Chancellor of the Exchequer, Rishi Sunak, announced today (08/07/20) during his summer statement that employers will receive a £1,000 “job retention bonus” for every employee they bring back from furlough who will work until January 2021.
After the furlough scheme ends in October, those staff who have been on the scheme and remain in work between November and January will entitle their employer to a £1,000 bonus from the Government.
Mr Sunak said:
People are anxious about losing their job, about unemployment rising. We want to ensure no-one will be left without hope.
If you stand by your workers, we will stand by you.
The Chancellor explained that if everyone took advantage of this bonus and all 9 million workers on furlough returned to work, the Government would pay out £9 billion to employers in return for retaining their staff.
Employees must be paid at least £520 per month to be eligible for this scheme.
This move has received mixed support from employers with some supporting the new measures, as Jamie Mackenzie, director at Sodexo Engage, said:
Today’s ‘mini-budget’ put huge emphasis on the need to stabilise the employment market. The job retention bonus will reward loyal employers, encouraging them to maintain staffing levels despite the inevitable reduction in business volumes caused by the pandemic.
Schemes like the one announced today are great for providing short-term relief to hard-pressed employers, but the reality is more complicated. Managers need to be prepared for the return of furloughed staff. A period without work may have had an effect on employee wellbeing and they’ll likely feel out of the loop. Employers need to nurture their returning workforce through a continued period of uncertainty about the future. Incentive and recognition programmes will be critical to swiftly reengage workers to a new and likely radically changed workplace.
However, some have criticised this move saying it will not save jobs as it does not go far enough.
Katie Maguire employment partner at national law firm Devonshires, said:
This announcement is unlikely to achieve what the Chancellor hopes and save millions of jobs as it simply doesn’t go far enough. A £1,000 payment is a drop in the ocean when considering the cost of salaries, pension contributions and employers national insurance contributions for each employee, so it is unlikely to stop most employees losing their jobs if they were likely to do so anyway. It may make a difference to an employer who has a large number of people furloughed as they will get a big bonus if they bring them all back and keep them employed until the end of January.
The Chancellor explained these will be new, decent, and at least national minimum wage (MNW) paid jobs and urged every employer to hire as many Kickstarters as possible.
Dr Joe Marshall, chief executive of the National Centre for Universities and Business (NCUB), said:
The Government has rightly acknowledged that Covid-19 has hit young people the hardest. Sunak today said that that those aged under 25 are 2.5 times as likely to work in a sector that’s been closed due to Covid. The Kickstart scheme is therefore a welcome step to keep youth unemployment down. It is vital to avoid lasting damage to careers that are just beginning, after all they are the future talent the nation needs and will play a crucial role in our economic recovery.
Skilled graduates in particular are the pipeline of future talent that businesses need, and they will undoubtedly play a crucial part in our economic recovery post Covid. A skills-led recovery is the only way to ensure that every community and all parts of the country begins to recover economically. What’s more, in the long run, successful innovation that leads to economic growth is reliant on the flow of graduates into businesses of all kinds and sizes.
In regards to apprenticeships, the Government will pay £2,000 to companies for every apprentice they take on and £1,500 for every apprentice over 25.
Darius is the editor of HRreview. He has previously worked as a finance reporter for the Daily Express. He studied his journalism masters at Press Association Training and graduated from the University of York with a degree in History.
£1,000 x 9 million = potentially £9Billion. Yup. However, £1,000 is the approximate cost of Universal Credit PER MONTH should each of these people stay unemployed…
This £9Billion represents a massive SAVING for the government – not an expenditure! It is not generous and will benefit larger businesses not smaller ones.
Why does he not support small ltd company directors – who are in a position to employ millions. Small ltd companies will go under through lack of director’s support with an incalculably large cost to the economy, business growth and entrepreneurial morale.