On 8 July 2020, the Chancellor, Rishi Sunak, delivered his Summer Economic Statement setting out a "Plan for Jobs". Despite the economic support measures put in place to tackle COVID-19, the government has recognised that the UK is still facing "profound" challenges and "significant" job losses. The government has therefore announced a number of measures to protect, support and create jobs (in our related Insight we discuss the measures that were announced from a corporate tax perspective).
Job retention bonus
A new "job retention bonus" of £1,000 will be paid for each furloughed employee brought back to work that continues to be employed as of 31 January 2021. The employee must be paid at least £520 on average each month from the end of the Coronavirus Job Retention Scheme (CJRS) through to 31 January. Further details will be announced by the end of July.
A new Kickstart scheme will directly pay employers to create new "good quality" jobs, with training and support for any 16-24 year olds claiming Universal Credit and at risk of long-term unemployment. Funding available for each six month job placement will cover 100% of the National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions. Employers will be able to top this wage up. There is no cap on the number of kickstarted jobs that may be created.
Apprenticeships and training
Businesses will be given £2,000 for each new apprentice they hire under the age of 25 and £1,500 for each new apprentice they hire aged 25 and over, from 1 August 2020 to 31 January 2021. 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.
£111 million is also being invested to triple the scale of traineeships in 2020-2021, ensuring young people have access to high quality training with the government funding employers who provide trainees with work experience at a rate of £1,000 per trainee; investment is also being made in the number of sector-based work academy placements, work coaches at job centres and the work of the National Careers Service.
The government is also bringing forward work on £8.8 billion of new "infrastructure, decarbonisation and maintenance projects" which will "create tens of thousands of jobs".
Other specific proposals to help protect jobs include:
- to support the hospitality and tourism sector, a new "Eat Out to Help Out" discount scheme, providing a 50% reduction for sit-down meals (subject to a cap of £10 per individual but which can be used unlimited times) in participating businesses from Monday to Wednesday each week in August; and a temporary cut in VAT from 20% to 5% from 15 July 2020 to 12 January 2021. These combined measures seek to support over 2.4 million staff at over 150,000 businesses in those sectors.
- a Construction Talent Retention Scheme to support the redeployment of construction workers at risk of redundancy; and
- an Office for Talent, which will focus on attracting, retaining and developing top research and science talent across the UK and internationally.
What does this mean for employers?
The government's commitment to supporting, creating and protecting jobs is clear. The job retention bonus is unexpected, but seeks to address calls for the CJRS to be extended which the Chancellor has indicated would be "irresponsible", only serving to give people "false hope" that they will return to their existing jobs, whilst their skills are atrophying. Whether it will be sufficient to avoid the anticipated cliff-edge of redundancies when the CJRS closes remains to be seen.
As well as working out what the new normal will be for those employees currently working or returning from furlough, businesses now face the challenge of deciding how they can best utilise the funding available for new employment opportunities, such as the Kickstart scheme. They will also need to consider how new employees are integrated and supported, potentially virtually, into the business. Thought will need to be given to how this balances with any redundancies being considered in the wider workforce and any associated discrimination and employee relations issues this raises.
With many jobs digitally evolving, employers will also need to consider how they can adapt their training plans to re-skill employees in existing roles and upskill those taking on new roles – and the extent to which this can be covered by any available government funding.
These new measures are intended "to turn our national recovery into millions of stories of personal renewal". However, experience with the CJRS suggests that many employers will want clarity about a number of issues before they make substantial claims for support. For example, if that support is dependent on provision of "proper" training for trainees, what exactly will qualify as proper training, especially given that many trainees may be operating wholly or partly remotely? Will there be limits on the extent to which employers are able to deploy trainees for revenue-making purposes? Can redundancies be fair in one part of a business if government funded trainees are being taken on in another part of the business, and how will the introduction of these schemes affect current redundancy consultations? Can furloughed workers be taken on under training programmes? We now wait for further detail on the government's proposals.