Federal Budget 2020: Incentives for hiring young job seekers, apprentices & trainees

To assist with the recovery from the impact of COVID-19, the Australian Government announced two important programs as part of the recently announced 2020 Federal Budget. These programs were handed down with the intention of making it easier for businesses when hiring young job seekers, apprentices & trainees through incentives that reduce the wages paid by the employer. These schemes include:

• Boosting Apprenticeship Commencements; and
• JobMaker Hiring Credit.

 

We asked our friends at Allara Learning to provide some more detail around the proposed measures and how a business looking to hire apprentices or trainees can access the subsidies.

 

Boosting Apprenticeship Commencements; A subsidy for hiring apprentices & trainees

Under the new ‘Boosting Apprenticeship Commencements’ subsidies program, businesses of any size that take on a new Australian apprentice or trainee will qualify for a 50% wage subsidy on the wages paid to the apprentice or trainee.

 

Is my business eligible?

Your business may be eligible if:

• you engage an Australian Apprentice between 5 October 2020 and 30 September 2021; and
• your Australian Apprentice or trainee is undertaking a Certificate II or higher qualification and has a training contract that is formally approved by the state training authority.

 

How much is the subsidy?

• Eligible employers will receive a wage subsidy of up to 50 per cent of the Australian Apprentice’s gross wage paid;
• The wage subsidy is available for a maximum of $7,000 per quarter per eligible Australian Apprentice;
• The subsidy is available for wages paid from 5 October 2020 to 30 September 2021.

 

Anything else I should know?

• The subsidy is available to employers of any size, industry, or geographic location;
• The subsidy is capped at 100,000 places;
• There is no limit per employer. Employers can receive a subsidy under Boosting Apprenticeship Commencements for any number of apprentices or trainees, provided they meet the eligibility criteria. However, your Australian Apprentices must be one of the first 100,000 who commences or recommences on or after 5 October 2020 and registers for the subsidy.

 

JobMaker Hiring Credit; An incentive for hiring young job seekers

The JobMaker Hiring Credit (‘JobMaker’) will be a subsidy paid to businesses to take on additional young job seekers. The amount of payment is either $200 or $100 per week (depending on the age of the employee) and will be paid for a period of up to 12 months.

JobMaker will be available to employers for each new job they create for eligible employees between 7 October 2020 and 6 October 2021.

A further JobMaker scheme will operate for new positions created from 7 October 2021 to 6 October 2022.

The scheme has not been legislated yet, so is subject to change. However, explained below is a summary of the information the Government has provided on how they intend the scheme to operate.

How much is the JobMaker payment?

Age of employee	Amount per week
16 to 29 years	$200
30 to 35 years	$100

How long will employers receive JobMaker for? 

New jobs created until 6 October 2021 will attract the JobMaker Hiring Credit for up to 12 months from the date the new position is created.

This means an eligible employer who hires an eligible employee on 6 October 2021 (the last day that the scheme is open to new entrants) could be eligible for payments for the 12 months to 6 October 2022.

 

Which employees will be eligible?

To be eligible, the employee must have received one of the following Government benefits for at least one of the previous three months at the time of hiring: the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment.

A brief summary of these benefits is as follows:

• JobSeeker Payment – Financial help for people between 22 and Age Pension age and looking for work. It’s also for people who are sick or injured and can’t do their usual work or study for a short time.
• Youth Allowance (Other) – A means tested payment for young people 16-21 years of age, who are looking for full-time work or undertaking approved activities
• Parenting Payment – The main income support payment for people who are a young child’s main carer. This payment is also for job seekers who are the main carers of young children.

Which employers will be eligible?

Unlike the JobKeeper scheme, there is not a decline in turnover test to satisfy.

However, to be eligible businesses must: 

• have an Australian Business Number (ABN);
• be up to date with tax lodgement obligations;
• be registered for Pay As You Go (PAYG) withholding;
• be reporting through Single Touch Payroll (STP);
• have kept adequate records of the paid hours worked by the employee they are claiming the hiring credit in respect of.

Employers must also satisfy the “additionality criteria” explained below.

What is the “additionality criteria” employers must satisfy?

To be eligible for the payment, businesses must show:

• There is an increase in the total employee headcount (minimum of one additional employee) since 30 September 2020; 
• the payroll of the business for the quarterly reporting period, as compared to the three months to 30 September 2020 has increased by at least the amount of the hiring credit claimed. In other words, if a business claims JobMaker of $200 per week in respect of one employee, their payroll costs must increase by at least $200 per week – the employer cannot make a profit from the JobMaker payment.

Employers can continue to be eligible for JobMaker for a newly created position, even if the employee originally hired in the position leaves but is replaced in the role (so long as the employer and new employee continue to meet all the relevant eligibility requirements). However, the 12 month payment period will only last for a maximum of 12 months from when the new position was originally created.

 

Which businesses are ineligible for JobMaker?

The following employers are not eligible for the JobMaker Hiring Credit:

• Employers who are claiming JobKeeper (although they will be eligible when JobKeeper ends – see below);
• Commonwealth, state and local government agencies, and entities wholly owned by these agencies;
• Sovereign entities (foreign Governments, their agencies and wholly-owned foreign resident subsidiaries). However, Australian resident entities owned by a sovereign entity that meet all other eligibility criteria are eligible; 
• Entities in liquidation or who have entered bankruptcy;
• Employers subject to the major bank levy.

An employer receiving the JobKeeper Payment can be eligible for the JobMaker Hiring Credit once they have exited the JobKeeper Payment and are no longer receiving the JobKeeper 

Eligibility for the hiring credit will commence in the reporting period following their JobKeeper exit date. This means that for businesses that will receive JobKeeper until the end of the scheme (28 March 2020) can apply for JobMaker for quarterly periods occurring after this date.

 

How does JobMaker work for newly established businesses?

Newly established businesses and businesses with no employees at the reference date of 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 this reference date will not be eligible for the first employee hired, but will be eligible for the second and subsequent eligible hires.

 

What is the age criteria for employees?

To be an eligible employee, the employee must be aged either:

• 16 to 29 years old, to attract the payment of $200 per week; or
• 30 to 35 years old to attract the payment of $100 per week

It appears from the information provided by the Government so far that the payment rate does not change if an employee has a birthday during the relevant period, the relevant test is just their age when they were first employed.

Employees aged under 16 years or over 35 years at the time their employment started will not be eligible for JobMaker.

 

What other employee eligibility criteria apply?

Other criteria are that the employee must:

• have worked at least 20 paid hours per week on average for the full weeks they were employed over the quarterly reporting period;
• commenced their employment between 7 October 2020 and 6 October 2021;
• have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one month within the past three months before they were hired;
• be in their first year of employment with this employer, reflecting that the hiring credit is only available for 12 months for each additional job; and
• must be employed for the period that the employer is claiming for them (in other words, employers will lose the payment if the employee leaves employment).

Employees may be employed on a permanent, casual or fixed-term basis.

Which employees will not be eligible for JobMaker?

The following are not eligible employees for the JobMaker Hiring Credit: 

• employees for whom the employer is also receiving a wage subsidy under another Commonwealth program such as the Boosting Apprenticeship Commencements wage subsidy, Supporting Apprentices and Trainees subsidy and the Australian Apprentice Wage Subsidy Trial;
• employees that another employer is claiming the JobMaker Hiring Credit in respect of 
• employees that worked on average less than 20 hours per week, for the full weeks they were employed during a reporting period will be ineligible for that period;
• Family members of a family business, directors of a company and shareholders of a company.

 

How do businesses claim JobMaker?

Registrations will open for eligible employers through ATO online services from 7 December 2020. Employers do not need to be registered at the time that they hire an employee in order to be eligible.  Registration can occur at any time before a claim is made.

Employers can submit claims from 1 February 2021 (for new jobs created in the first reporting period of 7 October 2020 to 6 January 2021). Employers will have three months to submit claims following the opening of the claim period.

Employers will need to get employees to fill out a JobMaker nomination form where the employee declares that they meet the employee eligibility, namely at the time of being hired they:

•  were aged 16 to 35 years old
• had been receiving JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one of the three previous months
• have not filled in a JobMaker Hiring Credit nomination form for another employer who they are still working for.

 

How will the JobMaker payment be paid to employers?

The JobMaker Hiring Credit will be claimed quarterly in arrears by the employer from the Australian Taxation Office (ATO) from 1 February 2021. Employers will need to report quarterly that they meet the eligibility criteria.

 

How can I apply or find out more?

Are looking for more information about the changes including what subsidies may be available to you, how to apply for the subsidy, or information on eligibility, speak to the team at Allara Learning for a confidential discussion today. 

You can also contact the team at Employment Innovations for advice and support on navigating the constantly changing employment landscape. Our HR Representatives are available for a confidential 1:1 consultation on 1300 144 120.

 

 

This article was originally published on 9 October 2020; updates have been made following additional information being made available. Last updated 4 November 2020.