The Lowdown on Job Keeper Allowance

The Lowdown on Job Keeper Allowance

Last night, the government made the announcement that businesses and employees alike have been waiting for; a wage subsidy scheme designed to take some financial strain off employers and to keep employees in their jobs. Overnight, our mates over at Rostron Carlyle Rojas Lawyers pulled together the most important bits and honed in on how we’re measuring up to subsidy schemes initiated by other nations. Check it out!


What is the Job Keeper Allowance? 

The ‘Job Keeper Allowance’ as it has been coined is a government initiative to support Australian businesses in keeping their Australian employees in their jobs. The ‘flat payment’ scheme will see eligible employees receive Government support through their employers of $1,500 per fortnight. 


Am I eligible?

To be eligible for the scheme, businesses will have to show that they have suffered a minimum reduction in revenue of 30%. This means a business has experienced a 30% decline in:

  • Actual revenue; or
  • Predicted revenue (e.g. for businesses who have seen a reduction in bookings such as accommodation providers).

How do I demonstrate a reduction in revenue and show that I am eligible?

A decline in business can be demonstrated from 1 March 2020. Details on how to determine a decline in revenue under the Australian scheme has yet to be released. That being said, we can look to the New Zealand system which was announced on 26 March 2020 for guidance. Under that system: 

  • For businesses who have operated for more than a year:

The business should assess their revenue by comparing one month’s revenue against the same month the previous year (example February 2020 compared to February 2019). The revenue of the month in the affected period must be at least 30% less than it was in the month it was compared against.

  • For businesses who have operated for less than a year:

The business must compare their revenue against a previous month that gives the best estimation of the revenue decline related to COVID-19.


How will the system be administered?

The system will be administered through the ATO’s one touch payroll system. The credits for payment will be provided to the employer starting 1 May 2020. Until that time, employers should now assess their staff for eligibility under the scheme and make the proper elections to ensure credit will be provided on time. It is not up to the employee to sign up for the scheme, although it is recommended that employees speak with their employer about eligibility.


Does the Job Keeper Allowance apply to former employees of my company?

The Job Keeper allowance is not available to former employees of the company, if they were let go prior to 1 March 2020. If an employer wishes to rehire an employee that they recently let-go (post 1 March 2020), they may be able to qualify that person for the scheme. 

According to PM Scott Morrison, if redundancy payments have been made to a recently made redundant employee, the employer and employee will need to discuss how to undo those arrangements themselves. 


What’s the underlying theme of this scheme?

The underlying theme for the Job Keeper Allowance is that it is for just that, Australians who keep their jobs. If an employee is unable to keep their job, then they will be properly placed in the Job Seeker scheme. There is no doubling up of the two schemes.

We are yet to have news on what other Government schemes will be available to employees who receive the Job Keeper Scheme. For example, it is uncertain at this time if an employee on Job Keeper will be eligible to withdraw from their superannuation or seek rental assistance. We will keep you up to date on this as the legislation reaches Parliament.


How do we stack up against other nations?

Australia United Kingdom New Zealand
Duration of scheme
  • 6 months
  • 3 months
  • 3 months
  • Flat $1,500 per fortnight
  • Up to 80% of wage, up to £2,500 ($5K AUD) per month
  • $585.80 NZD ($585 AUD) for people working 20 hours or more per week (FT-rate)
  • $350NZD ($350 AUD) for people working less than 20 hours a week (PT – rate)

Paid as a lump sum to cover 12 weeks.

Does the employee have to work?
  • Eligibility is for working Australians who were on payroll as of 1 March 2020
  • Eligibility is for workers who are not working, but still on the company books as of 28 February 2020
  • The employee must be retained on the books as an employee
Types of employees covered
  • Full time workers
  • Part time workers
  • Sole traders
  • Casuals who have been with their employer for 12 months +
  • New Zealanders on 444 visas
  • Not-for-profit entities
  • Full time workers
  • Part time workers
  • Employees on agency contracts
  • Employees on flexible or zero hour contracts
  • Sole traders
  • Full time workers
  • Part time workers
  • Sole traders
  • Contractors
  • Incorporated societies
  • Registered charities
  • NGOs
  • Post-settlement entities
Business eligibility criteria?
  • Business must show minimum 30% reduction in revenue
  • TBA 
  • Business must show minimum reduction of 30% in revenue
How is it administered?
  • Through the ATO’s one touch payroll, meaning the employer needs to ensure proper administration of the scheme
  • A new online portal is being set up by HMRC to deal with the administration of the scheme
  • It is likely that payment will be made by grant via BACS payment into an eligible employer’s UK bank account
  • Employer applies via online application administered by the Office of Work and Income
When does it come into effect?
  • Eligibility is assessed from 1 March 2020 with first payment to employer on 1 May 2020
  • Eligibility is assessed from 1 March 2020, payment date to employer is yet to be determined
  • 27 March 2020, payment made as a lump sum upon application being accepted


What’s going on in the UK?

In the United Kingdom, the Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1 March and is initially open for 3 months, and may be extended if necessary.

British workers who have been asked to stop working, but who are being kept on the payroll, otherwise known as ‘furloughed workers’, will receive a subsidy of up to 80% of their wage, up to a value of £2,500 ($5K AUD) per month. This is a measure to safeguard against workers being made redundant.

Self-employed Brits receive a similar grant of 80% of their average profits from the past 3 months, up to a value of £2,500 ($5k AUD) per month. The financial support in the UK will not be available until mid-June. 

The Australian Federal Government has commented that a system like that of the UK’s would be inequitable and difficult to administer within Australia’s social security system.


What’s going on in New Zealand?

In New Zealand, wage subsidies are being provided as a lump sum flat rate depending on the number of hours an employee works in a week. The NZ Government will subsidise full time workers (20+ hours per week) a flat amount of $585.80 per week; part time workers (-20 hours per week) will receive $350 per week. The subsidy is paid as a lump sum and covers 12 weeks per employee.

This system is similar to Australia in that it is for workers who continue to work. Other welfare systems are available to workers who are no longer gainfully employed. 

Other eligibility criteria which is similar to Australia is that the business must be able to show a decline in revenue by minimum 30%. The decline must be due to the effects of COVID-19 and the business must show they took active steps to mitigate the loss (We are yet to see if these criteria will be included in Australia).

NZ employers are encouraged to pay at least 80% of their employee’s usual wages. If that isn’t possible, they must pay at least the subsidy rate. Unlike the Australian system, if an employee’s wages are less than the flat rate, then the employee should be paid the full amount of their normal wage (i.e. no free pay rise).


Rostron Carlyle Rojas Lawyers have their finger on the pulse when it comes to COVID-19 updates and have volunteered to support us folk with a drip feed of the latest and greatest, with a legal spin of course. A particular thank you to Greg Rostron, Hamish Carlyle and Paul Rojas for getting behind us and the small business community at this time!


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