Summer 2020 Employment Updates: A plan for jobs…

Summer 2020 Employment Updates: A plan for jobs…

Job Retention Scheme Bonus

Over 9 million employees across 1.1 million businesses have been furloughed and grants claimed via HMRC. The Government confirmed that the Coronavirus Job Retention Scheme (CJRS) would not be extended beyond 31 October 2020. Instead of extending the CJRS, employers will be paid a bonus of £1,000 for every employee who has been furloughed at some point but who returns to work and remains continuously employed to the end of January 2021. Payments will be made from February 2021.

This comes as a welcome relief to employers in several ways. It gives employers clarity and timescales, something that has been lacking in recent months due to the unprecedented and fast-moving developments. Secondly, it incentivises businesses to bring furloughed employee’s back to work and retain them, knowing that some of the costs can be recovered. Specifically, for the temporary recruitment/labour market, it provides even more incentive to find workers and employees assignments to help recover some of the costs recruitment and Umbrella firms have had to absorb if they decided to use the CJRS and furlough workers/employees.

Previously, furloughed employees must be paid at least (on average) the current 2020/21 NICs Lower Earnings Limit of £520 per month and paid at least the National Minimum Wage/National Living Wage for the hours they work from November 2020 to January 2021.

It has not yet been confirmed whether the payments will be considered taxable income for the employer in the same way as CJRS grants are. Further details on the Scheme are expected to be announced by the end of July.

The Kickstart Scheme

The Government announced a £2 billion ‘kickstart jobs scheme’ to create more jobs for individuals under 25. This scheme will specifically subsidise six-month work placements for 16-24-year olds who are on Universal Credit and therefore at risk of long-term unemployment.

For each ‘Kickstarter’ job, the Government will cover the cost of 25 hours’ work a week at the applicable National Minimum Wage (NMW) based on their age, plus any Employers NICs costs (if applicable). Employers will be able to make payments to exceed these NMW limits if they wish.

The scheme will operate from August 2020 until December 2021, with the option of being extended.

Apprenticeships

From 1 August 2020, employers in England who engage new apprentices before 31 January 2021 will receive additional funding. This will be on two tiers; £2,000 for each new apprentice aged under 25, and a £1,500 for the over 25s. Employers in England have already been receiving payments of £1,000 for new 16-18-year-old apprentices, and those aged under 25 with an Education, Health and Care Plan (where applicable).

We anticipate this is an extension of the existing measure for under 18s and, if it follows the existing practices, will be paid via the training provider that employers (who pay the Apprenticeship levy) engage. Smaller employers who are not liable for the Apprenticeship levy, currently access existing payments via their apprenticeship service account. No details have been announced yet on how the new payments will be accessed but they will likely be via the same routes.

Traineeships

A traineeship scheme will begin in England from September 2020 for up to 30,000 16-24-year olds, with the Treasury indicating that employers must offer “a high-quality work placement of 60 to 90 hours” to qualify.

Traineeships will provide classroom-based lessons in Maths, English and CV writing, as well as up to 90 hours of unpaid work experience. Traineeships can last from six weeks up to six months and employers are not required to pay trainees for a work placement, unlike apprenticeships where the minimum wage rate is £4.15 per hour.

These announcements provide a further financial incentive to encourage employers to recruit new apprentices, and along with the existing exemption for employer’s NIC for the apprentices under 25. The “Kick Starter” or Traineeship schemes may be a viable alternative away from apprenticeships to gain significant cost savings towards taking on staff and building/re-building for the future, providing, of course, they meet the criteria set by the Government (details to be announced).

For more information on any of the above updates, please get in touch.