Coronavirus (COVID-19) – Beyond furlough; ‘A Plan for Jobs’

On 8 July 2020 the Government introduced “A Plan for Jobs“ (see here).  This included several measures designed to assist the economy as a result of the COVID-19 pandemic. Whilst we await written guidance and specific detail on the schemes (which is due to be announced by the end of July), we’ve highlighted below some key points of interest to employers.

Job retention bonus

The Government has said it will introduce a one-off payment of £1,000 to UK employers (a Job Retention Bonus) for every furloughed employee who remains continuously employed through to the end of January 2021.  To be eligible for the Job Retention Bonus, employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the CJRS on 31 October 2020 and the end of January 2021. Payments will be made from February 2021.

Unlike the CJRS, where the grant had to be paid in full to employees to cover their salaries, the aim of the Job Retention Bonus is “to reward and incentivise employers“ to keep staff and to avoid significant unemployment when the CJRS ends. Therefore, although there is no clarifying guidance yet, the strong implication is that the bonus payment can be kept by employers and does not need to be paid to or used to benefit staff.

It appears that the Job Retention Bonus will not only apply to employees whose jobs are at risk. The Chancellor in his speech announcing the scheme said that “we will pay the bonus for all furloughed employees“. Indeed, it appears the Treasury has set a budget for the Job Retention Bonus of £9.4 billion, which equates to a bonus for each of the 9.4 million jobs that have been furloughed.  Therefore, employers who are not planning redundancies, perhaps because their businesses have not been so badly affected by COVID-19, or whose staff were furloughed for non-financial reasons (e.g. because they were shielding or had caring responsibilities), will still be able to claim the bonus.  This also suggests that the bonus will apply to employees who have been furloughed at any point since the start of the CJRS March 2020, even if they have potentially been back at work for some time.

See the full guidance on the Job retention bonus scheme and which employees the bonus applies to.

It is certainly debatable as to whether this will be sufficient for some employers to put a hold on redundancies when compared with the cost to employers of employing employees until the end of January 2021.  However, it does mean that if you have put employees on furlough and they have returned to work or are due to return, the Job Retention bonus should be of interest.

Furloughed employees and Redundancy

Government has introduced changes to legislation (effective from 31 July 2020) to ensure furloughed employees receive statutory redundancy pay and statutory notice pay based on their normal wages, rather than a reduced furlough rate.  See the guidance here: Furloughed employees receive full redundancy payments.

By way of example, this would mean that if an employee is on furlough and is given 4 weeks’ notice at the start of August and continues on furlough for the duration of his/her notice period, the pay that they receive during the notice period should be based on their normal (pre-furlough rate) rather than the reduced furlough rate. The employer should be able to recover the 80% contribution under the furlough scheme, but would be responsible for topping up the additional 20% pay so that the employee is being paid at the pre-furlough rate for their notice period.

Kickstart scheme

The Government also announced its Kickstart scheme which will give funding to employers towards salary costs for any new six-month work placement created for an individual aged between 16-24 years old who are at risk of long-term unemployment and claiming Universal Credit.  The funding will apply for six months and will be conditional on the business proving the jobs are newly created; for a minimum of 25 hours a week; and paid at a rate of at least the National Minimum Wage (NMW).

Employers will be able to pay more than NMW but will only be able to receive funding from the Government in respect of the NMW.  Employers must also provide training to the individual and support them in getting a permanent role. Employers will be able to apply for the scheme from August 2020, with the first such kickstart jobs starting in the Autumn.

Trainees

The Government said that it will provide employers with a payment of £1,000 for taking on trainees. This will include work experience placements, training, and work preparation for 16-24-year olds, provided the traineeship lasts a minimum of 6 weeks. The idea is to prepare young people for the workplace and potentially provide opportunity for continuing employment.

Apprenticeships

The Government announced that for six months between August 2020 and January 2021, it will pay employers to create new apprenticeships. The payment will be £2,000 for employers who hire apprentices aged under 25, and £1,500 for each apprentice who is aged 25 and over.

This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.

Comment

These measures will certainly provide some assistance to employers still struggling with the effects of the COVID-19 pandemic. However, with many employers currently considering redundancy exercises, whether these measures will be enough to prevent high levels of unemployment in the near future remains to be seen.