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Markel Insurances

28 Aug 2020

The Chancellor’s Plan for Jobs: What’s involved?

In July, the Chancellor announced a package of measures with the aim of giving businesses the confidence to retain and hire staff. The measures outlined are the second phase of the UK Government’s economic response to the effects of the coronavirus pandemic, following the first raft of measures which included the creation of the Coronavirus Job Retention Scheme in spring.  

The Chancellor’s Plan for Jobs

The measures announced in July in the Chancellor’s summer statement include the following support measures for employers/employees:

A Job Retention Bonus will be introduced to help firms retain furloughed workers. UK employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.  Eligible employers may use the bonus as they wish.   

Employers will be able to claim the Job Retention Bonus for employees who:

• were furloughed and had a Coronavirus Job Retention Scheme claim submitted for them that meets all relevant eligibility criteria for the scheme

• have been continuously employed by the relevant employer from the time of the employer’s most recent claim for that employee until at least 31 January 2021

• have been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months). The employee does not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via RTI

•have up-to-date RTI records for the period to the end of January 2021

•are not serving a contractual or statutory notice period, that started before 1 February 2021, for the employer making a claim

In recognition of the fact that young people face a particularly high risk from unemployment, a number of initiatives aimed at encouraging employers to recruit and train younger workers has been announced.

A new £2 billion Kickstart Scheme will be launched in Great Britain to create subsidised jobs for those aged 16-24 who are 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.  Employers may choose to top this wage up.

From 1 August 2020 to 31 January 2021, any business in England that hires a new apprentice aged 16 to 24 will receive a one-off payment of £2,000, and £1,500 for those aged 25 and over. This is in addition to the existing £1,000 payment the government provides for apprentices who are aged 16 to 18, and those aged under 25 with an Education, Health and Care plan.

Figures from the Office for National Statistics show that between April and June, the number of people in work fell by 220,000, being the largest drop in the number of people employed since May to July 2009, during the last UK recession.

The increase in unemployment would have been much sharper still had it not been for the creation of the Coronavirus Job Retention Scheme. Separate statistics published by HMRC reveal that the number of workers covered by the furlough scheme was 9.6 million by 9 August, and has yet to record a fall in any week since it began. There are concerns of a sharp rise in redundancies due to the Coronavirus Job Retention Scheme coming to an end on 31 October 2020. However, the Chancellor has cautioned that “leaving the furlough scheme open forever” gives people false hope that it will always be possible to return to the jobs they had before and that the longer people remain on furlough, the more likely it is their skills could fade. 

It remains to be seen what additional support the government might offer in the event of local lockdowns occurring after the Coronavirus Job Retention Scheme comes to an end in October, where the ability to attend work and trading may be impacted by the introduction of local restrictions.

The third phase of the government’s plan will be set out in the autumn with measures with the aim of supporting the longer-term economic recovery through a Budget and a Spending Review.

For further advice about furlough and the government’s economic response to Covid-19, please contact Hannah Thomas or call us on 0371 705 4006.

Tagged COVID-19
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