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Understanding How Jobkeeper Is Applied In Payroll

Understanding how Jobkeeper is applied in Payroll

What is JobKeeper?

The JobKeeper payment is a subsidy for businesses, aimed at keeping more employees in jobs. The payment will be paid to employers for up to six months for each eligible employee that was employed on March 1, 2020, and is retained or continues to be engaged by that employer.

The question that is asked though is “How do we apply JobKeeper payments in payroll?

Before we start there are a few things that we need to consider:

  • Where a business is eligible for JobKeeper there is not the option to choose which employees are paid in this manner. It is “One In, All In”.
    All eligible employees are to be given the opportunity to sign up and it is their choice whether or not to sign up.
  • Employees can only be signed up to JobKeeper with one employer.
    If they are eligible under more than one employer, they need to choose which employer that they receive JobKeeper from.
  • JobKeeper is not a straightforward payment to the employee, it varies based on the circumstances of employments.

How is JobKeeper applied to Payroll?

JobKeeper is not a one size fits all. The way that it is applied to your payroll depends upon the employment circumstances of the employee.

Where an Employee is Stood Down

As COVID-19 spread across Australia and the world, many businesses were forced to temporarily close and remain closed until government restrictions are lifted.

Leave without Pay Before TaxAfter Tax
JobKeeper Payment$1500$1308
* Based on no additional tax deductions or HECS / HELP liabilities.

Where an Employee is still working (Regular or Reduced Hours)

The key when paying income is not whether or not an employee is working their regular, reduced, or in some cases more hours, but rather what the wages from these hours amounts to per fortnight in comparison to the JobKeeper payment.

If the wages are less than the $1500 value of JobKeeper

The key here is that any hours that are worked are treated as a Normal Wage with normal liabilities including accrual of leave, long service leave, and payment of Superannuation.

The balance of the JobKeeper payment is an allowance or “Top Up” without these liabilities to the employer.

Wages less than JobKeeperBefore TaxLiabilities
Normal WagesWage$ 1000Superannuation & Leave Liabilities
JobKeeper Top-UpAllowance$ 500No Superannuation or Leave Liabilities
($1500 minus Before Tax Wage Value = JobKeeper Top Up Allowance)

If the wages are equal or greater than the $1500 value of JobKeeper

Where the wages are equal or higher than the value of JobKeeper then there is no change to the handling of payroll. All hours and wages are treated as a normal wage with normal liabilities including Leave and Superannuation.

What about if I go on Leave?

If an employee takes Annual Leave, Sick Leave can be paid by JobKeeper.
It is treated the same as other wages.

Wages less than JobKeeper (using Leave)Before TaxLiabilities
Annual LeaveWage$ 250Superannuation & Leave Liabilities
Long Service LeaveWage$ 250Superannuation & Leave Liabilities
Compassionate Leave
(Sick or Carer’s Leave)
Wage$ 250Superannuation & Leave Liabilities
JobKeeper Top-UpAllowance$ 750No Superannuation or Leave Liabilities
Any leave acts the same as Wages, with the balance of the JobKeeper being applied as a “Top Up” Allowance.
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