Chancellor's 'Plans for Jobs' announced

Chancellor's 'Plans for Jobs' announced

What help is available for start-ups and SMEs whilst the world is on hold tackling COVID-19?

On 8 July 2020, Rishi Sunak announced a package of new measures to support jobs in the UK. A key part of these measures is a new job retention bonus for employers who bring employees back from furlough leave. The details of this scheme have not been announced, but the Chancellor gave a brief outline of it. Employers will be entitled to a one-off bonus of £1,000 in respect of each employee they bring back from furlough leave, provided that the employee is still employed by the employer as of 31 January 2021 and earned at least the lower earnings limit for national insurance (£520 per month) on average between November 2020 and January 2021.

It seems unlikely that this new job retention bonus will provide enough of a financial incentive for many employers to change their minds about the need for redundancies at the end of the furlough scheme if there is a reduction in work.

It may however provide a welcome windfall for some employers who have furloughed employees where there was not a reduction in their work, but as a temporary measure for those shielding and unable to work from home, or for those with childcare commitments. These employees may be back at work well before November, but their employers may be eligible for the job retention bonus for them. Depending on the details, this may be so even if there was no intention to make such employees redundant.

The bonus might have some impact in relation to lower-earning employees (for example, those paid the National Minimum Wage) who could potentially be brought back to work at the minimum monthly rate. For higher earners however, this bonus is unlikely to mean a reprieve from redundancy.

The Chancellor also announced the Treasury’s plan to invest £2bn in a Kickstart Scheme of work placement support for young people. Those aged between 16 and 24, who are claiming Universal Credit and at risk of long term unemployment, will be eligible under this scheme. Funding will be provided for each 6-month job placement and will cover 100% of the National Minimum Wage for 25 hours a week. Employers can top this up if they so choose.

In addition, the Chancellor announced that businesses will be given £2,000 for each new apprentice they hire under the age of 25 and £1,500 if they hire apprentices over 25. This comes on top of the recently announced package for new traineeships (a course that includes a work placement) where firms in England will be given £1,000 for each new work experience place they offer. The aim is to triple trainee numbers. A further £17m of funding has been promised to triple the number of sector-based work academy placements in 2020-21.

Further details of all these measures is expected in due course.

Contact our experts for further advice

View profile for Kerry GarciaKerry Garcia, View profile for Frances RollinFrances Rollin

Search our site