Kickstart Scheme: Out with the old in with the new!

We have been preparing for a deluge of redundancy questions and businesses have already asked “how to I get rid of my higher earners?” The Chancellor’s statement on 8 July is a game changer.  He is trying to move the focus from redundancy to recruitment.  Although the support package is unprecedented we think that Rushi Sunak has set businesses up to simply recruit new, younger members of staff and be left with an on-going decision about their existing wage bill.

Do you maintain your current wage bill and headcount whilst recruiting new, younger members of staff?  Or, do you recruit new employees and dismiss the older more expensive ones to reduce your wage liability?

He has announced:

• A Job Retention Bonus Scheme of £1000 for every employee kept on for 3 months when the furlough scheme ends.
• A Kickstart Scheme will subsidise a 6 month work placement for people between 16-24 on universal credit.
• A bonus of up to £2000 for hiring an apprentice.
• A pledge to provide 30,000 new Traineeships for young people in England. For each traineeship £1000 is given to the employer for up to 90 hours of unpaid work experience.

To qualify under the Job Retention Bonus Scheme and claim back £1000 per furloughed employee they have to be: in employment until January, brought back to carry out decent work and have an average earning between November 20 – January 21 of £520 a month.

The Kickstart Scheme applies to young people aged 16-24 who are at risk of long term unemployment and who are on Universal Credit.  It must be a decent job paid at national minimum wage of at least 25 hours per week.  Training and support must be provided to assist the young person in finding a permanent job.  The employee’s wages will be paid by the government for 6 months as well as an amount to cover overhead.

Our top tip for a business employing someone under the Kickstart Scheme is to ensure that you use a fixed term contract with a break clause to end it early if necessary.

The government is going to pay employers to create new apprenticeships over the next 6 months.  If a business hires a young apprentice they will receive £2000 per apprentice.  If a business hires an apprentice who is aged 25 and over they will receive £1500 per apprentice.

Employers will receive £1000 to take on a new Trainee under a Level 2 or 3 placement for high demand sectors.

A gentle reminder that a new recruit is now entitled to a contract of employment as a day 1 right.

Please contact us for any advice… even if you want to know how to dismiss your high earning long term employees to replace them with kickstarters.  You’ve got a business to protect after all!