09 July 2020

Yesterday the Chancellor delivered his Summer 2020 economic update (or mini-budget) setting out various measures to assist with stimulating the economy following Covid-19. The headline issue, from an employment law perspective, is the creation of a coronavirus job retention bonus. There are, however, some additional employment funding initiatives which were also announced.

We already know that the Coronavirus Job Retention Scheme (CJRS) will come to an end on 31 October 2020. There has been extensive lobbying to extend the scheme for sectors which have been particularly badly hit. Nevertheless, the Chancellor has stated again that the CJRS will end for all on 31 October 2020 as planned.

However, in a measure aimed at assisting employers to retain jobs after the end of the furlough scheme he has announced a new job retention bonus. This is a one-off bonus of £1,000 payable to the employer for each furloughed worker they bring back to work and retain in employment until at least 31 January 2021. The bonus will apply to workers who are paid at least £520 on average, in each month from November 2020 to the end of January 2021 - the equivalent of the lower earnings limit for National Insurance.

Additionally, a new “kickstart” job creation scheme was announced for young people on Universal Credit aged between 16-24. The scheme recognises that this group are likely at the greatest risk of being adversely affected in the jobs market by the pandemic.

The scheme will pay the wages of young people in this group for a period of six months whilst they complete a “job placement”. Employers will register to be part of the scheme and there will be no cap on the number of placements an employer can create nor any cap on overall placements which will be funded by the government. The government will pay for 25 hours’ work a week at the applicable National Minimum Wage rate. Employers can top up this contribution if they wish to do so. The scheme will open for applications in August with the first placements starting in the Autumn.

Separately, the existing apprenticeship scheme will be supported by bonuses to the employer of between £1,500 - £2,000 for each new apprentice taken on under formally recognised apprenticeship schemes.

Further detail is awaited from the government on these initiatives.

There is no doubt that the number of redundancy programmes being announced by employers in recent weeks is on the increase. It will be interesting to see, by contrast, whether there is a large take up by employers of these job creation and retention initiatives.

Please contact our expert Employment team if you require further assistance.

This update contains general information only and does not constitute legal or other professional advice.

Employment law

Caroline Carr, Partner: E: cac@bto.co.uk / T: 0141 225 5263
Laura Salmond, Partner: E: lis@bto.co.uk / T: 0141 225 5313
Douglas Strang, Senior Associate: E: dst@bto.co.uk / T: 0141 225 5271