What is a wage subsidy?
Wage subsidies are payments from the Australian Government designed to encourage companies to employ eligible candidates. They not only give employers greater flexibility in their hiring options, but businesses can also use these payments to offset the costs of on-the-job training and mentoring, or to make their workplace more accessible to employees with disabilities. As a result, it’s easier for companies to expand and grow their business, which ultimately helps boost the economy and creates more jobs.
Through the Government-funded Workforce Australia program (formerly jobactive), wage subsidies are available to businesses that hire eligible candidates such as long-term unemployed, young entry-level, mature-age or Indigenous jobseekers.
The maximum amount offered by the Australian Government for all wage subsidies paid through employment services providers is $10,000 (inclusive of GST).
What job types qualify for wage subsidies?
Wage subsidies can cover full-time, part-time or even casual employment, as well as apprenticeships or traineeships, providing the employee averages at least 20 hours per week over the 26-week wage subsidy period.
Bear in mind that some job types do not qualify for wage subsidies, so make sure you know what positions might be eligible.
Jobs that qualify for wage subsidies:
- permanent full-time positions
- permanent part-time positions
- apprenticeships and traineeships
- jobs that comply with Australian employment standards
Jobs that don’t qualify for wage subsidies:
- immediate family members hired for a role
- workers who are receiving another Australian Government wage subsidy
- jobs that displace existing employees
- commission-based, subcontracting or self-employed positions
Related: Ideas to Position Your Business for a Strong Recovery After COVID-19
What types of wage subsidy are there?
Different types of wage subsidy are available depending on the category the employee falls into in each case. All of these payments are available over a period of six months, and the total amounts include GST.
Restart Wage Subsidy
For mature employees aged 50 years or over
Up to $10,000 through Restart
$6,500 is available for full-time employment, with a bonus payment of up to $3,500 for employment that lasts 12 months.
Indigenous Wage Subsidy
For employees from an Indigenous Australian or Torres Strait Islander background
Up to $10,000
Youth Bonus Wage Subsidy
For employees aged 15-24 years
Up to $10,000
Youth Wage Subsidy
For employees aged 25-29 years
Up to $6,500
Long Term Unemployed Subsidy
For long-term unemployed workers registered with an employment services provider for 12 months or more
Up to $6,500
Parents Wage Subsidy
For workers who are the principal carer of their children
Up to $6,500
Wage Start Subsidy
For employees who have been out of work for over 12 months and are hired for at least 15 hours per week over 26 weeks
Up to $6,000
Disability Employment Services (DES) Wage Subsidy Scheme
Funding for employers who hire jobseekers registered with a Disability Employment Service provider in order to help people with a disability gain skills and experience through employment
Up to $1650
Australian Apprentice Wage Subsidy
The Australian Apprentice Wage Subsidy is currently being trialled until 30 June 2023, and it is not yet clear if it will be extended beyond that date. It provides funding for employers who hire an apprentice commencing a full-time Certificate III or IV qualification that leads to an occupation on the National Skills Needs List (NSNL) in a rural and regional workplace as defined by the Eligible Rural and Regional Postcode List.
Note that the apprentice must be employed under the relevant award for their occupation.
First year: 75% of award wage; second year: 50% of award wage; third year: 25% of award wage; fourth year: no subsidy
No matter what type of candidate you are looking for, read our guide on How to Find Good Employees for recruitment tips that’ll apply across the board.
Is there a COVID-19 wage subsidy for businesses?
Not anymore. In 2020, the Australian Government introduced the temporary JobKeeper Payment wage subsidy to support Australian businesses significantly impacted by the COVID-19 pandemic and associated restrictions and lockdowns.
Eligible businesses were able to claim $1,500 (pre-tax) per fortnight per employee to cover the cost of wages, but this wage subsidy scheme concluded on 28 March 2021.
How are wage subsidies paid?
Eligible businesses can receive wage subsidy payments from employment services providers over a six-month period. Employers can choose how frequently they would like the subsidy payments to be made, e.g. weekly or fortnightly – whatever works best for your organisation.
Wage subsidies are paid to eligible employers only after the Government receives verification of employment and wage payments to the employee. This is why it’s important that you, as the employer, keep appropriate records to support your wage subsidy arrangements.
Are wage subsidies taxable?
In Australia, any business income from subsidies is considered assessable income and is, therefore, taxable.
How can a wage subsidy help my business?
Receiving a wage subsidy for eligible employees can help lower your hiring costs, give you access to a bigger pool of available talent and ultimately grow your company with less risk, as your financial investment is reduced.
What’s more, a more diverse workforce can only benefit your business, since you’ll be able to draw on a wider range of perspectives and experiences those staff members bring to the table. First-hand input from mature-aged, Indigenous, young or disabled staff will have a positive impact on any business.
Who is eligible for a wage subsidy?
Wage subsidies for employers can help businesses expand and employ new staff. Certain criteria must be met by both the applying business and the person they are hiring.
Employee requirements
Wage subsidies are available to businesses hiring an employee who is either:
- 15 to 29 years old
- an Indigenous Australian
- 50 years or older
- supported by Disability Employment Services
- a parent, or
- registered with an employment services provider for 12 months or more.
Employer requirements
The employer must meet the following criteria:
- have an Australian Business Number (ABN)
- have never previously employed the person they are hiring
- not be an Australian, state or territory government agency
- ensure the person being hired meets the eligibility requirements for the wage subsidy
- expect the role being offered to be ongoing and for at least 20 hours per week on average over the six-month wage subsidy period
- guarantee that the work complies with employment standards for the position (for example, that it is suitable work and pays at least the national minimum wage).
The employer is, of course, required to pay all wages and other contributions for their employee as stipulated by state or federal law, including superannuation, tax and insurance payments.
Remember that not all jobs are eligible for a wage subsidy. It is up to the individual service provider to determine whether a wage subsidy is appropriate and to decide on the level of the wage subsidy, depending on both the employer’s and the jobseeker’s needs in each case.
How can employers apply for a wage subsidy?
As a first step, contact an employment services provider to establish whether your organisation is eligible for support.
It’s advisable that you approach the provider as soon as the job in question starts to ensure that you don’t miss out on a wage subsidy. Employers must apply for a wage subsidy agreement within 12 weeks (84 days) of the new employee’s start date to be eligible.
The Government reimburses employment service providers in arrears, i.e. after they have paid the employer and provided the required documentation to show that the payment to the employer has been made and the minimum employment requirements met.
Related: How to hire your first employee
So, if you want to save money on recruiting additional staff, look into your wage subsidy options and consider hiring diverse talent – not only to take advantage of these funding options, but also to give someone from a non-traditional background the chance to gain experience, increase their knowledge and tap into more opportunities in the labour market.
Now that you’re familiar with the wage subsidies available to your business, browse our Hiring Resources for Employers to get you started on your recruitment journey.
