Today was the first day for eligible employers to begin enrolling into the Jobkeeper Scheme. To do so, an employer has already had to:
- Determine that they are eligible under the GST Turnover reduction test. Interpret various pieces of legislation and guides to ensure correct calculation or forecasting
- Identified, contacted, and obtained copies of the Jobkeeper Nomination forms for all eligible employees (regardless of whether they are or are not participating)
- Have paid, or will pay in the next 10 days, a minimum of $3000 per eligible employee
But have employers participating in the scheme considered the true cost of enrolling in the Jobkeeper Scheme. Here are some examples of hidden costs:
- Administration costs. While many businesses are self managing, most are leaving it to the professionals or their payroll departments. There are costs associated with preparing the required (and often onerous) documentation for supporting eligibility and enrolment. On going reporting and reviewing ongoing eligibility for each employee will be required for each Jobkeeper payment.
- Interest costs. Many small business owners are drawing down on mortgages, borrowing from family members, or even withdrawing from super due to the Government requiring small businesses to ‘bank roll’ the Government for $3000 per eligible employee. Under the one-in/all-in rule, if you can’t make a payment for all your employees, then none are eligible.
- Payroll processing costs. Changes to payroll categories, and training payroll processors in applying the various STP reporting categories is a cost each business will need to consider.
- Leave entitlements and service periods. The complex interaction between leave provisions and Jobkeeper is hard enough to follow, but certain arrangements will lead annual and sick leave accruals. Even for employees who had been stood down but receiving Jobkeeper, the next 6 months will count as employment service, with the potential that redundancies may become more expensive 6 months later.
- Workers Compensation. NSW iCare has advised that Jobkeeper payments will be included as assessable wages for workers compensation, even those that have been stood down but still receiving Jobkeeper. A café with a policy percentage of 1.7% will now incur an additional $334 per stood down employee – strange considering workers compensation doesn’t cover personal injuries while stood down.
- Record keeping. Employers will need to keep very detailed records of historical data and minutes of decisions/discussions for a minimum 5 years. We are focusing our client’s attention in making sure documentation is prepared now, and not scrambling during a review/audit.
The question is – would it not have been easier to simply pay all these $750/w payments via Centrelink (for both Jobkeeper and Jobseeker) and employers simply top up payments as required if the staff member works? Surely there are easier ways to support the economy, than forcing small business owners to jump through hoops, beg banks to take on even more debt, and becoming tax, HR, and finance law experts overnight.
