The Federal Government has recently announced the introduction of the JobMaker Hiring Credit scheme, designed to give businesses incentives to employ younger, unemployed job seekers. The scheme is expected to support around 450,000 employment positions.
As part of the 2020/2021 Federal Budget, the JobMaker scheme targets the creation of new jobs, as opposed to the focus of the continuing JobKeeper scheme on keeping existing roles alive. JobKeeper 2.0 will continue to operate until 28 March 2021, together with the accompanying flexibility changes to the Fair Work Act 2009 (Cth) (Act) (see our previous article here.)
Under the JobMaker scheme eligible employers will be able to claim $200 a week for each additional eligible employee they hire who is aged 16 to 29 years old (to a maximum credit of $10,400), and $100 a week for each additional eligible employee who is aged 30 to 35 years old (to a maximum credit of $5,200). The JobMaker Hiring Credit can be claimed for each employee for up to 12 months from the date the new position is created.
The JobMaker Hiring Credit is to be claimed quarterly in arrears from the Australian Taxation Office (ATO) by an employer, commencing from 1 February 2021. Employers will need to report to the ATO quarterly that they continue to meet the eligibility criteria.
Along with the scheme, the Commonwealth government has also introduced further upskilling programs for apprentices and trainees, together with a wage subsidy for businesses that employ them.
To assist in your understanding of the JobMaker scheme and how it operates, this ‘factsheet’ sets out key facets of the scheme and the various eligibility criteria.
The JobMaker scheme commenced on 7 October 2020 and is available to employers for each new job they create over the next 12 months for which they hire an eligible young person, aged 16 to 35 years old. JobMaker payments cannot be claimed for existing employees.
Eligible employers will be able to receive JobMaker payments for up to 12 months for each new role created and for which they hire an eligible employee. The scheme itself will close to new participants on 7 October 2021.
Eligible employers who hire an eligible employee on 6 October 2021, being the last day that the scheme is open to new entrants, could then be eligible to receive JobMaker payments for 12 months up until 6 October 2022.
Employers who are currently participating in JobKeeper 2.0 and receiving payments for eligible employees will not be able to receive JobMaker payments. Only once an employer has ceased to receive JobKeeper payments for any of their employees, will they then become eligible to participate in the JobMaker scheme from the next reporting period.
The introduction of the JobMaker scheme does not affect the operation of JobKeeper 2.0 or extend its operation beyond 28 March 2021. No substantive changes were made to JobKeeper 2.0 as part of the Federal budget.
Employers may register for the JobMaker scheme online with the ATO from 7 December 2020. Importantly, employers do not need to be registered at the time that they hire an employee in order to be eligible to participate in the scheme. Registration has to simply occur at any time before a claim for a JobMaker payment is made.
Employers will be able to submit claims from 1 February 2021 for those new roles created in the first reporting period up to 6 January 2021. Employers will generally have three months in which to submit claims, following the opening of the relevant claim period. The JobMaker payment will be paid to an eligible employer quarterly in arrears, and not to employees. Employers will need to carry the full cost of any new employees until such time that they receive the JobMaker payment from the ATO.
In order for an employer to be eligible to receive the JobMaker Hiring Credit for an employee, they must meet the following conditions:
Unlike the JobKeeper scheme, employers do not need to satisfy a fall in turnover test in order to be eligible for JobMaker.
The additionality criteria means that:
Headcount for each reporting period will be taken from the last day of the relevant reporting period.
The amount of the hiring credit claim cannot exceed the amount of the increase in payroll for the reporting period.
The initial total employee headcount on 30 September 2020 and payroll in the three months to 30 September 2020 represent the baseline values for the employer. In the second year of the JobMaker scheme, those baseline values will increase to take into account the number and cost of new employees for which an employer is receiving JobMaker payments.
Newly established businesses and businesses with no employees at the reference date (30 September 2020) are able to claim the JobMaker Hiring Credit where they meet the criteria.
The minimum baseline headcount is one, so employers who had no employees at 30 September 2020 or who were created after that date, will not be eligible for the first employee they hire, but will potentially be eligible for the second and subsequent eligible hires.
The following employers are not eligible to participate in the JobMaker scheme:
To be eligible for the JobMaker scheme an employee must:
An employer will seek the assistance of an employee to complete the relevant nomination form, confirming that the employee is eligible for the JobMaker scheme and that no nomination form has been completed for them by another current employer.
While eligible employees may be employed on a permanent, casual or fixed-term basis, they must work at least 20 hours per week on average. It remains to be seen whether this threshold may encourage employers to employ two 20 hour per week part-time employees, rather than one full-time employee, and whether employers may look to reorganise their workforces to maximise the number of eligible new employees at the cost of existing employees. The JobMaker scheme is not open to independent contractors to participate in.
Any paid leave provided to the employee will count towards those average hours, but any unpaid leave will not.
The amount of the JobMaker payment received by an employer should have no impact on what amounts are paid to an eligible employee. Employers will need to ensure that they comply with the terms of any relevant modern award, enterprise agreement, and the National Employment Standards in the Act.
The following employees are not eligible employees for the JobMaker scheme:
As an integrity measure, ‘non-arm’s length’ employment relationships, such as those with family members of a family business, directors of a company, and shareholders of the company, will not be considered eligible employees.
Temporary amendments were made to the Act to support the practical operations of the JobKeeper scheme. Those changes included allowing qualifying employers to issue JobKeeper enabling stand down directions to employees when they could not be usefully employed due to the business changes associated with COVID-19 pandemic or government initiatives to slow the transmission of COVID-19. Employers who continue to qualify for JobKeeper 2.0 can continue to benefit from those changes.
they will be a ‘legacy employer” under the Act. Many employers will fall into this category.
Legacy employers can continue to take advantage of some of those temporary flexibilities under the Act even though they are not participating in JobKeeper 2.0 as such. Those employers will now also be eligible to participate in the JobMaker scheme.
Should you wish to discuss the JobMaker Hiring Credit scheme and how it may impact your business, please get in touch with Gadens’ team of Employment Advisory specialists.
Brett Feltham, Partner