Government Economic Stimulus Initiatives and Support
Employers are facing exceptional changes to the way of working and engaging with employees, and many employers are having to make colossal changes with little or no preparation.
The Fair Work Ombudsman (FWO) regularly updates their dedicated webpage on Coronavirus and Australian workplace laws to provide general guidance to employers on managing this situation.
The advice reminds employers that the usual provisions of the Fair Work Act still apply.
The FWO does not have specific information or rules about how to prepare for this situation, although they are updating their information regularly to try to address the thousands of enquiries they are receiving.
Fair Work Ombudsman Guidance
The webpage covers general information on relevant topics:
- Health and safety in the workplace.
- Changing an employee’s regular roster or hours.
- Quarantine and self-isolation.
- Working from home.
- Redundancy and reduction of hours.
- Standing down employees without pay.
- Changes to Hospitality and Clerk awards to allow for flexibility
- And more – check the website for updates.
Fair Work Act Provisions Still Apply
An employer can stand down an employee without pay “if they cannot be usefully employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible”.
Government orders requiring businesses to close would allow employers to stand down employees without pay.
This is distinct from making an employee redundant or otherwise terminating employment.
The employer must exercise caution and demonstrate that there is a genuine stoppage of work where the employee cannot be usefully employed in any role. If employees are stood down unlawfully, they may have the right to pursue unpaid wages.
It’s also important for employers to remember that as of today, all the Fair Work Act provisions are still enforceable, so always check with the FWO before making changes that could risk penalties later.
The JobKeeper payment is available to employees and self-employed people who were already employed at 1 March 2020, and whose business is impacted by a drop of at least 30% turnover by the virus. This includes part-time workers and casuals who have been employed for at least 12 months.
Employees who have been stood down or terminated during the period 1 March to now are eligible to be reinstated as employees so they can receive the JobKeeper payment.
The payment is a flat rate of $1,500 per fortnight. It is taxable but current advice is that superannuation is at the discretion of the employer. Eligible employees must receive the full $1,500 per fortnight, even if their previous earnings were less than this. The employer must pass on the full $1,500 to the employee, less tax.
The payment will apply from Monday 30 March and has now been extended until March 2021.
If the employer is paying more than the $1,500 to an employee, the amount above the subsidy attracts superannuation guarantee as usual.
There is no requirement for employers to pay this to employees before this is passed as law, and current advice is that employers are not obliged to pay it to employees until the funds are received, so they are not out of pocket.
Visit AAT JobKeeper Process for more details.
Employers – What You Need to do
- Make sure you have a tool for easy team communication in place – consider apps like Slack, Asana or Microsoft Teams. Consider using an app that allows for video communications so that staff members can visually connect with each other every now and then.
- Provide staff with access to tools and technology to allow for efficient and transparent work while at home. Online tools such as Evernote, Wrike and Microsoft OneNote allow for management of files, projects and communications.
- Write a policy and plan for the business management of COVID-19 as soon as possible and provide to staff.
- Include information on working from home, productivity measures and expectations, workplace safety and ergonomic setup of home equipment, leave policies, flexible working, access to relevant technology and tools, online security and safety and any other procedures or polices relevant to your business and industry.
- Maintain communications with your employees throughout this challenging time. Particularly for those people who have not had to work from home on their own before, social isolation may be a big issue.
- Consider getting the advice of a human resources expert to get advice about how to monitor and manage productivity during this time, especially for people who may struggle with working from home for the first time.
- Continue to pay superannuation guarantee obligations – currently there is NO provision in the law to defer super guarantee contributions. If an employer is unable to pay super on behalf of employees, a superannuation guarantee charge statement will need to be lodged.
- Register for JobKeeper updates with the ATO
Some employees who have been made redundant or who have had work reduced by 20% or more (including sole traders), can access up to $20k of their superannuation.
Eligible individuals can apply online through their myGov account to access up to $10k of super before 1 July 2020, and another $10k in the following three months.
Minimum draw down requirements for some super pensions will be reduced by 50% for the 2020 and 2021 financial years.
Note that at this stage, superannuation guarantee obligations and deadlines continue to apply for employers.
Employers (less than 20 employees) with Apprentices or Trainees
Small employers are eligible for a subsidy of 50% of wages for nine months up, to $21k per apprentice/trainee.
State Revenue Taxes and Fees
Check your state’s Office of State Revenue for announcements about payroll tax relief.
Some states have already announced measures to waive obligations for eligible businesses for the 2020 financial year and reimburse payments already made.
Other taxes and license fees may also be waived or reimbursed.
Assistance for Small Business
State Government Support
Check your state government’s announcements for support available. Grants may be available to help meet business costs.
State Revenue Offices can also advise if payroll tax and other licenses and fees are eligible for refund.
Cash Flow Assistance and Activity Statements
Tax-free cash flow assistance is available for businesses when activity statements are lodged. This takes the form of a credit for PAYGW to the ATO Integrated Client Account (ICA); it is not a payment of cash into the business bank account.
The credits range in total from $10,000 to $100,000. To be eligible for the credit, the business must have held an ABN at 12 March, have an aggregated turnover of under $50 million based on prior year turnover, and made payments to employees. Employee payments must be in the form of wages and salaries, director fees, termination payments, compensation payments and voluntary withholding from contractor payments.
Businesses must have lodged the 2019 tax return or have activity statements lodged before 12 March 2020.
Upon lodgement of the March BAS, any credit will be applied to the ICA on or after 28 April 2020. Early lodgement of the BAS will not affect the date of the credit.
Business owners need to lodge monthly and quarterly activity statements as usual, even if unable to make payment. At this stage, credits will be available for the March, April, May and June activity statements although up to September is likely.
Initial Cash Flow Boost
The initial cash flow boost is based on the amount of PAYG withholding for March. Eligible businesses will receive a credit equal to 100% of PAYG withheld up to $50,000. The minimum credit will be $10,000 even if the amount withheld is less than that.
The amount a business is eligible for will be automatically applied to the ICA, no application is required to receive this.
Cash flow boosts are non-assessable non-exempt income and not required to be paid back to the ATO.
Beware of schemes designed to manipulate the system so that a business appears to be eligible for cash flow assistance when in fact they are not. If a business is later found to have received a cash flow boost either by genuine mistake or by fraud, the amount will need to be paid back to the ATO and penalties will be incurred. You may need to remind business owners that the ATO has full visibility of payroll data now with Single Touch Payroll, and that changes in payroll behaviour will raise a flag for investigation with the ATO.
• Employers with a turnover of below $50m are eligible for an initial credit of up to $50k of PAYG withholding on the March activity statement, with a minimum payment of $10k for employers.
• If businesses lodge their activity statement by the due dates, and continue to be active in business, they will be eligible for a further $10k to $50k credit on the June activity statement.
• Credits are automatically calculated by the ATO and are tax free.
• PAYG instalments can be varied to NIL from March and taxpayers that vary their PAYGI rate or amount can also claim a refund for any instalments paid for the September and December 2019 quarters.
• Penalties and interest applied since 23 January 2020 may be remitted.
• Deferral of payments – including income tax and activity statement liabilities by up to six months.
• Existing and ongoing ATO debts may be eligible for low interest payment plans.
Sole traders without Employees
Income support payment categories via Centrelink (such as JobSeeker, Youth Allowance and Parenting Payment) will receive an additional coronavirus support supplement for six months of $550 per fortnight. Additionally, for the period of this supplement, the eligibility for these payment categories is expanding to include:
• Sole traders
• Self employed
• Casual workers
• Contract workers who meet the income tests as a result of the Coronavirus crisis
For the six-month period of this supplement, means testing will waived for JobSeeker payment, Youth Allowance and Parenting Payment.
The standard waiting times for these payments have been waived along with the liquid asset test waiting period and the seasonal work preclusion period.
The newly arrived residents waiting period will also temporarily waived for eligible recipients of the coronavirus supplement.
Sole traders should also note the provisions to vary PAYGI on your activity statement to NIL for the March quarter. Refunds can also be sought for the September and December 2019 quarters.
Sole traders whose business has reduced by at least 30% turnover are eligible for JobKeeper.
Instant Asset Write-Off
From 12 March 2020 the instant asset write-off has been changed. For each asset businesses can write-off the cost of each asset up to the threshold of $150,000. Currently this increased threshold (up from $30,000) is available to 30 June 2020 only.
The ATO also has updated information about accelerated depreciation for businesses with a turnover of less than $500 million.
The proposal for business hibernation will allow businesses to temporarily cease operations to avoid complete collapse of the business. This will involve collaboration between landlords, utility providers, telecommunications providers, financial institutions and all levels of government.
Related to hibernation, there is an embargo on eviction of tenants for six months. Landlords and tenants need to negotiate short term agreements.
We are awaiting more details on the plans for business hibernation and the ban on tenant evictions and will update this webpage accordingly.
Temporary Insolvency Relief
The rules around trading insolvent have been relaxed, allowing businesses affected by the Covid-19 situation to continue to trade.
The current minimum threshold for creditors issuing statutory demands on company directors will increase to $20k at least until 31 December 2020. The time frame for such demands will also increase from the current 21 days to six months.
Business Loans and Banking Support
Most businesses are eligible for loan relief. This means loan repayments will be deferred for up to six months. Business credit card repayments may also be paused for six months.
New loans with no repayments, restructured loans and low interest overdraft facilities are also being offered. Eligible loans will be guaranteed by the government up to 50% of the loan value
Any business owner with a dedicated bank manager should talk to them directly about appropriate support for their business. Businesses with merchant facilities should also talk to their providers about waiving terminal rental and merchant fees for up to six months.
Essential Links for Employers and Business Owners
There is a great deal of information being published, and we encourage you to stay updated with the official websites.