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2020 Federal Budget: what it means for employers

Learn more about the changes that will come into effect.
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2020 Federal Budget: what it means for employers

2020 Federal Budget: what it means for employers

7 October 2020

By Mike Toten

Subsidies to hire unemployed people aged under 35, wage subsidies to hire new apprentices, some employment initiatives that target women, and provision for superannuation accounts to follow employees from job to job – these are the items in last night’s Federal Budget that are of most relevance to employers. The changes will come into effect if the Budget legislation is passed by Parliament, and are outlined below.
The Federal Government has also maintained its position that the JobSeeker payments (under which unemployment benefit payments have been increased) will be reviewed at the end of 2020 and the JobKeeper program (which subsidises employees and employers to ensure their jobs are retained) will be phased out at the end of March 2021.

JobMaker Hiring Credit

This is a wage subsidy scheme under which employers receive payments for each new employee they hire under the age of 35, if that employee was unemployed and receiving either JobSeeker, Youth Allowance (Other) or Parenting Payment for at least one of the three months prior to being hired.

Payments are as follows:
  • $200 per week for employees aged 16-29
  • $100 per week for employees aged 30-35

Other provisions are as follows:
  • The employee must work an average minimum of 20 hours per week, but can be either permanent, fixed-term or casual.
  • The subsidy will apply for 12 months from the day the job commences.
  • It does not apply to employers currently enrolled in JobKeeper, nor to those covered by the major bank levy (ie the largest banks).
  • The job must be a new one that increases the employee headcount above what it was on 30 September 2020, not a replacement employee in an existing job.
  • Employers do NOT have to have suffered a drop in turnover to be eligible.
  • It commences today (7 October 2020) and applies to eligible new hires until 6 October 2021. It will end 12 months later, on 6 October 2022.
  • Payments will be made quarterly in arrears, starting on 1 February 2021. Employers will have to report their continued eligibility each quarter.
Although employers can begin hiring eligible new employees immediately, they cannot register for JobMaker with the Australian Tax Office for two months (until 7 December 2020).

Some commentators have suggested that the Hiring Credit may have the side-effect of making it harder for unemployed people aged over 35 to obtain jobs. The Government has claimed that it focused on younger people because a disproportionately higher number of them have lost their jobs since the arrival of COVID-19.

Wage subsidies for new apprentices

The aim of the fund is to provide for 100,000 new apprenticeships and traineeships (that number is capped), while retaining existing ones. Unlike JobMaker, eligibility is not age-dependent. A wage subsidy of 50% for the first 12 months of employment will be available to employers who create new apprenticeships additional to existing positions. It is claimed to target people who are either entering the job market or retraining.
Other details are as follows:
  • It applies as from today (7 October 2020) and at this stage will be available until 30 September 2021;
  • Subsidies are paid direct to employers, quarterly in arrears. There is a cap of $7,000 per quarter;
  • Again, it applies only to newly-created positions (not replacement employees in existing apprenticeships/traineeships).
This incentive follows previous announcements in July 2020 (Supporting Apprentices and Trainees) that provided a 50% wages subsidy for existing apprentices, to encourage employers to retain them.

Job Trainer Fund

This initiative will be funded jointly by the Federal and State Governments to support a targeted 340,700 extra free or low-cost job/career training short courses. They will focus on “areas of genuine skills needs.”

Initiatives to target employment of women

Evidence indicates that women have suffered worse employment-wise than men since COVID-19 arose. For that reason, the Budget included a second Women’s Economic Security Statement (the first one issued in 2018). This Statement allocates $240 million to various measures aimed to support cadetships and apprenticeships for women in the areas of science, technology, engineering, mathematics (STEM in other words), plus measures to improve general job creation, access to entrepreneurialism and women’s safety.
Specific announcements include:
  • Expanding the Women’s Leadership and Development Program;
  • Establishing a Respect@Work Council to address sexual harassment at work; and
  • Expanding the Paid Parental Leave and Dad and Partner Pay Schemes, to extend the work test period to retain access to paid leave where eligibility was affected by COVID-19.


The Budget announced three superannuation-related changes that employers and HR practitioners will need to be aware of:
  • Instead of a new superannuation account opening automatically every time an employee starts a new job, the person will be able to maintain a single account that continues with him/her in each job. Employees can still choose to switch funds, however.
  • An on-line comparison website, to be called YourSuper, will enable employees to compare what different funds are offering and charging, eg administration fees.
  • Superannuation funds currently listed under MySuper will have to meet annual performance tests as from July 2021, and those that underperform (eg poor return on investment rates) will have to notify all their members and be listed on YourSuper. The test will be extended to other superannuation products in 2022.

Other contents relevant to employment

The Budget predicts that Australia’s unemployment rate will peak at about 8% at the end of 2020, and remain above 6% until at least 2023.
However, closure of international borders will continue to significantly reduce immigration, with the result that the Australian population will actually decrease by an estimated one million people, the biggest decrease occurring in Victoria.
Finally, it predicts that Australia’s economic recession will end by mid-2021 and in the calendar year of 2021 the economy will grow by more than 4%.

Further information

The above changes are explained in full detail as well as a comprehensive Fact Sheet for the JobMaker Hiring Credit.

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