More than 1 million casuals to miss out on JobKeeper cash
More than a million working Australians including staff at local councils, state governments, universities, construction sites, arts and entertainment may not be covered by the $1500 fortnightly JobKeeper payment. Instead if their employers lay them off without pay, they will have to make do with the JobSeeker payment that is $400 less at $1100 per fortnight.
The $130 billion wage subsidy, JobKeeper, which was passed by the Senate today, is a lifeline for more than six million Australian employers and employees. But more than a million employees, many of whom were stood down or retrenched since March 1 often because of government orders, will miss out.
One of the frustrations for this group is that there hasn't been a clear source of information to help clarify their eligibility. Much of the information has been aimed at employers through the Australian Tax Office, Fair Work Australia and Treasury.
But more details are coming to light. For example the Government has announced that employees with the Australian government and its agencies, State and Territory governments and their agencies, foreign governments and their agencies, local governments and their wholly owned corporations are not eligible for the JobKeeper payment.
If they are laid off, they can only qualify for the $1100 JobSeeker payment. The JobKeeper is 36% higher than the JobSeeker or $400 a fortnight more. Not surprisingly many employees who have contacted Money are distraught about falling through the cracks.
To qualify for JobKeeper, you must work full-time or part-time, be a sole trader or a not-for-profit. Non-government schools and private vocational education providers are also eligible. But casuals who haven't worked for the same boss for the last 12 months aren't eligible.
Sally McManus, secretary of the ACTU, pointed out 1.1 million casuals will not qualify for JobKeeper. She told David Speers on the ABC's Insiders that more than 50% of university workers are casuals. Other industries reliant on casuals with short contracts include the construction industry as well as arts and entertainment.
The $1500 JobKeeper payment is for employers whose turnover has fallen by 30%. They need to show the Australian Tax Office they have suffered a downturn. Charities are eligible if their turnover is down by 15% or more. Companies with $1 billion turnover - and there are several universities in this category - qualify for subsidy if turnover falls 50%. The assistance is to help businesses to keep their employees in their jobs and re-start when the crisis is over.
While there are stories of casual employees who currently earn less than $1500 getting a pay rise, there are plenty of employees who will be getting much less regular income. It is up to the employer to top up their wage if they can. For example if you earn $2000 a fortnight, your employer will receive $1500 and it can add a further $500 to reach your usual salary.
The Government has clarified that employees receiving paid parental leave pay from Services Australia are not eligible for the JobKeeper payment. But employees on parental leave from their employer will be eligible. Employees receiving workers compensation will be eligible for the JobKeeper payment if they are working, for example on reduced hours, but will generally not be eligible if they are not working.
Eligible employees include Australian residents, New Zealand citizens in Australia who hold a subclass 444 special category visa, and migrants who are eligible for JobSeeker payment or Youth Allowance.
The JobKeeper payment isn't available until May 1 but it is backdated to the first full eligible pay period of March this year. One possible strategy is for employers to access a $100,000 cash flow grant to pay their employees in the meantime.
Eligible businesses can apply for the payment online, registering via ato.gov.au
Even if the employer goes into hibernation mode over the next six months, they can pay their employees the JobKeeper payment.
Case studies
Source: Treasury
Melissa
Self-employed Melissa is a sole trader running a florist. She does not have employees. Melissa's business has been in operation for several years.
The coronavirus has adversely affected Melissa's business, and she expects that her business turnover will fall by more than 30% compared to a typical month in 2019. Melissa will be able to apply for the JobKeeper payment and is able to receive $1500 per fortnight before tax, paid on a monthly basis.
Michelle
A worker with multiple jobs, Michelle currently works two permanent part-time jobs, earning $1000 a fortnight at an art gallery during weekdays, and $1000 a fortnight at the local cafe on the weekend. The gallery has recently closed, and Michelle has been stood down without pay under the Fair Work Act. Michelle continues to work at the cafe delivering take-away orders. Michelle can only receive the JobKeeper payment from the employer she nominates as her primary employer.
As Michelle only claims the tax-free threshold from her job at the art gallery, this will be treated as her nomination of the art gallery as her primary employer. The art gallery is eligible for the JobKeeper payment. The art gallery will pass the JobKeeper payment on to Michelle, so she will receive $1500 per fortnight before tax. During the application process, the art gallery will notify the ATO that Michelle receives the payment from them. The art gallery is also required to advise Michelle that she has been nominated to the ATO as an eligible employee to receive the payment. The cafe is not eligible to receive the JobKeeper payment for Michelle. The $1000 a fortnight that Michelle receives from her job at the cafe does not change her entitlement to the JobKeeper payment she receives from the art gallery.
Miles
Made redundant after 1 March and later rehired by the same business, Miles worked as a permanent part-time personal trainer at a gym for six months earning $1200 a fortnight and was made redundant on March 20. In response to the announcement of the JobKeeper payment, the gym re-engaged Miles, so they are well placed to resume their operations once the coronavirus restrictions are lifted.
Under the JobKeeper payment he will receive $1500 a fortnight before tax. Miles will need to advise Services Australia of his income. He is no longer eligible for the JobSeeker payment and the Coronavirus Supplement from Services Australia as a result of receiving the JobKeeper payment.
Sara
Employer with five employees who all currently get paid more than $1500 per fortnight Sara runs a landscaping company and employs five full-time gardeners. Sara is paying her employees $1700 per fortnight before tax. She expects that her turnover will decline by more than 30% over the coming months and that she will either need to lay staff off or reduce their hours significantly.
As a result of the JobKeeper payment, Sara is able to keep employing every gardener at $1700 per fortnight, with the JobKeeper payment subsidising these wage costs by $1500 per fortnight.
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