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JobKeeper extension welcomed but payment amount cut

The JobKeeper wage subsidy will continue until March next year.
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JobKeeper extension welcomed but payment amount cut

JobKeeper extension welcomed but payment amount cut

22 July 2020

The JobKeeper wage subsidy will continue until March next year, but the payments will drop to $1200 a fortnight from late September and then $1000 a fortnight from January. The JobKeeper Payment was due to finish on 27 September this year, but will now remain available for eligible employers until 28 March 2021.

The federal government has also tweaked the scheme whereby employees who worked less than 20 hours a week before the pandemic hit will receive $750 and then $650 respectively.

Treasurer Josh Frydenberg said the extension of support recognised Australia’s economic recovery was still in its early stages and a number of businesses and individuals remained significantly affected by the global COVID-19 pandemic.
 
“The government’s focus remains on reopening the economy where it is safe to do so, but the extension of these measures recognises that some parts of the economy will continue to be affected and need continued support,” the Treasurer said.
 
“Sadly, as a result of this global health pandemic, businesses will close and people will lose their jobs, but that is why we have extended the coronavirus supplement and announced a new skills package to help people transition from welfare to work.
 
“It is also why we are extending the JobKeeper payment beyond September to help keep businesses in business and Australians in jobs as our economy reopens.”

From 28 September, businesses and not-for-profits will be required to reassess their eligibility by reference to their actual June and September quarter turnovers to demonstrate they have suffered an ongoing significant decline in turnover. Organisations will need to demonstrate they have experienced the relevant decline in turnover in both of those quarters to be eligible for the JobKeeper payment in the December quarter.
 
Employers will need to again reassess their eligibility for the JobKeeper payment for the March quarter. Employers will need to demonstrate that they have met the relevant decline in actual turnover in each of the previous three quarters ending on 31 December 2020 to remain eligible for the JobKeeper payment in the March quarter 2021.

Eligible employers are businesses (including companies, partnerships, trusts, sole traders), not for profits and charities:

  • with a turnover of less than $1 billion whose turnover has fallen by more than 30%, or
  • with a turnover of $1 billion or more whose turnover has fallen by more than 50%

If they do not meet the turnover test in the extension period this does not affect their eligibility prior to 28 September 2020. The continuation of JobKeeper for these businesses will help support the economic recovery and provide them with sufficient time to adjust.
 
The JobKeeper payment will continue to remain open to new participants that meet the eligibility requirements.
 
An independent evaluation will be conducted at the conclusion of the program.
 
The new arrangements for the JobKeeper payment are expected to cost an additional $16.6 billion.


COVID-19 supplement

The 'coronavirus supplement' for those on JobSeeker will be cut from $550 per fortnight to $250, with the scheme to end on December 31.
 
Both existing and new income support recipients will continue to be paid the supplement.
 
The government will also ensure income support is appropriately targeted as the economy recovers by reintroducing a range of means testing arrangements.
 
From 25 September 2020, the assets test and the Liquid Assets Waiting Period will be reintroduced and the JobSeeker payment partner income test will increase from 25 cents for every dollar of partner income earned over $996 per fortnight to 27 cents for every dollar of partner income earned over $1165 per fortnight.
 
The government will also improve incentives to work by increasing the income-free area for JobSeeker payment and Youth Allowance (Other) from $106 per fortnight to $300 per fortnight and will simplify the taper rate from a dual taper of 50 cents and 60 cents to a single taper of 60 cents. This will mean recipients are more easily able to calculate the value of every dollar they earn.
 
These changes will mean individuals will be able to earn up to $300 per fortnight without foregoing any JobSeeker payment or affecting their eligibility for the supplement.
 
The expanded criteria for JobSeeker payment and Youth Allowance (Other) will continue to provide payment access for permanent employees who are stood down or lose their employment, sole traders, and the self-employed until 31 December 2020.
 
Reduced waiting times, including the Ordinary Waiting Period, Newly Arrived Resident’s Waiting Period (NARWP) and the Seasonal Work Preclusion Period, will continue to be waived until 31 December 2020.
 
The new arrangements for the coronavirus supplement are expected to cost an additional $3.8 billion.
 

'A sigh of relief'

The state’s peak business organisation, Business NSW, believes business owners across the country will breathe a sigh of relief that the federal government will extend JobKeeper.

“Our COVID-recovery report, Back on track, released earlier this week highlighted the need to gradually wind-back JobKeeper and not end it abruptly,” said Business NSW CEO Stephen Cartwright.

“Many businesses are unprepared and would be vulnerable if JobKeeper ended too quickly,” he said.

“Our survey showed two in five businesses receiving JobKeeper do not have a plan to manage when payments stop, and one in two recipients will need to reduce staff hours or headcount when payments stop.

“That is why so many businesses and their staff will be relieved to hear today’s announcement to extend JobKeeper.

“The outbreak in Victoria and emerging risks in NSW will add further pressure, heightening the need to continue to support businesses and their employees.

Business NSW’s Back on track report called on the federal government to implement JobKeeper 2.0 which would extend and target support to where it is needed most.

“The business community would like to see their governments implementing policies that will get people back into work," Mr Cartwright said.

“That is why we called for National Cabinet to sign a compact to return unemployment to below 6 per cent by 2022. JobKeeper 2.0 is a vital component to achieving this.

“We would also like to see a Youth Jobs Guarantee provided to ensure young people looking for work have access to job opportunities during these tough economic times.”

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