COVID-19 Update on JobKeeper Programme and National Commercial Tenancies Code of Conduct

There have been important announcements this week as part of the Federal Government’s response to the COVID-19 pandemic clarifying the JobKeeper programme as well as a national code dealing with Commercial Tenancies. 

1. JobKeeper Programme

Most of us have woken up this morning to the news that the JobKeeper legislation has passed through the senate. We will be communicating further specific details on how this will practically work as they emerge. A brief summary can be found at:

2. National Commercial Tenancies Code of Conduct

The Prime Minister announced this week that the National Cabinet has agreed on a mandatory Code of Conduct (‘the Code’) to provide relief to Tenants in commercial tenancies during the COVID-19 pandemic. The Code will be legislated and regulated in each individual State and Territory and provides for a range of measures for commercial, industrial and retail Tenants who are eligible to receive support under the Commonwealth’s JobKeeper programme.

To be eligible for support under the Code a Tenant must:

  1. have a turnover of less than $50 million; and
  2. have a 30% or greater decrease in turnover.

The Code sets out a number of principles which are intended to assist Tenants and Landlords to reach an agreement that shares the cashflow impact of the COVID-19 pandemic. These principles are:

  1. a prohibition on Landlords terminating leases for non-payment of Rent;
  2. an obligation on Tenants to continue to comply with their obligations under their respective Lease(s);
  3. an obligation on Landlords to offer rent reductions in the form of deferrals (postponement of Rent) or waivers that are proportional to the Tenant’s decrease in turnover. Rent waivers must comprise at least half of the total rent reduction;
  4. a prohibition on Landlords charging fees or interest on rent or other payments being deferred;
  5. a prohibition on Landlords calling on security deposits, bank guarantees and personal guarantees;
  6. a requirement for Landlords to provide their Tenants with an opportunity to extend their Leases for an equivalent period of the rent waiver and/or deferral;
  7. an automatic freeze on rent increases for the period of the COVID-19 pandemic and for a subsequent recovery period; and
  8. an obligation on Landlords to pass on any reduction in statutory rates or charges it receives to its Tenants.

If Landlords and Tenants fail to agree on an agreement for their respective Lease, the Code allows either party to refer the matter to their respective State or Territories’ mediation service.

For Leases which do not fall within the Code, Landlords and Tenants will be free to make their own commercial arrangements in relation to an appropriate level of rent abatement (if any) and the consequences which will flow from that.

Osborn Law is continuing to monitor the implementation of the Code in each State and Territory and are ready to assist you to negotiate an agreement with your Landlord or Tenant in accordance with the Code or to document any rent relief agreement reached. 

For more information regarding the above or to discuss anything further please contact our team on 02 4927 2900.