Hire purpose

Wage subsidies for new staff and simplified employment rules aim to encourage businesses to grow.

The Federal Government hopes to get the economy out of a holding pattern this year, extending JobMaker to sole traders and prioritising industrial reform legislation.

Reforms aim to give employers certainty around hiring casuals, which the Government hopes will complement the JobMaker wage subsidy scheme to create more jobs for young people.

However Federal plans have already hit turbulence with several states imposing early restrictions to deal with coronavirus cases.

At present, reduced payments under the JobKeeper extension are set to end on March 28, with JobMaker cash to flow from February. It will be paid in arrears quarterly for 12 months for eligible staff hired between October 7, 2020 and the end of October 6, 2021. But businesses cannot claim JobMaker while still on JobKeeper, encouraging those eligible to make the switch.

A significant late-change to JobMaker opens the door for sole traders and new businesses to begin accessing payments from their first hire. Initially, draft rules stated employers could only begin claiming when they had two or more staff, shutting out new businesses and sole traders considering taking on staff.

However, after an outcry - with advocates pointing out 62 per cent of businesses in Australia are sole traders - the rules were changed. As Australian Tax Office Deputy Commissioner Jamie O'Halloran explained in a December webcast, sole traders and new businesses can now claim JobMaker for staff hired after October 7, 2020, provided other criteria have been met.

The scheme is tailored to get younger workers - considered the hardest hit by COVID-19 job cuts - back in employment.

To be eligible for JobMaker both employers and employees must meet certain criteria.

Employers must:

Have an ABN.
Use Single Touch Payroll reporting.
Be registered for PAYG withholding.
Not be claiming JobKeeper.

Employees must:

Be 16-29 ($200/week subsidy) or 30-35 ($100/week).
Have averaged 20 hours/week.
Started work between October 7, 2020 and October 6, 2021.
Have received JobSeeker, Youth Allowance or Parenting Payment for four weeks in the past three months.

JobMaker has attracted criticism it disadvantages older workers, however checks have been built in to prevent abuses. For example, to prevent employers simply replacing older workers with younger staff, JobMaker can only be claimed for hires that boost total employee numbers compared to September 30, 2020. In addition, the total payroll of the business must have risen compared to the three months leading up to the start of the scheme on October 7, 2020. (For more detail see the JobMaker Hiring Credit fact sheet.)

Along with the hiring credits, the Government is also hoping to push through significant industrial reform with the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 up for debate early this year. The bill was introduced to parliament in December, with Industrial Relations Minister Christian Porter telling parliament it would address known barriers to creating jobs in areas such as:

Casual employment.
Award complexity.
A lack of flexibility in the Fair Work Act to consider all agreements between employers and employees.

Among amendments being proposed include:

A statutory definition of a casual employee included in the Fair Work Act 2009 for the first time. This aims to clarify confusion after several high-profile court cases over what constitutes a casual employee. The overarching principle of the new definition is that at the time the job is offered, the employer makes no commitment to continuing, regular work; the person accepts on that basis; and the worker has the right to accept or reject shifts being offered. The worker remains a casual based on this initial agreement, regardless of whether they begin to work more regular hours over the course of their employment.
After 12 months' work, an employer is required to offer casual staff conversion to either part-time or full-time status if they have worked approximate hours during the past six months. However, there are several circumstances in which employers are not required to make this offer, including a possible change in the business's future circumstance which may impact the staffing.
A provision to eliminate double dipping if a court finds an employee has been incorrectly classified as a casual. This means the court can offset casual loadings paid previously, against full-time entitlements (such as paid leave) being claimed.
The introduction of a part-time-flexi arrangement that allows part-time employees in specific COVID-hit industries to enter into a written agreement with their employers to work beyond their contracted hours at normal, rather than overtime, rates (unless work is outside ordinary hours, in which case penalty rates apply).
Temporary flexibility (two years) to allow the Fair Work Commission to approve enterprise agreements which do not pass the Better Off Overall Test (BOOT).
A crackdown on wage theft with the introduction of a new criminal offence for dishonest and systematic underpayment. Individuals can face up to four years in jail and a fine of up to $1.1 million, with corporations facing fines of up to $5.55 million.
$12.9 million to establish an Employer Advisory Service in the Fair Work Ombudsman from 1 July 2021. The EAS would offer employers authoritative written advice about how to apply awards and agreements to prevent underpayments.

The bill has been referred to the Senate Education and Employment Legislation Committee, which is accepting submissions until February 5, and is due to report back to parliament on March 12.

The information provided in this document is a selection of information taken from publicly available sources and is current as at the date specified in the information. It does not contain all information or all public websites that may be relevant to our brokers and their customers. Please note AFG does not provide tax, legal or accounting advice. Any information provided is of a general nature and/or for illustrative purposes. It does not take into account our broker's or their customer's objectives, financial situation or needs and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. AFG encourages our brokers and their customers to consult their own tax, legal and accounting advisors before engaging in or considering the appropriateness of any transaction.

Brokers set new standards

Low interest rates and Best Interest Duties will boost borrower confidence in 2021.