Job Keeper Wage Subsidy Scheme cannot be used to reduce an Employee's hourly rate

As you are no doubt aware, in response to the Covid-19 pandemic, the Federal Government in an attempt to assist employer to keep employees in work introduced the JobKeeper Wage Subsidy Scheme (JobKeeper Scheme).

The JobKeeper Scheme temporarily suspends provisions of the Fair Work Act (FWA) which are specific to standing down employees, minimum hours of work and payment of employee entitlements.

The JobKeeper Scheme introduced a “JobKeeper Payment” of $1,500.00 per fortnight which is a subsidy paid to “eligible” employers to keep paying their “eligible” employees. 

NOTE: Not all employers or employees are eligible (please refer to our previous blog post about which employers and employees are eligible.)

Since the introduction of the JobKeeper Scheme there have been several cases in the Fair Work Commission specifically about disputes between employers and employees concerning what the provision in the JobKeeper Scheme allow. These disputes centre on the JobKeeper Enabling Directions or Agreements and their effect on employee’s pay more specifically their hourly rate.

JobKeeper Enabling Directions allow employers to temporarily stand down an employee, including reducing their hours or days of work, change an employee’s usual duties, or change an employee’s location of work.

The JobKeeper Scheme also permits employers and employees to make Agreements to change their days and times of work and take annual leave in certain circumstances.

The amending provisions of the JobKeeper Scheme suspend the provisions of some Modern Awards relating to employee’s hours of work, when leave can be taken, and the employee’s usual duties or their location of work, but only insofar as the amending provisions differ from the Modern Award.  The amending provision were enacted to give employers and employees greater flexibility to allow businesses to continue and to support them to retain and pay their employees.

Most importantly JobKeeper Enabling Directions or Agreements cannot reduce the hourly rate an employee is paid prior to the introduction of the JobKeeper scheme.

Whilst an employee maybe required to work less hours under a JobKeeper Enabling Stand Down Direction, the employee must be paid their normal hourly rate for the actual hours worked, even if the amount which the employee earns whilst working the reduced hours is still greater than the JobKeeper payment.

Similarly an employer cannot require an employee to work longer hours than they would normally have worked to be paid the JobKeeper payment.  All employee’s eligible under the JobKeeper Scheme must be paid the full amount of the JobKeeper Payment.

Not paying the normal hourly rate or requiring an employee to work longer than they would normally have worked to earn the same as the JobKeeper Payment amount is illegal and will result in the employer being at risk of being brought before the Fair Work Commission.

To chat further about any concerns you may have regarding the JobKeeper Scheme, please contact the RNG Lawyers Litigation team.