As the JobKeeper enrolment due date for the months of April and May 2020 ended on 31 May 2020, most practitioners are now comfortable with the eligibility requirements for the JobKeeper scheme. While enrolments have been undertaken for most clients, there are on-going requirements that still need to be satisfied for the remaining JobKeeper period. We have summarised two key updates that that have been released over the last week.
Wage Condition for Monthly-Paying Clients
The JobKeeper Rules require that an employer who operates on a pay cycle that is less frequent than a fortnight (i.e. monthly pay cycles), allocate the monthly amount it pays between JobKeeper fortnights in a reasonable manner, in order to demonstrate that it has met the wage condition for those fortnights.
The ATO has advised that where an employee’s work pattern and employment status remains constant throughout the relevant period, it will be reasonable to allocate a monthly payment equally to each fortnight. However, if the work performed by the employee differs significantly over the period, it may not be reasonable to allocate a monthly payment equally to each fortnight. An unequal allocation is more likely to be unreasonable in cases where the difference is caused by a change to the employee’s usual work patters or employment status – for example, where the employee is stood down or their usual hours of work are significantly reduced during the month.
In some cases, employers who have paid at least $3,000 before tax to employees in a four-week period may have, in good faith, simply allocated that payment equally to each fortnight. There may be some circumstances where that allocation is not reasonable, for example, because the work performed by the employee significantly differed between the two fortnights. In these cases, for JobKeeper fortnights ending in April or May, the ATO will allow employers until the end of June to make any additional payments necessary to ensure that a reasonable allocation of the payments made is at least $1,500 per fortnight.
In such circumstances, the Commissioner will need to apply his discretion to allow monthly-paying employers until the end of June to make any further payments necessary in respect of the fortnights ending in April and May 2020 to meet the ‘reasonable allocation’ requirement.
Based on the ATO’s updated guidance, we recommend that you consider whether monthly-paying clients have not met the ‘reasonable allocation’ requirement for the fortnights ending in April and May 2020 and whether you need to apply to the Commissioner for a discretion to be exercised to allow a ‘top-up’ payment to be made by the end of June 2020.
JobKeeper and Superannuation
As announced when the Rules were first introduced, JobKeeper ‘top-up’ payments should not be subject to superannuation guarantee. The Superannuation Guarantee (Administration) Regulations 2018 have now been amended to ensure that employers are not subject to additional superannuation guarantee obligations as a result of their participation in the JobKeeper scheme.
Amounts of salary and wages that do not relate to the performance of work and are only paid to an employee to satisfy the wage condition for JobKeeper purposes, are excluded from the calculation of an employer’s superannuation guarantee shortfall and minimum superannuation contribution required.