Job Retention Bonus for employers
The Chancellor of the Exchequer, Rishi Sunak, announced his “Plan for Jobs”, outlining the assistance being offered by the government to encourage the UK’s recovery from coronavirus and to boost jobs across the UK.
Employers – What help is being made available?
I don’t know about you, but all of this news can be a bit overwhelming.
I wanted to look at the help being offered to employers, particularly focusing on the government’s plan for a Job Retention Bonus, and highlight some of the main issues it throws up.
The government has published a briefing document on its Plan for Jobs. In it, the government sets out the following schemes aimed at helping employers:
- A Job Retention Bonus – to incentivise employers to keep on furloughed employees after the furlough scheme finishes at the end of October 2020, the government has announced that employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed on 31 January 2021.
- The Kickstart Scheme – the government will fund the creation of six-month work placements for young people aged 16 – 24 who are on Universal Credit and are at most risk of long-term unemployment. The funding will cover the full cost of the relevant National Minimum Wage for 25 hours per week, as well as the cost of employer National Insurance Contributions and auto-enrolment pension contributions.
- Traineeships – the government will also provide funding for employers to offer work experience to trainees aged 16 – 24-year olds, at a rate of £1,000 per trainee.
- Apprenticeships – between 1 August 2020 and 31 January 2021, the government will provide payments to employers in England who hire new apprentices. The payment will be £2,000 for employers who hire apprentices aged under 25, and £1,500 for each apprentice who is aged 25 and over.
2. What do we know about the Job Retention Bonus?
A lot of our clients are asking me questions about this. The fact is, we do not know a lot about this right now. Further information has been promised by the end of July. In the meantime, here is what we do know:
- In his speech about the Plan for Jobs, the Chancellor was adamant that the Coronavirus Job Retention Scheme, will finish at the end of October. However, to avoid significant unemployment when the JRS ends, the Job Retention Bonus has been introduced to incentivise employers to get as many people as possible back from furlough to their jobs.
- What we know already is that to qualify for the bonus, furloughed employees must be “continuously” employed through to the end of January 2021. Not surprisingly, given the purpose of the bonus, this means that they cannot temporarily be let go between October and January and brought back on 31 January just to get the bonus.
- We also know that, to qualify, employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the JRS and the end of January 2021. The Lower Earnings Limit is the amount employees need to earn to qualify for some benefits and when certain tax become payable. This seems to suggest that it will not apply to employees who are on unpaid leave during the period, although this could impact disproportionately on certain groups of employees, as highlighted below.
- The amount of the bonus will be the same, irrespective of the actual salary of furloughed employees. It is therefore likely to be more of an incentive for employers of lower paid employees since it will cover more of their salary payable during the period up to 31 January 2021.
- Unlike the JRS, where the grant had to be paid in full to employees to cover their salaries, the aim of the Job Retention Bonus is “to reward and incentivise employers”. The strong implication is that the payment can be kept by employers and does not need to be paid to or used to benefit staff.
- Payments will be made from February 2021.
3. Will the Job Retention Bonus only apply to employees whose jobs are at risk?
No, it appears not. The Chancellor in his speech announced that “we will pay the bonus for all furloughed employees” (our emphasis). The Treasury has set a budget for the Job Retention Bonus of £9.4 billion, which equates to a bonus for each of the 9.4 million jobs that have been furloughed.
So employers who are not planning redundancies, perhaps because their businesses have not been so badly affected by coronavirus, or whose staff were furloughed for non-financial reasons (e.g. because they were shielding or had caring responsibilities), will still be able to claim the bonus.
One of the immediate criticisms of the Job Retention Bonus is that it seems to provide a windfall for employers who were already planning and able to bring their employees back from furlough.
In contrast, it may not be enough to incentivise or indeed keep afloat those facing financial difficulties, for example, businesses who may struggle to survive between the end of the furlough scheme and the end of January, and so may have little choice but to contemplate redundancies.
Another criticism is that the Job Retention Bonus penalises employers who decided not to rely on government help, and so did not put their staff on furlough, sometimes paying them out of their own resources even if they could not attend work. There is no equivalent Job Retention Bonus in respect of staff who are retained but who were not furloughed.
4. Does the Job Retention Bonus affect the ability of employers to make furloughed employees redundant?
The government recognise that it is not possible to save every job. So, the fact that employers have been offered an incentive not to make redundancies does not in itself prevent employers from doing so.
To avoid potential redundancies being unfair, employers should be mindful of their duties to consult with employees and to consider ways of avoiding or delaying redundancies.
Employers should therefore factor the Job Retention Bonus into their business case for redundancies and at least consider whether it might make a difference to their need to cut jobs. They should also be prepared to discuss the impact of the bonus on their redundancy plans with employees during consultation.
For guidance on carrying out redundancy exercises, or any other HR advice, we would like to introduce you to one of our trusted partners;
Joanna Tarabilda from Sagegreen HR. Feel free to pop her an email for more information and help: https://www.sagegreenhr.co.uk/joanna-tarabilda/
5. Are there any outstanding issues?
There are several issues about the Job Retention Bonus.
We will update you on the Job Bonus Scheme at the end of July.
6. How can we help employers/businesses?
You may find yourself needing to create new roles to cover the work load, or scale down to part time. Some companies may take advantage of the new Traineeships or Kick Starter Schemes.
Some of our clients are doing this already, especially creating roles to work from home.
The way you recruit staff into your business will change massively. Companies that would have used a recruitment agency for example, may decide to look at other options available to them.
We have witnessed lots of people losing their jobs, with some of the top high street retail names making announcements. Hospitality is also an industry where cuts have had to be made.
There will be more candidates looking for work, meaning responses to any job adverts will be massive.
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