The Chancellor's Plan for Jobs, announced yesterday, contained some eye-catching schemes, including a discount for eating out, a VAT cut for food, non-alcoholic drinks, accommodation and attractions, and subsidies for youth employment and training schemes.
But perhaps the most eagerly-anticipated was his announcement about the future of the furlough scheme, which currently subsidises the wages of over 9 million staff. He confirmed that the scheme will not be extended past its current end date of 31 October 2020 but employers which keep furloughed staff on until at least 31 January 2021 will be eligible for a 'Job Retention Bonus' of £1,000 for each furloughed employee who remains employed on that date.
In order for the employer to receive the payment, the worker must have been furloughed, must be continuously employed between 31 October 2020 and 31 January 2021 and must earn above the Lower Earnings Limit (£520 per month) on average between those dates.
Detailed guidance will be provided later this month, but it appears that employers will not be obliged to pass the payment on to the employee. It is not clear whether the employee can be under notice of termination on 31 January 2021; hopefully the guidance will clarify this point.
It remains to be seen whether this will have much impact on employer's decision-making about possible redundancies. It will have most take-up in sectors with relatively low-paid staff and which can expect some increase in demand in November and December - hospitality and retail spring to mind. But the level of payment probably won't make much difference to employers' cost-benefit analysis when it comes to potential redundancies among high-paid staff. It may have an impact on which staff are selected for redundancy, with previously-furloughed staff less likely to be selected, but employees could potentially bring unfair dismissal claims on this basis.
It also remains unclear whether any additional support will be offered to employers affected by local lockdowns, which may become increasingly common if there are further local outbreaks.
It's unsurprising that the bonus is fairly modest, given the already enormous cost to the taxpayer of the furlough scheme. Whether it will achieve its apparent goal of preventing a wave of pre-Christmas redundancies remains to be seen, particularly with major retailers such as John Lewis and Boots already announcing closures and redundancies.
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