What to expect from pay cut this week

 

Things took a dark turn for businesses and employees in March when it became apparent how dire the coronavirus pandemic was unfolding.

Businesses quickly had to change tact while others went out of business and many people were left either jobless or with cuts to their hours or pay.

JobKeeper and JobSeeker explained

The JobKeeper stimulus was introduced to provide support for businesses who faced financial losses to be able to pay their employees and keep them in jobs.

The stimulus has provided $750 per employee per week to any business that could prove a large reduction in overall turnover, with different criteria for small and large businesses.

JobSeeker was created to support people who suddenly found themselves out of work due to the pandemic. It effectively doubled fortnightly unemployment payments.

Those on JobSeeker payments get about $1100 a fortnight, which includes the $550 coronavirus supplement on top of the $612 pre-tax JobSeeker - formerly Newstart - payment for singles and $510 pre-tax payment for those who are coupled.

Approximately 1.3 million workers will lose access to support from the JobKeeper program. Picture Glenn Hampson
Approximately 1.3 million workers will lose access to support from the JobKeeper program. Picture Glenn Hampson

At a cost of $70 billion over six months, the JobKeeper program has provided over $2.6 billion in wage subsidies each week to qualifying businesses.

According to Treasury estimates, more than 900,000 businesses were supported and no less than 3.5 million workers were supported by the JobKeeper program.

But with changes coming into effect at the end of the month, hundreds of thousands of businesses will be forced to stand on their own two feet for the first time in six months and approximately 1.3 million workers will lose access to support from the JobKeeper program.

Prime Minister Scott Morrison has announced cuts to the coronavirus stimulus from $550 to $250 a fortnight. Photo by Sam Mooy/Getty Images
Prime Minister Scott Morrison has announced cuts to the coronavirus stimulus from $550 to $250 a fortnight. Photo by Sam Mooy/Getty Images

What's changing for JobKeeper

The JobKeeper scheme has been extended until March 28 next year, with cuts coming into effect next week from September 28, while a further payment reduction will come into effect early next year from January 4.

From September 28 to January 3, full-time employees who work more than 20 hours on average a week will get $1200 per fortnight compared to the current $1500, while part-time employees who worked less than 20 hours a week will get $750 per fortnight.

Then, from January 4 until March 28 next year, this will drop further to $1000 for full-time workers and $650 per fortnight for part-time employees.

To claim the fortnightly payments, businesses need to show that GST turnover has declined in the September 2020 quarter (for the first extension) and the December 2020 quarter (for the second extension) compared to the prior corresponding period.

Business will need to satisfy the decline in turnover test and will need to make a monthly declaration. Employers will be required to pay eligible employees at least the JobKeeper amount that applies to them each fortnight.

They won't need to re-enrol for the JobKeeper extension if they are already enrolled for JobKeeper for fortnights before September 28, and eligible businesses will be able to enrol in JobKeeper until the program ends.

The maximum fortnightly rate for singles will drop from around $1115 to around $815 a fortnight when JobSeeker payments come into place at the end of September. Picture Glenn Hampson
The maximum fortnightly rate for singles will drop from around $1115 to around $815 a fortnight when JobSeeker payments come into place at the end of September. Picture Glenn Hampson


What's changing for JobSeeker

The coronavirus supplement will drop from $550 a fortnight to $250 a fortnight from September 25, and will be extended until the end of the year to December 31, 2020.

That means the maximum fortnightly rate for singles will drop from around $1115 to around$815. Singles with children and over 60s will get a mere $50 a fortnight more than this. Those in a partnership will receive $760 a fortnight including the $250 coronavirus stimulus.

The asset test waiver will need to be updated online before September 24, 2020.

There will also be changes to the partner income test. Payments will reduce by 27 cents for every dollar a partner earns over $1165 per fortnight. If your partner earns more than $3,086.11 per fortnight, your payments will reduce to zero.

If you've been on JobKeeper payment and your employer is no longer eligible for this or your work situation changesm you can start an early claim for JobSeeker payment.

Job seekers will be obliged to apply for up to eight jobs each month.

Other government payments, including Youth Allowance, Austudy, the Farm Household Allowance, will also fall as the coronavirus supplement drops.

Originally published as What to expect from pay cut this week



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