Abuse of JobKeeper: preventative reforms and clarifications made


The government has clarified some of the rules around JobKeeper to curb misuse of the wage subsidy.

It’s been a big week in the world of coronavirus. For once, we mean ‘big’ in a good way. At the time of writing, Australian COVID-19 cases are still steadily decreasing. We’ve seen some states relaxing isolation rules to allow residents to dip their toes back into socialising. 

But as all the experts continue to warn us, we’re not out of the woods. For example, there is a risk of a second wave of infections and some businesses predict they won’t feel the worst economic impacts of the virus until later this year. This is why the $130 billion JobKeeper subsidy is still incredibly important.

In this article, HRM looks at early reports of disturbing behaviour from some employers and highlights important clarifications recently made by the treasurer.

Early reports of malfeasance

It has been a little over a week since eligible employers were able to apply for the scheme and according to a 24 April release from the treasury, 400,000 businesses have applied, which is estimated to mean about 2.4 million employees will be receiving the payment so far. The ATO will accept applications from employers up until the end of May.

(Read HRM’s previous article which outlines which employers and employees are eligible).

Due to the unprecedented circumstances, and bipartisan support, this legislation was passed through the government fairly quickly. While this is great for those relying on the payments, it also created a few teething problems. Many people had questions and sought clarification around the rules. 

There have also already been reports of some employers attempting to abuse the subsidy. 

Member for the Federal Seat of Mayo, South Australia, Rebekha Sharkie tweeted about an employer who contacted a former staff member it had recently let go saying they’d reinstate her under the JobKeeper scheme if she was willing to give $600 of the payment to them. When she refused, they withdrew the offer to reinstate her.

Another Twitter user reports one employer withholding $100 per payment for ‘administrative costs’ (this is illegal). 

Prime Minister Scott Morrison addressed the misuse of JobKeeper in a press conference. He said that if there are employers guilty of trying to misuse JobKeeper “that is disgraceful and it’s illegal, and they should be reported to the police and the ATO.” 

There are currently a few ways to do exactly that. JobScammer has created a hotline and the ATO has a tip-off page on its site. People caught using JobKeeper payments fraudulently could face fines of $126,000 for individuals and $630,000 for a body corporate.

Clarifications

But there is a difference between fraud, bad behaviour that goes against the spirit if not the letter of the legislation, and employers acting out of a misunderstanding regarding how the legislation works. 

Late last week, the treasurer also addressed cherry picking which of your staff will receive JobKeeper payments when he introduced clarifications to the scheme.

This was needed because there was varying advice around the ‘one in, all in’ principle. The principle was outlined in the explanatory statement that came alongside the JobKeeper legislation, but it wasn’t clear if this was the intention of the law or part of its parameters.

Frydenberg’s office has since announced that when an employer accesses JobKeeper payments, all eligible staff (both those currently working and those who have been stood down) must be covered by the scheme; employers can not pick and choose which staff to pay. 

“As noted in the explanatory statement to the existing rules, this ‘one in, all in’ principle is already a key feature of the scheme and will be made clearer in the rules,” the statement reads.

A nomination… with a condition

Another common criticism of the wage subsidy is that many workers have actually received a pay rise. The government argued this was required to make the law as simple to navigate as possible. But it does mean there have been cries of inequitable treatment.

For example, HRM spoke with a lawyer who shared a story of a part-time employee who, at the beginning of the year, was receiving $250 for a few hours of work each week. But, since their employer qualified for JobKeeper payments they are now making $1,500 a fortnight for the same few hours.

It is perhaps not surprising then that some of the workers in this situation are being asked to work more hours to make up the difference. 

As part of the JobKeeper legislation, amendments were made to the Fair Work Act to allow for employers to vary working arrangements for employees receiving JobKeeper payments (these rules sunset on 28 September 2020). One change allows employers to give a ‘JobKeeper Enabling Stand Down Direction’ to employees who “cannot be usefully employed for their normal days or hours” due to business shifts caused by COVID-19 or by government initiatives.

Under this rule, an employer could direct an employee to:

  • not work on particular days they would ordinarily work; or
  • work for a shorter timeframe than they would ordinarily work on particular days; or
  • work a reduced number of hours (including no hours)

But there’s not been specific provisions to cover increased hours, says Bernie Smith, SDA NSW branch secretary, who spoke to Workplace Express.

He refers to a case where Kidstuff, a toy retailer, sought to nominate its casual employees to be paid under the JobKeeper scheme under the condition they would triple their normal hours. In a letter sent to all staff, obtained by Workplace Express, a representative from Kidstuff’s payroll team said:

“The new casual role will involve employees working around 24 – 28 hours per week as directed including shifts Monday to Sunday. In accordance with the Job Keeper provisions and changes to Fairwork, your rate of pay will not change, and the signed terms and conditions of your employment will still apply where applicable.”

The letter goes on to say that staff can only work for the number of hours required to accumulate $1,500 (their rates depend on their award), and that it must be with the approval of a regional manager. It also stated that 9.5 per cent superannuation payments will be made on top of JobKeeper payments. (For employees whose wages are being ‘topped up’ by JobKeeper,  making super payments on that money is optional for employers.)

Smith says employees can’t refuse a ‘reasonable request’ to alter work patterns, and stresses employers’ responsibility to be reasonable with requests in the first instance. But what is reasonable?

According to Smith, the increase to 24-28 hours of work per week (the number of hours required to meet the JobKeeper payment of $750 per week at the casual level 1 rate of the retail award) for certain casual staff is “unacceptable”. He says this could amount to a “three-fold or four-fold increase” of some Kidstuff employees’ hours. 

What is reasonable, according to Smith, is requiring employees to work one longer shift of five hours rather than “the normal practice of two shorter shifts of three hours each”.

You can read other clarifications to the JobKeeper Scheme, such as new turnover benchmarks for those employed through a special purpose entity and exclusions of government revenue for charities (excluding schools and universities) in a turnover test, here.

This article was up-to-date as of 28th of April, 2020.

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John
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John

I think Smith has a very biased and slanted view of ‘unacceptable’ practices. Most ‘reasonable’ people would think the requirement to work hours equivalent to the award payment would be fair.

Of course, no one ever said that members of the IT Club were representatives of the so-called ‘reasonable person’.

Jess
Guest
Jess

Another issue we’re not seeing is how JobKeeper works for those earning over $1500 and are still encouraged to work a 38 hour week.

Wilbur
Guest
Wilbur

Strange but true… We are in a position where staff will take advantage of the jobkeeper payment and refuse to come to work, because they will get $1500.00 regardless. To combat this, yes we need to go through our disciplinary procedures, but employee is still being rewarded for their non-compliance throughout the ordeal…

Peter Gaskin
Guest
Peter Gaskin

I find it strange that this article only looks at employer abuse and not employee abuse. The Kidstuff demand is easily seen as illegal. If they make casuals work enough hours to earn $750 per week, then there is no top up and of course they are eligible for super. This is no gift. Fair Work amendments do not talk about working increased hours. Instead they talk about changing days and hours per day. They still have to meet a reasonable test and a oh&s conditions

Michelle Rudolph
Guest
Michelle Rudolph

Can your employee make you redundant once you have begun receiving JobKeeper? What legal obligations are there on an employer to maintain the JobKeeper agreement?

More on HRM

Abuse of JobKeeper: preventative reforms and clarifications made


The government has clarified some of the rules around JobKeeper to curb misuse of the wage subsidy.

It’s been a big week in the world of coronavirus. For once, we mean ‘big’ in a good way. At the time of writing, Australian COVID-19 cases are still steadily decreasing. We’ve seen some states relaxing isolation rules to allow residents to dip their toes back into socialising. 

But as all the experts continue to warn us, we’re not out of the woods. For example, there is a risk of a second wave of infections and some businesses predict they won’t feel the worst economic impacts of the virus until later this year. This is why the $130 billion JobKeeper subsidy is still incredibly important.

In this article, HRM looks at early reports of disturbing behaviour from some employers and highlights important clarifications recently made by the treasurer.

Early reports of malfeasance

It has been a little over a week since eligible employers were able to apply for the scheme and according to a 24 April release from the treasury, 400,000 businesses have applied, which is estimated to mean about 2.4 million employees will be receiving the payment so far. The ATO will accept applications from employers up until the end of May.

(Read HRM’s previous article which outlines which employers and employees are eligible).

Due to the unprecedented circumstances, and bipartisan support, this legislation was passed through the government fairly quickly. While this is great for those relying on the payments, it also created a few teething problems. Many people had questions and sought clarification around the rules. 

There have also already been reports of some employers attempting to abuse the subsidy. 

Member for the Federal Seat of Mayo, South Australia, Rebekha Sharkie tweeted about an employer who contacted a former staff member it had recently let go saying they’d reinstate her under the JobKeeper scheme if she was willing to give $600 of the payment to them. When she refused, they withdrew the offer to reinstate her.

Another Twitter user reports one employer withholding $100 per payment for ‘administrative costs’ (this is illegal). 

Prime Minister Scott Morrison addressed the misuse of JobKeeper in a press conference. He said that if there are employers guilty of trying to misuse JobKeeper “that is disgraceful and it’s illegal, and they should be reported to the police and the ATO.” 

There are currently a few ways to do exactly that. JobScammer has created a hotline and the ATO has a tip-off page on its site. People caught using JobKeeper payments fraudulently could face fines of $126,000 for individuals and $630,000 for a body corporate.

Clarifications

But there is a difference between fraud, bad behaviour that goes against the spirit if not the letter of the legislation, and employers acting out of a misunderstanding regarding how the legislation works. 

Late last week, the treasurer also addressed cherry picking which of your staff will receive JobKeeper payments when he introduced clarifications to the scheme.

This was needed because there was varying advice around the ‘one in, all in’ principle. The principle was outlined in the explanatory statement that came alongside the JobKeeper legislation, but it wasn’t clear if this was the intention of the law or part of its parameters.

Frydenberg’s office has since announced that when an employer accesses JobKeeper payments, all eligible staff (both those currently working and those who have been stood down) must be covered by the scheme; employers can not pick and choose which staff to pay. 

“As noted in the explanatory statement to the existing rules, this ‘one in, all in’ principle is already a key feature of the scheme and will be made clearer in the rules,” the statement reads.

A nomination… with a condition

Another common criticism of the wage subsidy is that many workers have actually received a pay rise. The government argued this was required to make the law as simple to navigate as possible. But it does mean there have been cries of inequitable treatment.

For example, HRM spoke with a lawyer who shared a story of a part-time employee who, at the beginning of the year, was receiving $250 for a few hours of work each week. But, since their employer qualified for JobKeeper payments they are now making $1,500 a fortnight for the same few hours.

It is perhaps not surprising then that some of the workers in this situation are being asked to work more hours to make up the difference. 

As part of the JobKeeper legislation, amendments were made to the Fair Work Act to allow for employers to vary working arrangements for employees receiving JobKeeper payments (these rules sunset on 28 September 2020). One change allows employers to give a ‘JobKeeper Enabling Stand Down Direction’ to employees who “cannot be usefully employed for their normal days or hours” due to business shifts caused by COVID-19 or by government initiatives.

Under this rule, an employer could direct an employee to:

  • not work on particular days they would ordinarily work; or
  • work for a shorter timeframe than they would ordinarily work on particular days; or
  • work a reduced number of hours (including no hours)

But there’s not been specific provisions to cover increased hours, says Bernie Smith, SDA NSW branch secretary, who spoke to Workplace Express.

He refers to a case where Kidstuff, a toy retailer, sought to nominate its casual employees to be paid under the JobKeeper scheme under the condition they would triple their normal hours. In a letter sent to all staff, obtained by Workplace Express, a representative from Kidstuff’s payroll team said:

“The new casual role will involve employees working around 24 – 28 hours per week as directed including shifts Monday to Sunday. In accordance with the Job Keeper provisions and changes to Fairwork, your rate of pay will not change, and the signed terms and conditions of your employment will still apply where applicable.”

The letter goes on to say that staff can only work for the number of hours required to accumulate $1,500 (their rates depend on their award), and that it must be with the approval of a regional manager. It also stated that 9.5 per cent superannuation payments will be made on top of JobKeeper payments. (For employees whose wages are being ‘topped up’ by JobKeeper,  making super payments on that money is optional for employers.)

Smith says employees can’t refuse a ‘reasonable request’ to alter work patterns, and stresses employers’ responsibility to be reasonable with requests in the first instance. But what is reasonable?

According to Smith, the increase to 24-28 hours of work per week (the number of hours required to meet the JobKeeper payment of $750 per week at the casual level 1 rate of the retail award) for certain casual staff is “unacceptable”. He says this could amount to a “three-fold or four-fold increase” of some Kidstuff employees’ hours. 

What is reasonable, according to Smith, is requiring employees to work one longer shift of five hours rather than “the normal practice of two shorter shifts of three hours each”.

You can read other clarifications to the JobKeeper Scheme, such as new turnover benchmarks for those employed through a special purpose entity and exclusions of government revenue for charities (excluding schools and universities) in a turnover test, here.

This article was up-to-date as of 28th of April, 2020.

8
Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
John
Guest
John

I think Smith has a very biased and slanted view of ‘unacceptable’ practices. Most ‘reasonable’ people would think the requirement to work hours equivalent to the award payment would be fair.

Of course, no one ever said that members of the IT Club were representatives of the so-called ‘reasonable person’.

Jess
Guest
Jess

Another issue we’re not seeing is how JobKeeper works for those earning over $1500 and are still encouraged to work a 38 hour week.

Wilbur
Guest
Wilbur

Strange but true… We are in a position where staff will take advantage of the jobkeeper payment and refuse to come to work, because they will get $1500.00 regardless. To combat this, yes we need to go through our disciplinary procedures, but employee is still being rewarded for their non-compliance throughout the ordeal…

Peter Gaskin
Guest
Peter Gaskin

I find it strange that this article only looks at employer abuse and not employee abuse. The Kidstuff demand is easily seen as illegal. If they make casuals work enough hours to earn $750 per week, then there is no top up and of course they are eligible for super. This is no gift. Fair Work amendments do not talk about working increased hours. Instead they talk about changing days and hours per day. They still have to meet a reasonable test and a oh&s conditions

Michelle Rudolph
Guest
Michelle Rudolph

Can your employee make you redundant once you have begun receiving JobKeeper? What legal obligations are there on an employer to maintain the JobKeeper agreement?

More on HRM