Facebook Live Event 12: Job Keeper Wage Subsidy Repayments

Published April 03, 2020 Views: 5

3/04/20

In a pre-recorded session today, Ed formally goes over some of the questions that have been coming in thick and fast this week. Particularly, he discusses which businesses will benefit from the job keeper scheme and the businesses that will not be suitable for the subsidy.

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 12: Job Keeper Wage Subsidy Repayments

  • Transcript

    Ed: Hi, everyone. Ed here. You will see that I am dressed up for you today. And the reason for that is that, unfortunately, I’m not live to you today, I had a preexisting commitment I need to go to, which has meant that what I’m gonna do today is provide a short video, answer some questions that we’ve seen coming up again and again, and then we’re going to…I’ll explain in a moment and maybe get any further questions answered.

    I should add before I launch into some of the updates that I’m dressed this way, not because I’m on my way to a wedding nor pleasingly am I on my way to a funeral. I can say that with absolute certainty because I’m neither in anyone’s top 5 or top 10 contacts and, consequently, wouldn’t be able to attend those events at this time.

    So possibly too early for COVID-19 gags, so apologies for that, but maybe a bit of a dark humor through this time might help us. So, as I said, I’m gonna do a short video, give you some updates on some issues that seem to be troubling people, give you some updates on what’s come through the system overnight. I’m then gonna answer a couple of questions that we’re seeing. Stewie is here to fire a couple of questions at me. And then finally what we will do is keep the live stream open and we will enable you to carry on answering questions live. And we have got some advisors, our top guys ready to give you great advice through the responses on Facebook. And we’d urge you to ask those questions and they’ll get back to you in that channel.

    So, overnight, one of the things that I have seen is this, is I was looking at the questions from various live streams this week. And one question that came up that needs answering, and I know a few of you were following, was that there was a suggestion from one of our watchers on the question of JobKeeper, that they had spoken to the ATO, and that there was not a requirement to pay JobKeeper and subsequently claim it back through BAS.

    Now just to really get to the bottom of that question, it’s a really important one for us, all of us, in this process. I have read that question as having two sub-parts. The first part is a suggestion that there is not a requirement to pay JobKeeper, that is absolutely true. You do not have to pay JobKeeper. So if you have someone under $1,500 a fortnight who is still earning a wage, you are not required to top them up to $1,500, you just won’t subsequently get JobKeeper back from the government as a result.

    Equally, if you’ve got someone on unpaid leave or they have been stood down and they’re currently earning nothing, then you are not required to now start paying them $1,500 in order to claim it back. The government might hope that you’re gonna do those things, but there is not a requirement.

    A lot of people are saying, “Why would I do those things?” And the answer to that is this, is that the government hopes that essentially we’ll all play our part in a bigger picture in retaining staff, so that when we all get back up and running properly, that they’re accessible to you, they’re still on your payroll and so forth. So just to be absolutely clear, no obligation to pay JobKeeper.

    The second part of the question seemed to be a suggestion that the person asking the question had spoken to the ATO, and the ATO said that you wouldn’t get the money back through BAS. My presumption being that somehow else it would be paid directly to the employee or something else. So I have gone back in a response to that question, I’ve looked at all of the fact sheets available, everything else I can find online, any commentary, anyone else providing advice on there, seeing if I’ve got a different view to anyone. I’ve even tried to ring the ATO, a fat chance of getting through to them, frankly.

    And the reality is this, everything that I am seeing says you need to pay the sum of money, if you choose, you need to pay the sum of money now, either through wages because they’re already doing at least $1,500 worth of work for you or through a sort of a JobKeeper payment to those who might already be on unpaid leave, and you will subsequently get that paid back. And the government, the treasury is being absolutely expressed in this, you will not get your first payment until May.

    So that being the case, I cannot see anything that suggests that you won’t be getting this back from your BAS. So the sort of questions that we’ve been having about, “Hey, can I just not pay anything and then just claim it back, then hand it straight over to my employees?” The answer is no, you will need to show that you’ve made those payments in order to recover it through your BAS.

    So, in reality, there’s a lot of people have been suggesting, small businesses are, in effect, being asked to bridge the gap between the government and your employees. They’re essentially being asked to provide, in some circumstances, a sort of cash flow loan to the government. I don’t say that to be inflammatory, but that is the reality of the situation.

    And when I say the situation, I mean this. So I look at JobKeeper and I say it is good for some people, it’s not so good for others. The group of people that it is good for, the group of businesses that it is good for are those that are still operating and have their staff operating at usual or maybe even reduced levels, but over the $1,500 per fortnight requirement and they still got work they need doing.

    So you’re already paying wages, what’s gonna happen is that subsequently you’re just gonna get some of that money back from the government, so it’s gonna help you out. I’ve used the figure, hopefully not too confusingly, I’ve said that roughly, at my workout, is about 30% of your wage bill, that’s a very rough back of an envelope number based on the fact that I’m getting 3 grand a month, might be about 30% of the total cost of employing someone. That’s probably more than 30%, in fairness, when you factor in median incomes, part-timers, and so forth.

    So it suits those businesses that are still operating, still paying wages, and can recover some of it subsequently from the government. Those that it does not suit, my view is, are those businesses that currently have staff members that they have put on unpaid leave, agreed unpaid leave with them, or they have stood them down in accordance with the narrow definition of stand down and then subsequently not paying them anything or maybe paying them less than the $1,500 a fortnight.

    Now those businesses are essentially being asked to now dip into their own cash flows to pay extra money out, pending a refund from the government. So, for me, that doesn’t strike me as a good scheme for those businesses in a world where, as I’m urging you to do, you should be preserving cash. I don’t think that many people are gonna be in a good position if their business has been shut down or there’s been a significant slowdown to start adding cash to their bills.

    There’s been some suggestion that you can go and get loans for that, you can, and good on you if that’s how you’re feeling towards supporting your staff in order for them to get JobKeeper. Remember, they can go and get JobKeeper separate to that, so don’t feel some sort of moral compunction to do this. The reality is that with your hat on, that says, “I’m a business owner, I’m a director, I have duties to this business,” I don’t think that dipping deep into your cash reserves in order to pay extra money is the right thing to do at this time, particularly when it hasn’t been legislated yet.

    So a couple of points, clarity on JobKeeper, and then I’m gonna take a swerve over to a particular industry, which is, childcare had a big update overnight, not just childcare but also afterschool care and holiday care as well. There’s a suggestion from the government that they are going to pay. And I say suggestions, this sort of thing again will need to be legislated to amend the existing legislation, that they will pay 50% of a childcare center’s income pre-crisis.

    So bearing in mind that my understanding from what I’ve read is that a childcare center, typically 60% of their income goes to wages. So if a childcare center was operating at pre-crisis levels anyway, so they were still having that flow of people through the door, but they weren’t receiving any income from the parents, they would be getting 50% from the government, but they might not be able to afford that because they’d be paying out more than that in wages.

    The reality, of course, is that most childcare centers, assuming they’re open, are working at reduced capacity at the moment. Less people are sending their kids to childcare so they’re gonna get paid 50% of pre-crisis attendance, that should be enough to at least pay the wages and potentially the rents coming through as a result of whatever work they’re needing to do.

    And they’re encouraging people, particularly in essential services, people that still need to be working, is the way it’s described, to send their children to childcare centers and for those childcare centers to stay open. One of the questions that will logically arise from that is, how does that work with JobKeeper? The indication, so far, is that JobKeeper is still available to childcare centers and the like. And consequently, you should carry on paying your wages, you will get this additional subsidy from the government, and you will get JobKeeper back if you qualify from the government in due course.

    So that is a situation in a fast-developing environment in childcare, a big, big boost for the industry. The encouragement from the government is to keep your centers open so that people can access them and the wheel of the world can keep turning so that the economy keeps moving. So those are a couple of the big updates from me. There’s also some themes coming through in the questions, I’m gonna seek to try and answer via some questions posed by Stewie, if you could.

    Stewie: Sure. There’s actually some clarity required around the proposed pandemic leave and would that be available as a new entitlement in addition to annual leave, personal leave, and long service leave, and also JobKeeper. If pandemic leave goes ahead, which entitlement would actually take precedence? Is it up to the employer or the employee?

    Ed: So pandemic leave is very, very narrow on a stress type of leave. Okay. It’s been set up purely and it seems like if it hasn’t quite been legislated, it’s well on the way, so it looks likely to come in. A few things to say about it, very, very narrow, it is designed purely for this situation. A situation where an employee is fit to work but there is some government advice or restriction which says that they should not attend work. So it may be, for example, that they have…they’re in a required quarantine or isolation following travel.

    Now, that being the case, you, as an employer in ordinary circumstances, would be saying, “Well, hang on, you should be at work. You’re not. That’s not my fault, it’s your fault.” And some employers, it’s presumed, hence the reason they’ve gone for this leave have been saying, “Okay, staff, you’re no longer employed by me.” So what the government has done is put this thing called pandemic leave in, essentially, to stop those employers from dismissing people, discarding people, whether they’re casual, part-time, or full time. Interestingly, it covers all types of worker or employee. They put it in place to stop employers removing people from their workforce because they haven’t been able to turn up to work because it’s something that government has said, notwithstanding that they are fit to work.

    So two things to say about that. I’m not saying many employers are doing that, to be honest. Most employers are actually being more generous and they’re paying those people sick leave, letting them take out paid annual leave. Pandemic leave is unpaid, and it’s really there as a protective measure. It doesn’t apply to everyone, just to 103 awards. You’ll need advice if you need to talk about pandemic leave with your staff. But the reality is that it’s this very narrow thing that is really just designed to stop employers from firing people, not really to give a benefit to employees.

    Stewie: A multifaceted question from Wayne, overnight. With the number of casuals who would be entitled to the $1,500 JobKeeper payment per fortnight, which is considerably more than they would normally get paid, our workers’ compensation renewals, if JobKeeper is classified as wages, would also dramatically increase?

    Ed: Yes.

    Stewie: And also, if superannuation is payable, can these business costs be factored into the net pay to the employee?

    Ed: Could we just break those down, Stewie? We’ll the first one and then we’ll come to the second one.

    Stewie: With a number of casuals who would be entitled to the $1,500 JobKeeper payment per fortnight, which is considerably more than they would normally get paid, our workers’ compensation renewals, if JobKeeper is classified as wages, would also dramatically increase? That’s a question.

    Ed: So the question is, you’re paying top-up because your casuals don’t earn $1,500 a fortnight, you’ve chosen to participate in JobKeeper, so you’ve chosen to pay top-up. Will that be calculated when it comes to your workers’ compensation work cover renewal as part of your wages for the purposes of calculating your premium? The answer it seems, and I stress it seems that we legislated is that that top-up is not wages. Oddly enough it is in some circumstances, but if you’re topping up, it’s not wages because you don’t have to pay super on it, so the presumption is that basically what you’re doing is facilitating this government scheme, you’re not actually paying wages to the employee over and above what their core wage was. So let’s say someone was getting paid by you 500 bucks a fortnight, that part is wages and that’s what would go into the calculation of your workers’ comp renewal policy, the extra grand doesn’t, on my understanding.

    Stewie: And then, I think, you’ve actually answered the second part of the question, which I’ll repeat to you also, which is, also, if superannuation is payable, can these business costs be factored into the net pay to the employee?

    Ed: So on a top-up, superannuation is not payable. You can choose to pay it, but it’s not payable according to the guidance given so far.

    Stewie: What do we know about employees who may be on work cover payments? Would those employers, employees be eligible for JobKeeper?

    Ed: So if they’re on work cover payments, that’s something that if they’re already on it pre-crisis and they continue to be, so that’s a matter between them and the insurer, the JobKeeper or even the JobSeeker allowances wouldn’t trump that arrangement.

    Stewie: Must an employer notify the employee that they had been nominated for JobKeeper?

    Ed: So the question, is there an obligation to tell the employee that they’re gonna get JobKeeper, essentially? So to those that were getting 0 or something below $1,500, it’ll be fairly plain, obviously. So suddenly getting this lump of money in their bank accounts from you, they want to know what it is, so you’ll need to communicate that. For those that are not, there’s no obligation to say, “Oh, by the way, as part of your income, I’m now recovering that portion from the government.” And I don’t believe there will be because it’s not the employee ,in that case, the case where you’re still working, you still have the employees needing to do at least $1,500 worth of work per fortnight, and what you’re essentially been doing is part of their income has been funded and you don’t need to disclose to them that that’s occurring.

    Stewie: Overnight, a question from Linda. If we are advised to shut down, can we stand down our factory staff but have our office staff work remotely, and would we be able to access JobKeeper for office staff who are still working?

    Ed: So in a stand down, shutdown, and consequent stand down situation, then yes, you could have your factory staff stood down, you could have your office staff just still working. In fact, as part of a stand down procedure, you should consider whether there are alternatives to stand down, and one of those might be, “Oh, we can have our office staff still working from home.” So not just can you do it, you should be looking at doing that. And second to that, can you get JobKeeper for those people? Yes. You could also get JobKeeper for the stood down factory staff, but only if you’re willing to pay $1,500 out of your own pocket, pending it coming back from the government.

    Stewie: From Belinda. I have two casual staff who have left for now because they are scared of contracting the virus while at work, however, the rest of my staff are still working. Do I have to pay the two non-working casuals JobKeeper if they are eligible?

    Ed: So, two non-working casuals who are presumably therefore not getting any pay at the moment, they don’t want to work because they don’t want to contract the virus. Do I have to pay them JobKeeper? The answer is no. You’re under no obligation to pay them $1,500 when currently they’re not receiving anything.

    Stewie: From Shelly. When conducting meetings with individual staff to discuss variations to their ongoing employment, they would normally be welcome to bring a support person. Due to social distancing and our office showroom closed to the public, do we still offer this when arranging meetings with our staff?

    Ed: Great question, really good question actually. Any obligation under fair work laws to allow people to have support people at certain types of meetings, what do we do there where we’re practicing social distancing? The answer is that you carry on seeking to apply those rules. You can always have a support person there by phone or by video. I think, let’s be real about this, there shouldn’t be communication challenges with achieving something to do that. Remember those, the employee’s choices to whether they have that support, that support person there rather than a positive obligation. It’s a positive obligation to ask and offer and not to make sure that someone is there.

    Stewie: From Tracy, a client from iMedX [SP] in South Australia. We are a medical facility. We are currently seeing a marked reduction in patient numbers and therefore revenue downturn, is this seen as a stand down option?

    Ed: So there’s a reduction… A medical facility, is that right, Stewie, that’s seeing a reduction in patient numbers, but there hasn’t been a stoppage of work, and there’s no suggestion that there are stoppage somewhere else in their supply chain, for example, including patients has stopped, it’s just reduced. So the reality is that there’s not a stand down situation there at this time, it’s just a slow down in work and their options for their employees right now would be to look to negotiate reduced hours, reduced income, or potential leave with limited or no pay.

    Stewie: Final one from Suzanne. If I cannot afford to pay existing staff 100% of their wages, but I can afford, say, 90%, can I negotiate a new agreement with them if they consent to it? If so, what do I need to do legally?

    Ed: Great question from Suzanne. It sounds like we’re all starting to get on top of this quite pleasingly and that the language I’m hearing is correct. There’s not a stand down situation, Suzanne’s wondering if she can negotiate, though, reduced income with her staff. She can subject to it and not going below minimum wage.

    So the approach that would be to make some form of communication to all staff saying that you’re going to enter into negotiations. I’ve seen some really good letters going out that say these are the options that we are considering, including 90% reduction, perhaps going on some form of leave, alternatively having an individual negotiation.

    Can you tell me what your preference would be if they choose to go into, say, an individual negotiation, you’d sit down with them one to one, offer a support person. Make sure that you’re not strong-arming people into deals that they don’t want. If someone’s belligerent and says, “I’m sorry, I’m not moving 100% pay and so forth,” then you can explain to them that that being the case, you need to go away and consider the financial implications of that decision, and it may be that you need to have a further consultation meeting with them should there need to be some form of restructure or redundancy in the business as a consequence. So try not to be overbearing or threatening in that, but be as constructive as you can be, even if it can be quite frustrating if someone’s not willing to play their part in the bigger picture.

    Great. So, guys, that’s it from me today. I will be back on Monday. And as I say, please keep watching. We’ll just keep this stream open and we will have our advisors giving advice to you via your questions. And equally have a look at employsure.com.au/coronavirus, employsure.com.nz/coronavirus. Thank you. See you on Monday.

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