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New JobKeeper ‘loophole’ rules out 5,500 Aussie workers

Jessica Yun
·3-min read
Several Australian unions are calling for Treasuer Josh Frydenberg to rethink the new loophole that excludes Aussie workers of employers owned by foreign governments. (Source: Getty)
Several Australian unions are calling for Treasuer Josh Frydenberg to rethink the new loophole that excludes Aussie workers of employers owned by foreign governments. (Source: Getty)

At least 5,500 Australians are estimated to miss out on JobKeeper after some corporations were informed last weekend that they would no longer be eligible for the $1,500 a fortnight payments.

Last Friday, the federal government modified the eligibility rules around JobKeeper that excludes an employer if it is owned by a different government.

“The government changed the definition of ‘sovereign entity’ in the JobKeeper rules so that an employer is excluded from the JobKeeper scheme if they are 100 per cent owned by a foreign government, even if they are an Australian resident,” the Australian Services Union said in a statement.

This has left catering companies like Dnata, which employs more than 5,500 workers in Australia and handles up to 90 per cent of airlines’ catering needs, in the lurch. Dnata is 100 per cent owned by the government of Dubai, but employs Australians.

Treasury confirmed with Yahoo Finance that “a sovereign entity is not a qualifying employer for the purposes of JobKeeper payment” and indicated it had greater expectations for government-owned organisations to compensate employees.

“The term ‘sovereign entity’ takes its meaning from the Income Tax Assessment Act 1997 and, generally, includes a body politic of a foreign country, a foreign government agency, and an entity wholly-owned by a body politic of a foreign country or foreign government agency,” a Treasury spokesperson said.

“Government employers are considered to have a greater capacity to support their employees through this period than private businesses.”

In a letter to Treasurer Josh Frydenberg, TWU national secretary Michael Kaine and ASU assistant national secretary Linda White warned that the Australian economy would suffer if companies like Dnata collapsed.

“It will mean airlines will not be able to return to full capacity in the short to medium term,” they said.

“We hope you will consider the plight of thousands of workers today and examine this loophole.”

Aviation workers and their families would be “devastated” by the “unintended consequences of this loophole, they added.

“The Jobkeeper Payment has given them certainty about their futures and their income and has them on standby to return to work when the Government lifts its travel restrictions.

“Without it their jobs are under threat and their futures are entirely insecure.”

A spokesperson for the Australian Council of Trade Unions said the number of workers ineligible for stimulus payments were “extremely concerning”.

“The large number of employers who have not yet signed up for JobKeeper and the millions of workers who are not eligible for support are obviously extremely concerning.

“The Treasurer has the power to expand JobKeeper to any group of workers in Australia and we have been encouraging him to do so.”

Addressing ASU members, the union said the announcement might come as a “complete shock and no doubt will be extremely concerning and upsetting for you”.

“But please rest assured that the ASU will do everything within its power to attempt to get this outrageous narrow minded decision changed so that you get the support that you deserve.

“Scott Morrison took JobKeeper away from you with the stroke of a pen and we will be demanding that he fix the problem that he has created.”

Services Australia recently came under fire after Yahoo Finance reported it had not been forthcoming with information around income reporting dates for the $550 Coronavirus Supplement.

Aussies who miss out will receive the $550 payment for five months, not six, a Senate committee heard.

Has your business or employer been affected by this new change in the eligibility criteria? Let us know at jessica.yun@yahoofinance.com.

Episode 3 of Yahoo Finance's 'Live Online' Breakfast Club series will run this Thursday 7 May 2020 at 10am.
Episode 3 of Yahoo Finance's 'Live Online' Breakfast Club series will run this Thursday 7 May 2020 at 10am.

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