The JobKeeper scheme helped qualifying employers pay their eligible employees by subsidising their wages.

Employers who qualified for the scheme (qualifying employers) could claim a reimbursement for each eligible employee. The reimbursement is referred to on this page as a JobKeeper payment.

How an employee was paid under the JobKeeper scheme

Qualifying employers needed to first pay their employees, then the Australian Tax Office (ATO) paid the applicable JobKeeper payment to the employer monthly in arrears, as a reimbursement.

An employer who was receiving JobKeeper payments for an employee needed to pay the employee at least the amount of the applicable JobKeeper payment, even if they earnt less than this. This was known as the ‘wage condition’.

Satisfying the minimum payment guarantee

An employer who was receiving JobKeeper payments for an employee needed to pay the employee the higher of the following amounts, each fortnight:

• the amount of the applicable JobKeeper payment, or
• their pay for work performed that was required to be paid in the fortnight (including any paid leave or public holiday pay).

This was known as the ‘minimum payment guarantee’ under the JobKeeper provisions.

On 17 December 2020, the Full Federal Court of Australia handed down a decision relating to the minimum payment guarantee, Qantas Airways Limited v Flight Attendants’ Association of Australia [2020] FCAFC 227.

To meet the minimum payment guarantee each fortnight, employers could only take into account amounts payable that were:

• for work the employee performed (including any paid leave or public holiday pay), and
• required to be paid in the fortnight (for example under the applicable award, agreement, employment contract, or other relevant instrument), whether or not the work was performed in that fortnight.

This meant that where work was performed during a fortnight, but the employer wasn’t obliged to pay the employee for it until a later fortnight (for example, because the employer pays wages or parts of wages in arrears), the employer could only count that amount towards the minimum payment guarantee for the fortnight in which it was required to be paid.

Employees earning less than the applicable JobKeeper payment amount

To remain qualified to receive JobKeeper payments, qualifying employers couldn’t pay their eligible employees less than an amount equal to the applicable JobKeeper payment.

When an employee was entitled to be paid less than the applicable JobKeeper payment amount during a fortnight for the work they performed (including any payments for leave or public holidays), their employer still needed to pay them the full applicable JobKeeper payment for that fortnight. The employer could then be reimbursed the applicable JobKeeper payment for that fortnight from the ATO.

If an employer paid an employee an amount less than the applicable JobKeeper payment they were receiving for the employee, the ATO would stop making JobKeeper payments to the employer.

From 28 September 2020, there were two JobKeeper payment rates – a tier 1 (higher) rate and a tier 2 (lower) rate. Information about the different types of JobKeeper payments that applied to employees is available from the ATO’s Payment rates page.

Employees that earned more than the JobKeeper payment amount

When an eligible employee was entitled to be paid more than the amount of the applicable JobKeeper payment during a fortnight for the work they had performed (including any payments for leave or public holidays), their employer needed to pay them the higher amount for that fortnight. The employer couldn’t just pay the amount of the applicable JobKeeper payment.

For example, if an employee normally worked 76 hours a fortnight and was paid $1700 (before tax), and this hadn’t changed while the employer was receiving JobKeeper, they still needed to be paid $1700 (before tax) for the 76 hours they worked.

Employees with multiple employers

Only one qualifying employer could receive JobKeeper payments on behalf of an eligible employee. If an employee had more than one employer, only their primary employer should have accessed the applicable JobKeeper payment on their behalf.

Interaction of the Annual Wage Review with the JobKeeper payment

When calculating the amount an employee in the JobKeeper scheme needed to be paid, the employee's usual pay for work performed in the fortnight could be affected by a minimum wage increase.

Other important information

Employers needed to deduct tax from their employees’ pay.

Employers couldn’t ask their eligible employee to pay a fee or pay part of their wage (including in cash) to access the JobKeeper scheme.

The ATO administered the JobKeeper scheme.

An employer needed to qualify before they could access JobKeeper payments from the Australian Government. Qualifying employers needed to tell eligible employees if they intended to claim the JobKeeper payment on their behalf.

Overpayments, ‘cashback’ and the JobKeeper scheme

If a qualifying employer mistakenly overpaid an employee under the JobKeeper scheme, the usual rules about overpayments applied. An example of an overpayment included when an employer paid an employee the amount of the applicable JobKeeper payment thinking the employee was eligible when they weren’t, and they didn’t then receive the payment from the ATO.

Under the Fair Work Act, employers can only deduct money from an employee’s pay to fix an overpayment in limited situations. This includes if it’s allowed by:

• an award or agreement (and the employee agrees to it)
• legislation
• a court order, or
• a Fair Work Commission order.

Otherwise, employers and employees should agree on a repayment arrangement instead.

Employers also couldn’t ask their employees to ‘earn back’ their JobKeeper payments by working for free or on reduced pay rates once JobKeeper ended or they stopped being eligible or involved in the scheme.

Payment during a JobKeeper enabling stand down direction

The temporary JobKeeper provisions in the Fair Work Act allowed a qualifying employer to give directions to an eligible employee to:

• reduce their hours of work (a JobKeeper enabling stand down direction)
• change their duties or location of work.

Any JobKeeper enabling directions or agreements made under the JobKeeper provisions couldn’t reduce minimum pay rates. An employee working under these arrangements still needed to be paid based on their usual minimum hourly rate and any applicable penalty or overtime rates for any hours that attracted those extra rates. If an employee had been directed to work different duties that attracted a higher pay rate, the employee needed to be paid at that higher pay rate.

When an employee of a qualifying employer had been asked to work fewer hours (or no hours) under the JobKeeper provisions, the employer had to pay the employee the higher of:

• an amount equal to the applicable JobKeeper payment, or
• the employee’s pay for the work they performed that was required to be paid in the fortnight (including any payments for leave or public holidays).

JobKeeper payment and interaction with other minimum entitlements

Under the former JobKeeper scheme, an employee’s usual terms and conditions of employment continued to apply. This included terms and conditions from an:

• applicable award
• applicable agreement, or
• employment contract.

However, a JobKeeper enabling direction or agreement applied instead if the direction or agreement was different to the employee's usual terms and conditions.

Any terms and conditions of employment not related to the direction or agreement continued. For example, sick and carer’s leave, penalty and overtime rates.

Public holidays

Public holiday pay needed to be included when calculating an employee’s usual pay if the employee:

• would normally have worked on the public holiday if the JobKeeper enabling stand down direction hadn’t been given
• would have been entitled to time off without loss of pay.

Pay slips, record-keeping and paying wages

Pay slip and record-keeping obligations continued to apply for all employers accessing the JobKeeper scheme.

Pay slips for a fortnight that the employee was paid the applicable JobKeeper payment needed to show any extra amount that the employer paid to make sure the employee received at least the JobKeeper amount.

Employers also need to pay their employees’ wages in accordance with their usual requirements, including frequency of pay.

Tax and superannuation

The JobKeeper payments were a before tax amount (gross) payment.

References

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