Can you believe it has already been six months since the first phase of the JobKeeper initiative came into effect?
Alas, all good things, a bit like that family block of Marble chocolate you bought yesterday, have to come to an end.
The initial version of JobKeeper eventually came to an end last Sunday 27 September. However, while it did finish up, the first JobKeeper extension period or quarter started on Monday 28 September with the second extension commencing on 4 January 2021.
If your business is eligible for this current extension period (see eligibility requirements on the ATO website), this article will provide some guidance on what steps you need to do get prepared and start reporting.
Step 1: Determining Employee Eligibility
If your organisation was eligible for JobKeeper, pre-extension, you will not need to re-register your eligible employees.
If your organisation was not eligible for JobKeeper, pre-extension, but eligible for JobKeeper extension 1, you will need to register your eligible employees.
To register employees, make sure you have first sent your employees a JobKeeper employee nomination notice to complete. If you are a Definitiv customer, we suggest using our Announcements feature to manage this step. You can read the section on how to send out the nomination notice in our JobKeeper guide from earlier in the year here.
To find out more on nominating your employees, visit the ATO website.
Step 2: Determining the Tier
One of the new aspects of the JobKeeper extension is that there is no longer one flat fortnightly rate. There are now two rates dependant on the number of hours an eligible employee works.
To determine which tier an employee falls in, you will need to work out the number of hours an employee worked in the four weeks from the last date of the pay period before 1 March or 1 July 2020.
If an eligible employee worked 80 hours or more during one of these comparison periods, they will fall into tier 1. Any other eligible employees fall into tier 2.
What can be included in the hours?
The following can be included in the calculation;
- Actual hours worked
- Paid leave
- Hours paid in absence if they were scheduled to work on a public holiday
For employees on a weekly and fortnightly pay cycle, it will be easy to calculate those hours. If you have employees on a monthly pay cycle, you can either choose to pro rata or if you use time and attendance tools, such as through Definitiv, you can look at actual hours worked via reporting.
The pro rata calculations to ensure 80 hours worked condition is met in February or June 2020 are as follows;
- February (29 days): 82.86 hours
- June (30 days): 85.72 hours
Once you have determined which tier an eligible employee falls into, this will need to be reported to the ATO. Although we suggest doing this as soon as possible, the good news is that you have a bit of time to determine which tier an employee falls into. The ATO has confirmed that eligible employers have until 31 October to report the tiers their eligible employees fall into for the JobKeeper fortnights commencing on 28 September and 12 October.
Remember, even though you don’t need to report until 31 October for these earlier fortnights, you do need to have paid your eligible employees.
Similar to JobKeeper, pre-extension, this is reported to the ATO via an allowance other ATO category, however, we suggest talking to your payroll software provider on what you need to do. If you are a Definitiv customer, please refer to the JobKeeper extension guide that has been sent out as this has been automated for you.
What are the rates for each tier?
The below tables outline the fortnightly rates for the tiers in extension 1 and 2;
Step 3: Setting up JobKeeper payments
If you were already receiving JobKeeper payments prior to extension 1, you will have already done some setup in your payroll software. However, given the changes to rate, you will most likely need to do some tweaking.
The best place to always start if you have concerns is your payroll software provider. If you are a Definitiv customer, refer to our JobKeeper extension guide for everything you need to know.
Step 4: Informing your employees
Once you have determined and reported the tier an eligible employee falls into to the ATO, you must inform the employee of their tier/payment rate within 7 days.
A great way to do this if you are a Definitiv customer is with our Announcements feature.
Information provided in this article is general information, not legal advice and should not be relied upon as such. Definitiv does not accept liability for any loss or damage arising from reliance on the content of this article.
This article is correct as of Thursday 1 September 2020.