The economic lifeline for the Australian Workforce – what does this mean for business owners? What does this mean for the long-term viability of the business and potential future of that business in a post-COVID-19 world?
2020 certainly has been an unbelievably challenging year for everyone, particularly business owners who employ staff. Carrying the load of not only keeping the business afloat during the global pandemic, but also to retain staff and keep everyone employed.
In March 2020, the Federal Government announced one of its first economic lifelines – the JobKeeper Scheme. The JobKeeper Scheme was originally due to expire on 27 September 2020, and will be extended for an additional period of six months until 28 March 2021.
The purpose of the extension is to continue to support businesses who continue to be impacted by COVID-19. Rather than dramatically drop the guillotine on the Federal Government economic support, the changes have been designed to wean businesses off the lifeline as they start to stand back on their own ‘two feet’.
What are the changes?
Here are the headlines that you need to know about the changes.
- Changes to the payment amounts
The first stage of the JobKeeper Scheme included a $1,500 fortnightly payment to employers to subsidise staff wages. In the second stage of the JobKeeper Scheme this universal payment will be transitioned to a tiered system as follows:
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- From 28 September 2020 to 3 January 2021:
- $1,200 per fortnight for all eligible employees who (in February 2020) were working in the business for more than 20 hours per week; and
- $750.00 per fortnight for all other eligible employees.
- From 28 September 2020 to 3 January 2021:
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- From 4 January 2021 to 28 March 2021:
- $1,000 per fortnight for all eligible employees who (in February 2020) were working in the business for more than 20 hours per week; and
- $650.00 per fortnight for all other eligible employees.
- From 4 January 2021 to 28 March 2021:
- Changes to the eligibility tests
Given the extension of the JobKeeper Scheme for a further 6 months, it is not surprising that businesses will need to re-qualify for the decline in turnover test to remain eligible for the extended period. This is so that the support measures can be provided to, and targeted at, those businesses and industries that are continuing to be seriously impacted by the COVID-19 pandemic.
In order to remain eligible for the extended period, employers must be able to demonstrate that their actual GST turnover has fallen in the June 2020 and September 2020 quarter. This is different to the original eligibility tests which were based on a reasonably estimated forecast on turnover. The percentage decline in turnover, however, remains the same.
What does this mean for the long-term viability of the businesses?
The COVID-19 stimulus packages introduced by the Federal Government have been quickly introduced and processed to allow Australians to continue trading and to keep people employed. The immediate benefits of this (aside from the financial benefits) are that it keeps Australians employed with purpose, and assists with the resilience and mental health challenges we are experiencing during the pandemic period.
However, the extended relief leads us to question, will this allow the business to continue to trade through the pandemic period and thrive at the end? Or is it simply a life support mechanism and prolonging the inevitable insolvency of companies that should not have otherwise been trading?
In the fullness of time, we will be able to assess the long-term success of the JobKeeper Scheme providing Australian businesses with a ‘soft landing’ into the post-pandemic period. As a business owner, it is important that you start to plan now about how your business will operate and thrive in a post-COVID-19 world.
DISCLAIMER: This article is intended to provide general information and should not be relied upon as legal advice. Formal legal advice should be sought if you are concerned about, or require particular advice applicable to your specific circumstances in relation to, any topics covered in this article.