The Australia Government’s JobKeeper Scheme has been of great support to businesses nationwide during the pandemic.  The JobKeeper Scheme was a supportive measure put in place during the start of the COVID-19 pandemic. The scheme provided substantial cash and employment support to impacted businesses across Australia through 2020.

From 28 March 2021, the JobKeeper Scheme is no longer providing the support many businesses relied on and will continue to be impacted by COVID-19. Especially in the tourism, travel, wholesale and retail industries we expect there will be increasing numbers of insolvencies and employment pressures from April this year.  This anticipated rise in insolvencies is likely to raise the unemployment rate as well.  The rules around trading while insolvent return back to normal where a company trading while insolvent will lead the director who has allowed the company to incur a new debt and is personally liable.

With the end of JobKeeper, what does that mean for businesses?

It means JobKeeper qualifying employers will no longer receive a wage subsidy for their JobKeeper eligible employees.  On and from 29 March 2021, employers must revert back to paying and working arrangements in accordance with employees’ applicable contracts of employment and employers can no longer validly issue any JobKeeper enabling directions (including stand down directions, variations to days and hours of work, location and directions to perform certain duties). Example: an employee whose working hours were reduced as a result of a valid JobKeeper enabling direction will, on 29 March 2021, be entitled to return to their ordinary hours of work and pay.

Employers will need to consider whether their businesses can accommodate the returning of all employees.  Business should review business workforce requirements and financial capacity to retain employees.  There may be a need to restructure and how that restructure might look and whether it will involve mutual agreements to vary terms of employment.  The legal basis of the current arrangement of work might mean employment contracts that were altered due to JobKeeper may continue to work according to their varied hours of work.  Businesses who have stood down or required employees to turn into part time employees will need to be informed of the end of JobKeeper scheme and will need confirm their availability to return to their ordinary hours of work.

There are many people that are still reliant on JobKeeper which means they may be unable to continue to operate without government support.  To help ease the blow of the end of JobKeeper, it is very important for clients to review expenses, redundancies and finance options as it could keep them from becoming bankrupt.  These topics are difficult to discuss and are even more challenging when its client’s futures and livelihoods.

As JobKeeper ends the revised JobSeeker rate which started on 1 April 2021 at $620.80 a fortnight, equating to $310.40 a week, or just over $44 day came into force.  This is approximately 50% of the concessional amounts paid during the period JobKeeper was available.

The legal risks with the end of JobKeeper include the rise of redundancies, businesses will need to follow legal requirement of a ‘genuine redundancy’ as an unfair dismissal could lead the employer being liable.

Employers should also keep all valid and accurate records of all relevant employee data relating to the JobKeeper Period being 30 March 2020 until 28 March 2021. The JobKeeper period should be treated like any other payment to employees and will need to be maintained for at least 6 years.

JobKeeper was always meant to be temporary and while we are not out of this crisis yet, we must remain disciplined when it comes to economic policy. To do otherwise would subject the current generation to higher taxes and leave future generations a higher debt burden.  Australia was only able to provide this temporary relief for over the year because it had the first balance budget in 11 years before the pandemic hit, as they said we were ‘back to the black’.

If you are worried about how the end of JobKeeper may affect your business, please do not hesitate to contact us.

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