It’s going to take more than a cheap meal to save UK employment
As the effects of the coronavirus pandemic continue to be felt across the world, the Chancellor of the Exchequer, Rishi Sunak, yesterday made a statement to the House of Commons outlining the Government’s plans for ongoing help for the economy.
There are two measures that are likely to be of direct interest to employers: The Job Retention Bonus (JRB) and the Kickstart Scheme.
Further incentives were announced but were aimed at consumers and the hospitality sector, including the “eat out to help out” £10 meal discount, which failed to receive the backing of HMRC who questioned the value for money of this course of action.
Job Retention Bonus
The Job Retention Bonus is intended to encourage employers to retain staff who have been on furlough for some or all the period of lockdown by guaranteeing their employment through until January 2021.
According to HMRC the scheme will operate as follows:
This is a one-off payment of £1,000 to employers that have used the Coronavirus Job Retention Scheme (CJRS) for each furloughed employee who remains continuously employed until 31 January 2021. The bonus will provide additional support to retain employees.
To be eligible, employees will need to:
- earn at least £520 per month (above the Lower Earnings Limit) on average for November, December, and January
- have been furloughed at any point and legitimately claimed for under the Coronavirus Job Retention Scheme
- have been continuously employed up until at least 31 January 2021.
Employers will be able to claim the bonus from February 2021 once accurate RTI data to 31 January has been received. More information about this scheme will be available by 31 July and full guidance will be published in the Autumn.
While we appreciate that employers will welcome any assistance in these difficult times, we are sceptical that the promise of £1000 per employee in early 2021 will materially affect employers’ decisions with regards to redundancies.
With the end of the Coronavirus Job Retention Scheme in October 2020 it is highly probable that businesses are already looking at their finances and making difficult decisions.
Where they are contemplating redundancies it strikes us as unlikely that a promise of £1000 in 6 months’ time is going to be such an incentive as to outweigh the wages cost from the end of the furlough scheme until 31 January 2021. We are therefore dubious that this headline-grabbing scheme is likely to have a material effect on employers’ decision making.
We are not alone; it is reported that Jim Harra, the Permanent Secretary at HMRC, wrote to Rishi Sunak this week: “The advice that we have both received highlights uncertainty around the value for money of this proposal… I am unable to reach a view that this represents value for money to the standards expected by MPM (Managing Public Money)”.
Also announced yesterday, in the same speech, was the Kickstart Scheme.
This is aimed at addressing the problems with unemployment amongst the young in society. It contains several strands and will be managed by the Department for Work and Pensions (DWP).
The following is a distillation of the relevant parts of the Chancellor’s speech yesterday as he laid out the contents of the scheme:
- “These (Kickstarter) jobs, with a minimum of 25 hours per week paid at the National Minimum Wage, will entitle employers to have the employees wages paid for six months, plus an amount to cover overheads. For a 24-year-old, the grant will be around £6,500.
- Employers can apply to be part of the scheme from next month.
- £1,000 to take on new trainees, with triple the number of places
- £100 million to create more places on Level 2 and 3 courses
- New careers advisers to support over a quarter of a million more people.
- The evidence shows Sector-Based Work Academies work, so we will…triple the number of places.
- For the next six months, we’re going to pay employers to create new apprenticeships.
- We will pay businesses to hire young apprentices, with a new payment of £2,000 per apprentice.
- And we will introduce a brand-new bonus for businesses to hire apprentices aged 25 and over, with a payment of £1,500.”
Further details can be found on the government website.
These measures will undoubtedly benefit employers looking to take on new staff and hopefully young people seeking work. The more germane question, whether at a time of great economic uncertainty employers are looking to expand workforces rather than reducing them, might render these new measures less effective than hoped.
It is also possible that some employers may see the Kickstarter scheme as a means to replace established workers with younger, government-subsidised employees. Time, as ever, will tell.
Should you wish to discuss the implications of these new measures, or any other employment law related issues, please contact us.
For more specific information or to discuss your requirements please call either Amanda Galashan or Julie Calleux at Employease on 03339398741, or email us at email@example.com. This note does not constitute legal advice on any particular situation you may have.
Copyright: Employease 2020