Important JobKeeper and JobSeeker changes announced

Jul 23, 2020

Keeping abreast of the changing JobKeeper payments and rules is critical to small business resilience in this time of economic uncertainty.

With the lifeline having had a seriously positive impact on small business’ ability to keep staff on the payroll, it’s encouraging to see the wage subsidy is sticking around. To date, the JobKeeper initiative has supported around 3.5 million Australians and 960,000 businesses.

While still in play, there’ll be a reduction in payment amounts after September 2020, which needs to be folded into your business planning.

“The report recommends that we keep Jobkeeper, and we shall, but it needs to be done in a way that is responsive with the circumstances,” Prime Minister Scott Morrison.

Current JobKeeper Scheme

The JobKeeper scheme in current operation sees 960,000 employers receiving a flat rate of $1,500 per fortnight for each staff member on their books during the COVID-19 pandemic. This was to be paid in full, directly to employees by employers.

This phase of the scheme will remain in place until the end of September 2020.

Newly announced JobKeeper Scheme

On July 27, the Prime Minister announced that, while the important measure of JobKeeper will continue, it will do so in a reduced form.

Key highlights from the announcement:

  • The current JobKeeper rate of $1,500 per fortnight will remain until the end of September, 2020.
  • After September, the JobKeeper payment will be clipped to $1,200 per fortnight for full time employees.
  • After September, the JobKeeper payment will also be clipped to $750 per fortnight for those working less than 20 hours a week.
  • These new rates will run from September through to January 2020.
  • From January 2021, JobKeeper will be again reduced to $1,000 for full-time employees and $650 for people working less than 20 hours per week.
  • Businesses turning over less than $1 billion will have to ‘requalify’ after September by proving a 30% loss in revenue over the last two quarters.
  • Businesses turning over more than $1 billion will have to prove a 50% loss in revenue.
  • Businesses will then have to ‘re-qualify’ once more in January 2021 to receive the third iteration of JobKeeper. Again, proving a 30% or 50% drop in revenue over the previous quarter depending on business size.

Basis behind changes to JobKeeper

This is an evolving and contentious issue that’s garnered differing voices across the spectrum.

The federal government argues that people were earning more now than they did before and that this possibly encouraged joblessness and benefit disparity. There was also the burning need to get a scheme in place quickly as the COVID-19 pandemic rapidly escalated.

The government wants to give the message that this revision is the result of time to plan and rethink the scheme, in line with prevailing conditions.

As Treasurer Josh Frydenberg said:

“We did take a conscious decision to have one single flat payment of $1,500, now that meant some people were getting overpaid while others were getting underpaid.”

“We took that conscious decision because we wanted to get as much money out of the door as possible and we didn’t want to build a new system. We have had time to reflect on that.”

Changes to JobSeeker

In tandem with the changes announced to JobKeeper, there’ll also be a shift in how JobSeeker payments work. While less relevant to employers, this will affect many employees who have been laid off.

  • Currently the JobSeeker supplementary payment stands at $550.
  • After September, this supplement will be reduced to $250 a fortnight, meaning the total payment will go from $1,115 to $815.

But there’s another aspect to this, which pertains to additional income leniency. Currently you can earn an extra $106 per fortnight while remaining eligible for JobSeeker.

However, from the end of September, those receiving the reduced JobSeeker supplement can earn an extra $300 per fortnight and still remain eligible.

The federal government hopes by enacting this measure that it’ll encourage people into work without the fear of JobSeeker disappearing.

There are new requirements to look for work that need to be considered too. From August 4, the government is reviving the requirement that people receiving the unemployment benefit have to connect with employment services and log four job searches a month.

Additionally, from the end of September, the number of job searches beneficiaries have to undertake a month will increase, but this number is yet to be announced.

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