Among the numerous job creation packages mentioned in the Summer Economic Update is a new initiative called the Job Retention Bonus, giving employers £1,000 for each worker they bring back from furlough.
Employers who bring someone back who was furloughed - and then continuously employ them through to 31 January 2021 will receive a £1,000 bonus per employee.
In order for a business to qualify for the bonus, the employee must be paid at least £520 on average, in each month from November to January.
So that means they could remain on furlough until 31 October, and then be employed for three months to 31 January to secure the bonus.
This is in response to the concerns that when the Flexible Furlough Scheme ends on 31 October, many furloughed workers will not have a job. Workers particularly at risk include those in the food and drink, leisure and tourism and retail sectors, although others sectors are also affected.
Already there have been large numbers of redundancies as the flexible furlough scheme winds down, with employers aware they will have to start paying an increasing proportion of the furlough costs between August and October.
For some employers the £1,000 bonus may not be sufficiently attractive by itself, but it will assist those who were already planning to bring people off furlough and back onto the payroll.
It also appears to be payable for any employee who has been furloughed at any point, and not just those still on furlough at the end of the Flexible Furlough Scheme. This avoids employers being put in a position where they have to keep people on furlough until 31 October.
Some companies, such as John Lewis, Primark and William Hill have said they will not claim the bonus, putting pressure on other large companies to consider doing the same.
The Coronavirus Job Retention Scheme (CJRS), which has now become the Flexible Furlough Scheme, has so far supported over one million employers to protect over 9 million jobs, according to government figures.
It has been open since March, winding down gradually until October. The government is keen to ensure that people who have been furloughed are supported back to work, their skills are retained and relationships maintained.
All the details about the one-off payment of £1,000 per employee will be available by the end of July, according to the government. These details will be needed to enable employers to make decisions about staff retention.
We do know that it will be a condition of the scheme that employees have to earn above the Lower Earnings Limit (£520 per month) on average between the end of the Flexible Furlough Scheme on 31 October 2020 and the end of January 2021.
It is not clear what will happen if an employee resigns before 31 January 2021. Will the employer still receive the bonus, as it was their intention to retain the employee?
The bonus payments will be made from February 2021.
The government will be hoping that by the time we get to February the labour market will have improved and fewer jobs will have been lost.
Although the bonus will be welcome, there are other issues for employers to consider in bringing back workers on furlough, including:
Appropriate legal advice may be required.
On 14 July 2020 Bishop Fleming is holding a free webinar with The HR Dept to help businesses understand:
Finally, this session will also provide attendees with the opportunity to ask questions.
A place can be secured by registering here.
The Summer Economic Update also announced additional measures to secure jobs.
A new £2 billion Kickstart Scheme will be launched to create new, fully subsidised jobs for young people. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible.
Funding will be available for each six-month job placement and will cover 100% of the National Minimum Wage for 25 hours a week. Employers can top this up if they wish.
Other employment support schemes include:
Further details are awaited.
Check out our Business after COVID-19: Transition Knowledge Hub for more guidance and advice on managing the pandemic.