Yesterday afternoon, Rishi Sunak, the Chancellor of the Exchequer announced his 3 point plan to get millions of people back to work: 1) to support people to find jobs, 2) to create jobs, and 3) to protect jobs. In this article, we focus on the employment programmes that were announced.
“Stand by your workers, we will stand by you”
In his economic statement, Rishi Sunak addressed the benefits that the Coronavirus Job Retention Scheme (CJRS) has brought to millions of people and businesses. He commented that it will be a difficult moment when the CJRS comes to an end, and although it was necessary to extend the Scheme until October, leaving the scheme open forever would give false hope to those currently furloughed that they would be able to return to their current jobs. He also addressed the fact that the longer someone is on furlough, the more their skills will fade making it difficult for them to acquire new opportunities.
For this reason, the Government is announcing a new ‘Jobs Retention Bonus’ to reward and incentivise employers to bring their furloughed employees back to work. Employers will be paid £1,000 for every furloughed employee brought back to work and retained through to January 2021. To receive this bonus, employers must give their furloughed employees “decent work” and not “work for the sake of it”, and must pay them at least £520 on average in each month between November 2020 and January 2021. Whilst there is no further detail on this at present, the announcement that the bonus would be paid for “all furloughed employees” indicates that the bonus will also cover those employees that were furloughed and have already been brought back to work, provided they remain in employment until January 2021.
“We can do more for young people”
- Kickstart Scheme
In addressing concerns that the under 25s will be the hardest hit by the effect of Covid-19 on the economy with hundreds of thousands of young people leaving school, college or university without jobs, Rishi Sunak has announced a ‘Kickstart Scheme’ to give young people the ‘best possible chance’ in obtaining work effective from August 2020. The Kickstart Scheme will directly pay employers to create new jobs for 16 to 24 year olds at risk of long term unemployment. It is unclear whether there will be some sort of criteria that an individual would have to satisfy to actually show that they are at risk of long term employment. Under the scheme, the Government will cover 6 months’ worth of wages per ‘Kickstarter’ plus an amount for overheads, provided employers can prove that the jobs are new and that Kickstarters are paid least the national minimum wage for a minimum of 25 hours per week. Employers must also support their Kickstarters by providing them with training and support to find a permanent job. Whilst it isn’t clear from this announcement whether the jobs provided can be temporary, the reference to employers providing support to Kickstarters to find permanent jobs is an indication that fixed-term contracts would be an option.
- Traineeships and apprenticeships
It was announced that the Government will pay employers £1,000 to take on new trainees. As a result of positive evidence that over 91% of apprentices stay in work or do further training after their apprenticeships end, the Government has also announced that for the next 6 months, they will also incentivise employers to hire apprentices. This will be in the form of a bonus scheme, with £2,000 per apprentice payable to employers hiring young apprentices and £1,500 per apprentice payable to employers hiring apprentices over 25 years old.
In an interesting twist to the original purpose of the CJRS, the Jobs Retention Bonus encourages employers to consider how and when they can bring their furloughed staff back to work. Unfortunately, for those employers who need to reduce overheads, they may not be able to afford to bring staff back and pay 3 months wages, with only part of that money being recouped via the bonus and likely not until after January 2021 in any event. For those who have already brought furloughed staff back or are planning to do so in the coming months, this announcement will indeed be a “bonus” and, as has recently happened in relation to furlough payments, there may be some employers who adopt a moral stance and refuse the money on grounds that they don’t need it. However there must also be a risk that all the bonus does in some cases is delay redundancies that would have happened in November to February instead.
On the attempt to incentivise apprenticeships, various surveys have shown that the introduction of the apprenticeship levy has led to a decrease in the number of apprenticeships offered by employers. It isn’t immediately obvious that the offer of direct cash will result in employers creating additional apprenticeship opportunities on top of what they had already intended, particularly when the 6 month window for this scheme is quite short from a workforce resource planning point of view. The Kickstart scheme will likely be more successful in getting more younger people into employment (but recognising of course that apprenticeships are not only for young people) because it is more generous and would appear to allow for a shorter-term employer commitment.
For any further information or advice in relation to any of the announcements and how these might work for you, please do not hesitate to contact a member of the team.