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JobKeeper Extension - Eligibility and Payment Rates

The Government has now confirmed the changes to JobKeeper, in relation to the extension of the scheme post-September. Find our comprehensive guide of the changes below or download a PDF version.


The changes relate to the JobKeeper extension period between 28 September 2020 and 28 March 2021.


There is still one application of the 'original' JobKeeper scheme to come for the month of September (applications open 1 October). After this application, to continue to receive payments for the month of October onwards, there are additional eligibility requirements as well as changes to payment rates.


The extension of the JobKeeper scheme is separated into two periods. The first period is 28th September 2020 to 3 January 2021 (first extension). The second period is 4 January 2021 to 28 March 2021 (second extension).


The Government has clarified that businesses are not excluded from qualifying for JobKeeper payments in the second extension if they were not eligible for the first extension. If a business satisfies the relevant turnover requirement for the second extension then they re-qualify for payments between 4 January and 28 March.


Businesses who have previously not been eligible for JobKeeper payments can enter the scheme and enrol for the first and/or second extension, if they experience the decline in turnover for the relevant period.


The business and all employees in receipt of JobKeeper must still meet all other eligibility criteria.


The below is based on businesses with an annual aggregated turnover of less than $1 billion.

To qualify for JobKeeper payments for the first extension, the business must have experienced an actual decline in turnover of at least 30% in the September 2020 quarter (July, August, September) compared to a comparable quarter in 2019 (generally the September 2019 quarter).


To allow businesses enough time to review their eligibility, the wage condition for JobKeeper fortnights starting 28 September and 12 October has been extended to 31 October. This means businesses will be able to assess if they are eligible to receive JobKeeper before they pay or top-up their eligible employees. It also gives businesses time to review hours worked (required for the new payment rates).

To qualify for JobKeeper payments for the second extension, the business must have experienced an actual decline in turnover of at least 30% in the December 2020 quarter (October, November, December) compared to a comparable quarter in 2019 (generally the December 2019 quarter). It is likely that there will be alternative testing methods, however they are yet to be announced. They will be similar to the current alternative testing methods.

The current payment rate (until 27 September) is $1,500 per fortnight before tax, for all employees and eligible business participants.


The payment rate is changing to a reduced, two-tiered system after 28 September. For employees, the applicable rate depends on total hours worked (this includes paid leave) in the chosen reference period. For eligible business participants, the applicable rate depends on hours actively engaged in the business.

Tier 1: The payment rates for those who worked 80 hours or more in the reference period are as follows:

  • For fortnights on or after 28th September 2020 - $1,200 per fortnight

  • For fortnights on or after 4th Jan 2021 - $1,000 per fortnight

Tier 2: The payment rates for those who worked less than 80 hours in the reference period are as follows:

  • For fortnights on or after 28th September 2020 - $750 per fortnight

  • For fortnights on or after 4th Jan 2021 - $650 per fortnight

These figures are before tax. Before the business claims a payment for a JobKeeper fortnight from 28 September, they must notify the ATO which rate applies to each of their eligible employees and/or eligible business participant. We assume that this will be part of the existing online application process. As mentioned above, the wage condition for employees for JobKeeper fortnights starting 28 September and 12 October has been extended to 31 October. After this, wages must be paid within the relevant fortnight to be eligible for reimbursement.

Businesses must calculate the hours worked by their eligible employees in order to assess whether they will receive the higher rate or lower rate. This will generally only be relevant for part-time or casual employees (as full time employees are likely to exceed the minimum hours required for the higher rate).


To be eligible for the higher rate, employees must have worked 80 hours or more in either of the following reference periods:

  • The 28 day period ending before 1 March 2020,

  • The 28 day period ending before 1 July 2020.

Both periods are applicable to all eligible employees - you do not need to choose the same reference period for all employees.


If the employee has not worked 80 hours or more, then the lower rate applies. Information on alternative tests are detailed below.


Businesses must notify their employees in writing the payment rate which applies to them - this needs to be done within 7 days of notifying the ATO of the relevant rates for each employee.


The 28 day period is based on when an employer's pay cycle ends and therefore will not be the same for all employers. However, it should include the last two consecutive fortnights or last four weekly consecutive pay periods ending before 1 March or 1 July. If an employer's pay period is monthly, average hours are identified over a pro-rated basis.


Checking payroll records for the relevant periods should enable a business to accurately calculate hours worked.


Example - before 1 March:

Jess pays her employees fortnightly on every second Wednesday. In February 2020, the pay cycles ended on the 5th and 19th. The next consecutive pay cycle ended on the 4th March. As the reference period is the 28 days ending before 1 March, Jess must calculate the hours based on the last two pay cycles (being the 5th and 19th of February). This period is 23 January to 19 February.


Example - before 1 July:

In June 2020, the pay cycles for Jess ended on the 10th and 24th. The next consecutive pay cycle ended on the 8th July. As the reference period is the 28 days ending before 1 July, Jess must calculate the hours based on the last two pay cycles (being the 10th and 24th of June). This period is 28 May to 24 June.


The payment rates as above also apply to eligible business participants. However, the test to determine which payment rate applies for eligible business participants is based on hours of active engagement in the business.


Active engagement means time spent actively operating the business, undertaking specific tasks in business development such as training, planning, regulatory compliance or similar activities. Both the business and the eligible business participant (or sole trader) must be in a position to reasonably prove the basis of calculating active hours.


To be eligible for the higher rate, the eligible business participant must have been actively engaged in the business for 80 hours or more in the following reference period:

  • The month of February 2020.

80 hours averages out to about 20 hours per week. If the business participant was actively engaged in the business for less than 80 hours in February, then the lower rate applies.


The ATO must be notified which payment rate applies.

The ATO have issued guidance on alternative reference periods for eligible business participants and employees. These are the circumstances for which there are alternative tests:

  • Not representative of normal hours.

  • Employed part-way through the reference period.

  • First pay cycle ends on or after 1 March or 1 July.

  • Businesses that change hands.

Businesses should review their turnover now and compare their September 2019 quarterly GST turnover to the September 2020 quarterly GST turnover. This will allow businesses to pre-emptively determine their eligibility for the first extension.


If the business lodges BAS, GST turnover for comparison purposes is likely to be G1 less 1A (if G1 does not include GST). Please note that outstanding unlodged BAS' may hold up JobKeeper extension applications.


If businesses are likely to be eligible, they need to work out if the Tier 1 or Tier 2 payment rates apply to each of their eligible employees and/or eligible business participant.


From 28 September businesses must:

  • Notify the ATO and their eligible employees and/or eligible business participant what payment rate applies to them.

  • During the first extension - ensure their eligible employees are paid at least:

  • $1,200 per fortnight for Tier 1 employees

  • $750 per fortnight for Tier 2 employees

  • During the second extension (if eligible) - ensure their eligible employees are paid at least:

  • $1,000 per fortnight for Tier 1 employees

  • $650 per fortnight for Tier 2 employees

If you have any questions or require assistance - please contact us.

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