Wednesday, 21 October 2020

Update 14: JobMaker Hiring Credit announced in 2020-21 Budget

As part of the 2020–21 Budget, the Australian Government recently announced the JobMaker Hiring Credit, a new incentive for businesses to employ additional young job seekers. The purpose of the scheme is to improve the prospects of individuals getting employment in Australia and increase workforce participation as the economy recovers from the COVID-19 pandemic.

Under the new Scheme, employers will be able to claim the JobMaker Hiring Credit for new jobs created on or after 7 October 2020 for up to 12 months from the date the new position is created.

We have set out a number of Q&As for employers on the new JobMaker Hiring Credit based on the information currently available from the Australian government. This is subject to the impending passage of legislation enacting the JobMaker scheme.

How much is the JobMaker Hiring Credit?

For eligible employees hired from 7 October 2020 until 6 October 2021 for up to a maximum claim period of 12 months, eligible employers will be able to claim:

  • $200 per week for each eligible ‘additional’ employee they hire aged 16 to 29 years old; and
  • $100 per week for each eligible ‘additional’ employee aged 30 to 35 years old.

Like the JobKeeper scheme, the JobMaker Hiring Credit will be administered by the ATO and the ATO will pay the Credit to the employer.

Who is an ‘additional’ employee?

The JobMaker Hiring Credit is only available to employees hired in an ‘additional’ job that was created on or after 7 October 2020.

To demonstrate that the job is ‘additional’, the employer must be able to show an increase in:

  • the business’ total employee headcount (minimum of one additional employee) from the reference date of 30 September 2020 (the baseline headcount); and
  • the payroll of the business for the reporting period, as compared to the three months prior to 30 September 2020 (the baseline payroll).

The first reporting period is 7 October 2020 – 6 January 2021. The amount of the JobMaker Hiring Credit claim cannot exceed the amount of the increase in payroll for the reporting period.

The baseline headcount will be adjusted in the second year of the JobMaker scheme to ensure an employer can only receive the JobMaker Hiring Credit for 12 months for each additional position created.

Will my business be eligible to receive the JobMaker Hiring Credit?

A business will be eligible to receive the JobMaker Hiring Credit if it:

  • has an Australian Business Number (ABN);
  • is up to date with tax lodgement obligations;
  • is registered for Pay As You Go (PAYG) withholding;
  • is reporting through Single Touch Payroll (STP);
  • meets the additionality criteria (mentioned above);
  • is claiming in respect of an eligible employee; and
  • has maintained adequate records of the paid hours worked by the employee they are claiming the hiring credit in respect of.

A business will not be eligible if it is:

  • a government body agency or a wholly owned entity of such an agency;
  • a sovereign entity, save for Australian resident entities owned by a sovereign entity that meet all other eligibility criteria;
  • in liquidation or has entered bankruptcy; or
  • subject to the major bank levy.

Importantly, employers cannot claim both the JobKeeper Payment and the JobMaker Hiring Credit at the same time.

Will my employees be eligible?

Your employees will be eligible if they:

  • were aged 16 to 35 years old at the time their employment started;
  • worked at least 20 paid hours per week on average for the full weeks they were employed over the reporting period (the first reporting period is 7 October 2020 to 6 January 2021);
  • 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;
  • are in their first year of employment with the business; and
  • are employed for the period that the employer is claiming for them.

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

Your employees will not be eligible if they:

  • are aged under 16 years or over 35 years at the time their employment started;
  • are also receiving a wage subsidy under another Commonwealth program from your business;
  • are receiving the JobMaker Hiring Credit from another business; and
  • worked on average less than 20 hours per week, for the full weeks they were employed during a reporting period.

How will the JobMaker Hiring Credit work?

From 7 December 2020, eligible employers will be able to register for the JobMaker Hiring Scheme through ATO online services. 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.

Eligible employers will need to ask employees to fill out a JobMaker nomination form where they declare that they meet the employee eligibility for the JobMaker Hiring Credit (outlined above). These nomination forms are not yet available, but we expect they will be released closer to December 2020. From that point, we would recommend that these forms are provided to prospective employees during the recruitment process to ascertain their eligibility.

From 1 February 2021, eligible employers will be able to submit claims for new jobs created in the first reporting period. Employers will have three months to submit claims following the opening of the claim period, and they will need to report quarterly that they meet the eligibility criteria.

The ATO will pay the JobMaker Hiring Credit quarterly in arrears to eligible employers. Unlike the JobKeeper subsidy, where employees were paid the $1,500 fortnightly subsidy regardless of the hours they worked, employers retain the JobMaker Hiring Credit and pay employees only in respect to hours worked.

What should employers do?

While the legislation and supporting rules are not yet law, it is important that employers are aware of the JobMaker scheme ahead of its implementation in the coming months.  Therefore, employers should start to prepare for and consider the impacts of the scheme on their business.

We will provide further updates as to the status of the scheme, including once the legislation and supporting rules comes into effect.

This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.