually if you read the questions that were coming through yesterday on the Livestream, the sentiment changed over the course of the questioning, over the course of the day as people watched it and the concept of JobKeeper started to settle in. And it probably reflected my own sentiment as well and I found some of these questions quite hard to reply in a positive manner to.

    At the start of the day…and you’ll remember at the start of the Livestream yesterday I was saying, great, this is brilliant, the government stepped up, they’re really gonna help us out. At the end of the day, I was seeing questions along the lines or maybe they were just statements that were saying things like, “So really the government’s just asking us to do Centrelink’s job? Which is pay out $1,500 per fortnight out of what might be non-existent cash flow at the moment if we’re a business that’s been shut down. To keep someone on our books to stop them going and queuing at Centrelink. And we’ve gotta bridge the cash flow issue between now and when we get that back in BAS in due course if we do, if this gets legislated.”

    And the straight answer, honest answer that I had to give to that is in essence yes. What they’re asking you to do is play your part as part of a bigger economic strategy to keep people on the books. I used the metaphor in my responses last night saying they’re just trying to keep some oil on the wheel so that when it starts turning again it runs more smoothly. If the people are there still employed by you, still on your books, still receiving some form of income from you hopefully, we can be quicker to get back up and running.

    But for businesses that don’t have any cash flow at the moment because they have been shut down or have otherwise had to take the commercial decision like my cafe to stop trading, then that’s very difficult. You’re being asked to pay $1,500 to someone per fortnight which may be above what they were earning by the way. So you might be asked to pay more than you would otherwise have done had you been trading, in order to get that back through the BAS process which may take until May to see the first signs of it.

    And people are saying, “Well how am I meant to do that?” Now a response is look, there are ways of getting small business funding that perhaps weren’t available a few weeks ago. I don’t, you know, yet know how real that is. I don’t know if there really is a flow of credit to small businesses. Certainly, the intention of the government has been to open up that flow. In reality, if you ring your banker today and you ask them for a cash flow loan to support paying someone $1,500 per fortnight for something that’s not yet legislated, I suspect they’re not gonna give it to you for that reason just yet. They might do in a week or two but right now I don’t think you can rush out and start getting loans to fund that cash flow position because the thing hasn’t been enshrined in some legislation that we know is actually gonna stick.

    So the short answer to those businesses that want to know how to fund it, should they get cracking on it straight away, is if you don’t have cash flow and should you get cracking on it straight away, I would wait until this gets enshrined in law. Encourage those employees who have been stood down or otherwise on unpaid leave or shortened hours to see if they can bridge their own gap through Centrelink at this stage. And you will keep in touch with them and once we know exactly how this is gonna work, exactly how you might fund it if you’re inclined to do it then you’ll get back to them.

    That’s a frank view, I know the government probably won’t like that, I know the government wants this to have an immediate impact on businesses. But I think that it would be careless of the business owner at this stage who should be in a cash preservation mode to start paying out money that it doesn’t know that it has or will even get back.

    So that was another, I suppose, throbbing set of questions for businesses in this process. I think a few people asked something allied to that which was can we just not pay it yet and then pay it once the government has credited us? And the answer to that is no, because of a chicken-and-egg situation which is you’re only gonna get the credit if you have paid the wages or paid the sums of money to your employees. So you won’t be able to put on your BAS statement that you intend to pay those sums of money once you get the credit. I could be proven wrong in the legislation on that but that seems to be the way the government is trying to get this to work. Because what they’re trying to encourage the employers to do is to keep people on their books.

    So those were a few of the main questions. A few people were confused by what to do if there is more than one employer for a casual employee. I was confused about that as well when I was doing the presentation yesterday. The position once I researched it further is this, is only one employer will get the credit. Which employer that is isn’t clear at the moment, is it gonna be the person who has the most hours undertaken by the casual? Is it going to be the first person to make an application? I don’t know, that will need to be clarified, that’s exactly the sort of thing that will need to get debated as this gets legislated.

    So those were the main questions, I can see though that as with yesterday there are a flood of questions coming through. I’m going to do my best to answer some of those now, Stu.

    Stu: First up from a client Sydney Dogs and Cats Home we are a not-for-profit. Yeah and we’re unclear on how to shell it down to a 30% gross income. Will that include donations and bequests or whether donations and bequests will be excluded from that calculation?

    Ed: So, first of all Sydney Dogs and Cats Home one of my favorite clients. I shouldn’t play favorites but have been a client of ours now for a long time and are very proud to be associated with them. So the question was as a not-for-profit how is the 30% downturn going to be calculated? Again no clarity at the moment. The hope and plea in a way to government is to use a pragmatic approach here. Not all businesses run on straight cash, some will have bursts of donations, it may be that March is a strong period of donations but April isn’t. There’s all sorts of reasons, particularly in charitable organizations who’ll be affected by things like end of financial year where those that are in a position to donate maybe well backload that towards the end of the financial year. So coming into that period in Australia that your numbers might look artificially good at this stage.

    What I can say is that there is great concern in the charitable sector which would be no surprise to anyone in there as to the impact of this on people providing donations with a double whammy of course, that people diverted a lot of their own resources to donating for bushfires and related causes. And so a lot of charitable causes were already suffering from donation dips and are only gonna get hit again with that.

    Stu: From Sarah, if we need to reduce staff hours due to lack of business and the full-time staff members refuse to accept the proposed reduced hours what is our next step?

    Ed: So the question is if you are needing to reduce hours or cost and the full-time staff members are refusing to accept that. Having thought that maybe just about everyone would be in some form of shutdown this week in Australia, it doesn’t seem to be the case, so you may still be able to operate. Now what you would need to be doing is negotiating/consulting with those staff members. So you should be sitting down with them and trying your hardest in a positive way and really stressing and emphasizing the need to communicate well through this not just to try and bang home the point and say if you don’t take this then you’re all gonna end up without a job.

    That’s not the way you tend to get these negotiations successfully done, you need to try and be as open and transparent as you can with staff members about the problems that your business is facing. This is what the downturn in revenue looks like, this is consequently the cost gap that we need to bridge. If we can do this and if the crisis is only for x period, then we should come out the other side and we’ll all have jobs. If not then we’ve got a problem and that we have to take more drastic measures to cut costs which might include redundancies.

    Now, the problem that you might have in situations like that is there may be full-time staff members that quite want redundancies at the moment. Maybe they’re taking a reasonably short-term view on this, they’ve got quite a decent length of continuous service and might see it as a financial benefit to be made redundant right now. So you will get into tricky situations like that where you’re gonna have to work out what to do if someone is simply refusing to take those reduced hours, but you can’t force them to do it.

    Stu: From Paul, the big question is as an employer but also an employee of the business do we qualify for the jobseeker incentive payment of $750 per week?

    Ed: Question was from Paul, as an employer and an employee do we qualify for this 750 per week 1,500 for fortnight JobKeeper? And the position I’ve been taking on this…I got asked this in a few different ways, what about directors, is one version. What about if I’m an employee of my business? The answer that I’ve been giving is this is that if you are getting paid through payroll which will be reflected in your BAS and your single touch payroll, you should if all other qualifying factors are there receive the credit back through for yourself.

    As to sole traders, there’s also going to be a way for sole traders to nominate a name who should be getting the credit if they can show that they…if they have suffered a downturn in business. I got asked quite a few times about sole traders with employees, it seems that in that case what will happen is that the employees they will be considered like a Pty Limited entity. And I say it seems, I stress this might be clarified and essentially anyone that’s on the payroll will become eligible if the criteria is satisfied. It’s not clear if then on top of that the sole trader themselves will be able to nominate themselves for the 750, 1,500, that’s hopefully gonna be clarified in due course.

    Stu: From Kathy, can we select which employees we want to bring back to work to pay this JobKeeper payment? Two, we will most likely need a gradual return to work process for our business.

    Ed: So Kathy asks a great question though this is actually one of the ones that was quite prevalent last night. Can we select the employees that get this? The answer is yes, because…and really to emphasize you’re gonna be the one paying wages and/or simply paying some form of JobKeeper credit at this point in order to recover that through your BAS later. What that means is you need to run your business as its business needs require as its minimum. So you might need as Kathy does to phase people back into work, bringing them back off unpaid leave say and you phase them back into work. And as they’re phased in to work if they qualify, if you qualify you’ll end up getting the credit through the BAS system in due course.

    That doesn’t mean we have to phase everyone back in and start paying them all straightaway if that’s not what your business requires. There is a world in which the government is encouraging people to start giving people the $1500 whilst on unpaid leave just as a sort of generous credit on the basis that they will eventually get it back from the ATO.

    You don’t have to do that and I really stress, this is not something that you are obliged to do. There’s been some murmuring from Prime Minister Morrison about some sort of moral contract, this isn’t to position myself as someone that’s amoral in any way. But ultimately you’ve got fiduciary duties to your business and you need to consider those first and foremost. You can’t start chucking around $1,500 credits if you can’t afford that from a cash flow perspective.

    Stu: From Anusha, can you also speak a little bit about annual leave while on the JobKeeper?

    Ed: Anusha asks what about annual leave whilst on JobKeeper? This is one of those areas too that will need to be clarified but I’m gonna stick my neck out a bit. Annual leave, if paid, so assuming this is an agreed unpaid leave, is a form of wages. Now, those wages will reflect in your payroll and as I understand it people that are being paid wages you will see a credit against that payroll for $1,500 assuming they’re earning at least that. So it should be the case if they’re on annual leave, sick leave are being paid wages even if those were accrued as entitlements then you should get that back as a credit. But that may be clarified in due course.

    Stu: May asks what if you have no work for your employees?

    Ed: May asks if you’ve got no work for your employees. So assuming you’re in some form of shutdown either because the government has enforced it or sales have run dry and therefore there’s effectively no point in running the business. Then your employees would either be stood down or you would be seeking to agree with them a period of unpaid leave ideally. Now, in that case, the government is saying if they are stood down or on unpaid leave we would like you to pay the $1,500.

    But I stress again you don’t have to do that, you may not be able to afford it, either because you don’t have the cash flow or you’re not able to get a loan. You might not be willing to get a loan there’s not a requirement that you go out and leverage your business in order to do this. And it may be simplest to say to your employees look, I need you to go Centerlink on this basis, go and see what happens there. Let’s keep in communications if this becomes clearer as to how I can fund it then we’ll talk again.

    Stu: We’ve touched on this one before but it’s worth touching on again. From Stephanie, if I have casual staff who only work one day per week, and for example let’s say their normal wage is $200 per week, do I still apply for the $1,500 JobKeeper payment or just apply for the $400? And who is the best person to apply, the business owner, the bookkeeper, or the accountant?

    Ed: This sounds like a bad joke doesn’t it? There’s a business owner, a bookkeeper, and an accountant you only need an employment relations advisor to make a total joke. So the question was someone is earning $200 a week which is less than the 750 per week 1,500 a fortnight what am I meant to do? What the government is envisaging on this is that you top-up that money to the 750 a week 1,500 a fortnight, and essentially you breach the cash flow gap and the government then credits you for the 1,500 in due course.

    So it’s asking you somewhat perversely to be honest to start paying out more money to those people at this stage. Some people have said, “Can I get them to do more work?” Yeah, you can ask them and negotiate that and agree them. Someone quite rightly said last night “Who on earth would do more work if they’re gonna get paid 1,500 for just doing their old hours?” That might be true, you might find people a bit more community-spirited at the moment and help out. But you’re meant to bridge that gap, top it up as the government is calling it and you’re meant to fund it.

    Again, you don’t have to, so if you don’t, if you only pay the 200 then you won’t get that credit in due course because what they’ll see through your single touch payroll is the I’m not paying at least 1,500 per fortnight to that person.

    Stu: From a client, Harvey…

    Ed: Sorry just to cut across there. I was asked who’s the best person to apply. That will become clearer I suspect you’ll be consulting with your bookkeeper or accountant as well. But hopefully, the application process will be simple enough for us business owners to do as well.

    Stu: From Harvey a client. If we have an ATO debt will the credit come off that, or would be paid to us to pay staff?

    Ed: So asked if there’s an ATO debt what happens, will the credit be put against that or will we actually receive it? To be determined, I suspect, Harvey, two things on that. In principle, I suspect it will just set off against whatever the ATO debt is, because I don’t think you’re gonna get cash in hand from the $1,500 it will just be that whatever your tax bill is will be reduced as a consequence. So I don’t expect to actually get money physically paid to you. So if you’ve got a debt it may be that it’s just set-off against that.

    But I do know that the ATO is taking…they’re pretty open and proactive view as to who they will speak to about how and when you pay your tax. I presume that goes to any debts as well. So it might be worth contacting the ATO in due course about that.

    Stu: From another client Carol from Viking Plastics. We have staff on reduced hours, the staff are now asking can they go back to full-time hours now that we’re getting $1,500. How do we deal with this when we’re not sure we will even get the $1,500?

    Ed: Another client, thanks Carol from Viking Plastics. The question is we have staff who are on reduced hours now asking if they can go back to their full-time hours. What do we do given that we don’t know if we’re actually gonna receive the 1,500 bucks. The answer is you ask them to wait just as you’re having to wait. Keep the status quo of the reduced hours at the moment. Assess your business needs as well does the existence of the $1,500 credit actually mean that they’ve got the work to do? Is your business being limited by the reduced hours at the moment, or is that just a reality of the downturn that you don’t have the work for them to do.

    Because if you don’t have the work for them to do and you essentially boost them back up to full hours with the $1,500, it’s not really gonna be a credit to you, you’re gonna end up getting that money across to them and still paying out at the lower level of the wages. What you can do in course keep them on the reduced hours but still get the $1,500 credit in due course which would be obviously a benefit to you as a business owner and not just a benefit to the employee.

    Stu: An interesting one from Glenn. What if your March revenue is down by the 30% but then your April, May, June, July, August, and/or September months are back up, do you continue to get the Jobkeeper? Or once eligible are you automatically eligible for the whole six months?

    Ed: So Glenn asks essentially how they’re gonna keep working out whether you’re on a downturn and is it once you’ve got it you keep it or do you have to keep notifying? I love your optimism Glenn, I’m very pleased to hear that, it’s almost gonna come roaring back after March. But the answer to that seems to come out from what they say in the fact sheet as regards to sole traders. That the sole traders is gonna be required to consistently update and essentially self-certify their downturn with the ATO. I think it talks about them doing it monthly I suspect a similar arrangement will be made with Pty Limited and other organizations as well where you have to continually explain whether you are suffering a downturn. However, that is going to actually be measured.

    Stu: We’ve covered this part worth covering again. From your automation innovation can you reduce people’s hours or salary down to the $1,500?

    Ed: Can you reduce people’s hours or salary down to the $1,500? Only if they agree that. Something I said yesterday as well I’ll just reinforce today that this isn’t any sort of carte blanche or sanction, or opportunity to unilaterally reduce hours, or indeed get people to work existing volumes of hours for just the $1,500. You’ve still gotta pay minimum wage, you can still only vary people’s contractual terms by mutual agreement. So you can’t reduce it on the basis that all you’re gonna get is the 1,500 bucks, therefore, that’s all I’m gonna give you.

    Stu: From Amy, we are a partnership and have employees, we do not draw a wage for ourselves, are we eligible for any payments the whole JobKeeper, etc.

    Ed: Amy the partnership with employees who ask if she’s eligible for any payments if there’s a downturn. To be clarified, Amy, it seems clear that this isn’t just for Pty Limited so in respect of your employees you should get it. As to yourselves if you’re not on payroll as it seems you’re saying it’s to be clarified as to whether you will be entitled like say sole traders are to nominate yourself for a payment. It’s not clear at the moment that’s the truth.

    Stu: From Carrie-ann Thurley. Ed, equal payment is causing trouble already amongst my staff, some are already complaining they work double the hours of others and are going to be paid the same. Any tips on how to deal with this?

    Ed: Staff starting to be frustrated about not being equally treated getting paid in different ways. So I saw a few questions a bit like this and I suppose it goes down to the can I choose who to get JobSeeker to and so on. So a few sessions ago we talked about the different hats you wear. And one of those hats is you as a fiduciary or business owner and needing to operate in the best interests of the business. You then have this second hat which is you as an employer and you may have a particular social stance as to how you wanna look after your staff. Whether you wanna treat them all in the same way and so forth.

    And the balance under the law is that you need to first and foremost consider your position as a fiduciary, and you need to work out what the needs of your business are. And that includes the financial constraints that may be arising because of any downturn. So on that basis, you need to look at your cost with your employees and manage that appropriately.

    Within that context as well, you need to have the business operating successfully as far as it can. I think you’ve gotta be a bit careful not to be opportunistic to say okay, that person will accept to reduce salary so I’m gonna do that there. And I’m gonna reduce them but ask them to do this still but I’m not gonna reduce that person’s over there even though they’re doing the same job. Maybe they’ve got kids and I think I wanna be fairer to them.

    I think you need to be very careful about making very subjective decisions like that. My recommendation would be to keep things as objective and non-personal as possible. Try and avoid getting into the personal details of particular circumstances of people because that’s where it’ll start to cause friction with staff.

    Stu: Joe asks I have a casual who has been employed for nearly two years but left for three and a half months to work interstate and then came back, are they eligible for JobKeeper?

    Ed: A casual who has been around for two years I think it was but they left for three and a half months and they’ve recently come back, are they gonna be eligible for JobKeeper? So the only wording around this is at the moment is that they need to have been regular for 12 months what regular is, is yet to be determined. In other aspects of employment relations regular is just a question of fact. And you look at all of the circumstances it doesn’t necessarily mean you’re working a certain number of hours a week or that there’s a consistency to those hours. It’s very hard to have a particularly yardstick. So we’ll have to see what the government says as they legislate this. But it may be that that kind of example is included but that will hopefully be clarified in due course.

    Stu: Mark asks what if a casual employee was employed 11 months ago will they be entitled to JobKeeper in one month’s time?

    Ed: So they were employed eleven months ago, will you be able to from April say that they’ve then done 12 months? Again to be clarified sorry to sound a bit vague on this. But it seems to me that this whole point as to when you need to be employed and how long you need to be employed as a casual is gonna need some serious clarification. Because saying that you need to have been employed as a permanent staff member full-time, part-time on 1st of March seems relatively arbitrary. And what they’re gonna have to make sure they don’t have is a set of arbitrary rules which ultimately undermine the legislation and mean that people lose jobs because of tripwires within the legislation.

    So those are sort of things that do need to get thrashed out in a legislative process so that when it comes to it, we can all actually perform what the law says and not have the myriad of questions that we’ve got today.

    Stu: From Harvey, we’re a small company two staff, two directors in a limited company. Can all four claim JobKeeper?

    Ed: Harvey says limited company, two staff, two directors, all on the payroll by the sounds of it, can we all claim JobKeeper? Yes, if you otherwise qualify if you’re all employees on the payroll you should receive credits against all four of those people if they otherwise qualify.

    Stu: From Haley, does a 12-months employee include maternity leave?

    Ed: Good question Haley. Haley says does a 12-months employee include maternity leave? Now, remember the 12 months only applies to casuals, regular casuals. So typically you wouldn’t have been on a period of parental leave per se as a casual if you’re a true casual you just simply wouldn’t have been taking work during that time. Consequently, I doubt that that person will have the 12-month continuity that they’re talking about, but they may seek to cover off those situations we’ll see.

    If you’re a permanent staff member you don’t need the 12 months to…you just need to have been employed on the 1st of March you don’t need the 12 months if you’re a permanent staff member. So if you were, say, on parental leave on the 1st March, you would still have been employed by the company on that date even if you’re not receiving payment from them at that time. So you should be when you come back to work and are back on the payroll the company should get credit for you at that time.

    Stu: From Natasha, we’re a small business and due to everything going on we had to make a staff member redundant as her role was no longer required and there was no work for her. I have since emailed asking if we can reemployment them under the new JobSeeker scheme. Do we have to re-employ them?

    Ed: So someone’s been made redundant and the question is they’ve come back and said, hey JobKeeper now exists can I come back to work? Do I have to reemploy that person? And the answer is no. You don’t have to reemploy them at all, we don’t know JobKeeper is going to be as it says on the tenet this stage. So the response would be a polite we don’t yet know the circumstances, we will consider that request as and when things become clearer. And you may well consider it once things do become clearer. Who knows in two weeks’ time we could all be going back to work and you may need that person. But for now, don’t burn the bridge but be clear that unfortunately, you’re not in a position to reemploy them at this time.

    Stu: From Lish, I had a beauty salon and obviously forced to close. With the JobKeeper, am I able to ask my two staff to return, and do things like training, procedure, advertising, etc. They usually work 38 hours but I wanna propose 15 per week, am I able to do this on the $1,500?

    Ed: Great question from Lish who runs a beauty salon, she’s currently in shutdown but says well you know what, if we can do JobKeeper, if I can afford to pay my staff for some hours, I wanna bring them back not on their full-time arrangement, but I wanna bring them back on 20 hours is the suggestion. And consequently, pay them for those hours and then recoup via JobKeeper. I think Lish is a classic case study of what this is good for. She says look, I have got work to do, I don’t just wanna chuck $1,500 at someone who’s sitting on stand down and then try and recoup it for them in due course. What I wanna do is bring them in and start looking at this next phase of the business the opportunity phase. I wanna sort my marketing out, I want to get myself planned for when we get up and running again and they can do some gainful work for me there.

    Yep, bring them in, negotiate with them to come back on the 20 hours. My hope is that they would see the sense in that in order to recover some income. And then you go from there and recover their $1,500 against each of them per fortnight in due course.

    Stu: A question related I guess. From Nicole, what if you predict a 30% drop in April turnover and keep staff on during that time but the turnover drop ends up being only 25%?

    Ed: So Nicole asking what if you’re expecting a drop of 30%, you carry on paying your staff, you end up doing better than you thought you would. On a strict interpretation and what seems to be happening then it seems like you wouldn’t then get the credit. But again my hope is that they take a pragmatic view as to how they calculate the 30%. It seems reading between the lines on the fact sheet that there’s gonna be some level of self-certification saying I think this will happen to me therefore I’m going to seek to claim it and hopefully then you will be able to recover it even if it does not happen to you. But I can’t promise that, we’ll have to wait and see.

    Stu: From Jase. I’m a business owner, I’ve stopped paying myself to keep my business open. Can I get JobKeeper?

    Ed: I’m a business owner and I’ve stopped paying myself to keep my business open can I get JobKeeper? If you run payroll that should be possible. If you’re not and you run for a Pty Limited then no. If you [inaudible 00:47:25] you would just taking drawings from the business then it seems not or getting some other sort of fee. But if you’re on payroll then it should be but you will need to pay yourself today the $1,500 in order to receive the credit in due course. You don’t just get cashback from the ATO through BAS.

    Stu: Ed, this is another one related to a question you’ve answered a little while ago but related. From Melanie, I had a casual employee employed longer than 12 months who was extremely valuable to my business at this time. Can I provide this if she is employed full-time elsewhere? The full-time position is likely to remain secure through this COVID disruption.

    Ed: So it’s an employee that works full-time elsewhere is seemingly getting paid full-time elsewhere and can I provide JobKeeper to them as well? The answer is they can only get JobKeeper from one employer and I suspect it will go through the full-time employer. But how they’re gonna determine which employer gets to claim the credit I’m not sure.

    Stu: From Lesley-ann, what if an employee has been casual for eight months and the last two months became a permanent part-time employee. Are they eligible as they are now officially part-time, or not eligible as they haven’t been employee for more than a year?

    Ed: Two months ago it sounds like they went part-time so yes, they’ll be eligible because that would be the 1st of March. I’ve been asked this question in a range of ways including what do I do if I’ve got a casual that’s under 12 months but I want to give them JobKeeper, can I turn them into a part-time or a full-timer now? My answer to that has been maybe, I don’t know if they’ll close that loophole to stop that happening. Remembering they want people to stay employed that’s the whole purpose so maybe they won’t close that loophole.

    But be aware if you’re changing people from casual to permanent, that’s a permanent staff member on your books accruing entitlement, so you have to then pay for and you have all the challenges if you’re downturn continues longer than you think it might. Be very careful of binding yourself to extra costs in your business now that you may well not need. So do that with caution. I think again remember the hats you wear. I know the government is saying to us that we’ve got these moral obligations and societal obligations, and I buy that to an extent. But the law also says I’ve got fiduciary duty to my business and to the shareholders in my business, and that’s my first duty and I have to be careful not to confuse that with these social obligations.

    Stu: From Emma, can you choose when you take this offer up, for example, can you pay a team member some annual leave out and then choose to use the JobKeeper initiative three or four weeks down the track?

    Ed: Emma asks can you choose when to kick in on the JobKeeper, can I pay annual leave and then later JobKeeper? It may be that you get a credit against annual leave, Emma, so it’s to be confirmed. But it may be that if someone is being paid annual leave at the moment you will still get the 1,500 bucks against them. Frankly speaking, you want to get as many credits as you can. So you don’t want to, unless you’re prevented from doing so, pay out wages whether it’s leave or otherwise without the credit.

    Stu: A few following this one Ed. From Michael, if there is not enough work for an employee and I want to retain them, do I put them on leave or do I have to pay the $1,500 anyway?

    Ed: If there’s not enough work for an employee and I want to retain them, do I put them on leave and if so do I have to pay the $1,500 anyway? A few things bundled up in that so ignore the one to retain them for a moment. If you haven’t got enough work for someone and there’s not a true stand down situation then you would seek to negotiate reduced hours, reduced pay, alternatively unpaid leave for that staff member.

    So let’s assume you get an agreement with them that they go on unpaid leave, you would then determine whether you want to pay JobKeeper to them, the 1,500 bucks per fortnight for not doing anything essentially. That’s quite a good retention tool but it’s also coming out of your cash flow until it’s recouped from the ATO. So be careful about that, you know, ask yourself whether that $1,500 is really going to be the retention tool that you want it to be because you’re gonna be bridging your cash flow position between that payment until the ATO pays it back.

    Stu: From Evelyn, if an employee was given a letter of offer on or before the 1st of March, and didn’t commence work until the 16th, would they be eligible for JobKeeper?

    Ed: On its face, no they need to have been employed on the 1st of March, but again this is the sort of thing that needs to be thrashed out in the legislation. Good. So, guys, we’ve been going the best part of an hour, the questions as ever are coming thick and fast, we’ll do our best to address them including if we feel that they’ve been addressed during the podcast…sorry the Livestream, we’ll reference back to the point at which you need to listen to.

    As ever, Employsure here through our hub employsure.com.au/coronavirus. employsure.com.nz/coronavirus. I’m conscious that we’re focusing a lot on Australia at the moment, our clients in New Zealand are in a very different situation right now they’ve been almost fully locked down. Business so far as possible is continuing but safe essential services are needing to be done from home. So we’re monitoring that situation as and when anything new arises there we’ll address those things through here. But for the moment guys, if you do need our help in New Zealand just make sure you reach out. Thank you, guys, we’ll see you tomorrow.

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