JobKeeper Payments During a Business Sale

The Federal Government’s JobKeeper package has been well received by the business community and enabled many businesses to retain staff despite a short-term reduction in revenue.

In many cases the JobKeeper package enables “business as usual” and could be the difference between a business sale taking place or being deferred.

Positively, the JobKeeper legislation provides that eligible employees will continue to be eligible if there are changes in ownership of the business, provided the new owner continues to run the same business.

Here is Subsection 9(6) of the legislation:

Businesses that change hands etc.

(6) For the purposes of this section, treat an entity (the later entity) that employs an individual at a time (the later time) as having also employed the individual at an earlier time if:

(a) the individual was employed at the earlier time by another entity in the same wholly?owned group as the later entity; or

(b) both of the following apply:

(i)  at the later time, the individual is employed in a business carried on by the later entity or in a non?profit body the purposes of which are carried on by the later entity;

(ii)  at the earlier time, the individual was employed in the same business or non?profit body, but that business was, or the purposes of that non?profit body were, carried on by a different entity.

Note 1:      Paragraph (b) means that an individual can be an eligible employee of an entity even if the business or non?profit body in which the individual is employed changes hands after 1 March 2020.

Note 2:      Paragraph (b) also means that, in working out if an individual is a long term casual employee of an entity at a time, employment in a business or non?profit body during the period of 12 months that ended at that time can be counted even if the business or non?profit body changed hands during that period.

The Explanatory Statement supporting the Legislation also includes the following summary:

Subsection 9(6) of the Rules provides some flexibility for any changes in ownership of a business and movement of employees within the same wholly-owned group. It means that employees are not disadvantaged if these events, which are ordinarily beyond their control, occur.

A person can therefore be treated as an eligible employee of the same employer even if the business or non-profit body in which the person is employed changes hands after 1 March 2020. It also means that in working out if a person is a long term casual employee of an employer, employment in a business or non-profit body in the 12 month period ending on 1 March 2020 can be counted even if the business or non-profit body changed hands during that period.

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