It’s feared that Australian workers over 50 could be unfairly forced into retirement - a key trigger for downsizing - as a result of the introduction of a new scheme which funds employers to hire younger workers. 

On 11 November, the Australian Senate approved new legislation which introduces the JobMaker hiring credit scheme

The scheme provides employers with a $200 per week payment for new employees aged 16 to 29, and $100 per week for new employees aged 30 to 35 between now and October 2022.

The government claims that younger workers have been hardest hit by the COVID-19 pandemic and therefore deserve special support. However, this claim flies in the face of the latest data which shows that older workers in their 60 and 70s are most likely to have lost their jobs since March.

However, in approving the scheme, the Senate ultimately did not support amendments proposed by the ALP and the Greens to ensure the scheme would not be used to replace more expensive older workers with cheaper younger workers.

This amendment would have required that the hiring credit could not be used if the employer terminates the employment of an existing employee. 

The role played by Senator Pauline Hanson and her colleague Malcolm Roberts in the final vote on this amendment was crucial.

On 10 November, Senator Hanson originally supported the amendment, only to backflip on 11 November after the measure was not supported by the House of Representatives and receiving a briefing on the issue from Treasurer Josh Frydenberg.

“I am quite happy with the information I am receiving from the Treasurer, not from the voices I am hearing here,” Ms Hanson told fellow senators on 11 November, when voting down the amendment.

Retirement a key trigger for downsizing

The government’s decision is of particular interest to many Australians over 50 who are considering downsizing. 

An Australian Housing and Urban Research Institute report published in 2014 found that retirement was a trigger for around one in six downsizing decisions. 

Similarly, the Australian Bureau of Statistics found that in 2018-19, around 11 per cent of people who entered retirement did so after they were retrenched, dismissed or because no work was available.

After details of the JobMaker scheme were released in the Australian Budget in October, not-for-profit advocacy group the Council of the Ageing (COTA) argued it could lead to mass redundancies.

“Whilst we welcome the targeting of younger workers as a vulnerable group, we are very disappointed that there is no parallel system for older workers as the other group who are very vulnerable and also likely to stay unemployed longer,” COTA said in its budget brief.

“There are major risks with this measure for older workers. 

“Past periods of economic downturn have seen that older workers are amongst the first to be made redundant. 

“At the cessation of JobKeeper in March 2021, we would expect to see an increasing number of older workers laid off. The JobMaker rules incentivise employers to do so and replace the worker with a worker under 35 years in order to receive the subsidy. 

“The government’s 'safeguard' in this respect is that there must be more people ‘on the books’ before the subsidy than after and that the overall wage bill must be higher.

“This could result in the replacement of permanent, part-time workers with multiple young workers in casual positions.”

“Defending this, Government has argued that there are existing protections through the Age Discrimination Act and the Fair Work Act. But we know ageism is rife in employment and proving that age discrimination occurred in non-voluntary redundancies is exceptionally difficult in the eyes of the law and is rarely successful.”

In response, Mr Frydenberg said late last week that, even without the amendment, older workers will be safeguarded.

“It’s very clear in the legislation the many protections that are in place,” Mr Frydenberg said.

“Firstly, there is a requirement of additionality. When an employer takes on a younger person under the JobMaker hiring credit, in order to be eligible they have to be additional to both head count and to their payroll. 

“Secondly, there cannot be any contrived schemes designed to get around the rules and the Tax Office will be monitoring that very, very closely with appropriate penalties. Then thirdly, what we know with this particular program is that the Fair Work Act and its provisions will continue to apply, for example, like unfair dismissal. So there are many protections that are in place.”