New jobs measures could cost £30bn

But are they enough? Asks Rachel Lester of Axiom Stone Solicitors

Since the Pandemic forced businesses into Lockdown over three months ago, the furloughing of workers has enabled businesses to weather the economic storm.

However, the winding down of the furlough scheme by the end of October, against the backdrop of the sharpest decline in the economy in generations, will create the window for mass redundancies. The mass unemployment that will follow looks set to break the previous unfortunate record of 3 million.

On Wednesday (July 8), the Chancellor announced the Government’s latest measures to support business and workers alike:

Businesses will be paid £1,000 for every furloughed member of staff brought back and continuously employed through to January 2021. It is anticipated that this could be at a cost to the Treasury of more than £9bn if every job currently furloughed is protected.

Although the bonuses appear on the face if it generous, they are still small compared with the cost of employing staff and are worth less than the furlough scheme. The Government has also faced criticism for failing to extend the furlough scheme beyond October, particularly in sectors of the economy such as hospitality, beauty and leisure that have been so badly hit by the Pandemic. The Chancellor admitted today that when the scheme ends, it will be a ‘difficult moment’ but was categoric that “leaving the furlough scheme open forever gave people false hope that it will always be possible to return to the jobs they had before.”

There will be a “kickstart” job creation scheme for young people aged between 16 and 24 on Universal Credit under which Government will pay their wages for up to six months. While this will involve initial funding of £2bn, the Chancellor has said there will be no cap on the number of places available.

Although a significant pledge, it raises questions over the long-term security of these jobs since the funding will only be available for six months, and employees do not acquire employment rights to claims for unfair dismissal and statutory redundancy payments until they have been employed for two years.

Apprenticeships will be supported by bonuses for businesses, ranging from £1,500 to £2,000 for each apprentice taken on. Jobcentre work coach numbers will also be doubled.

On the face of it, this is a commendable proposal – but it is likely to be criticised for its short-termism as the bonus scheme is limited to employers who apply between August 2020 and January 2021.

If these measures do not achieve their stated objectives and there is, as is feared, a second wave of the Pandemic forcing further significant lockdown of the economy in the Autumn, those employment-related incentives for job creation and retention now being introduced, will be a mere drop in the ocean. Unfortunately, employers already cash-strapped and seeing the adverse economic impact on their businesses as long-term, are still likely to choose to make redundancies.

Faced with economic hardship, it is equally possible that businesses will try to avoid redundancy payments by inventing performance issues when there are none. Or, they may use the pandemic as an excuse to get rid of staff they no longer want, where the real reason may open them up to charges of discrimination and dismissal for whistleblowing, if for instance an employee has raised concerns around health and safety.

With the economic downturn likely to adversely affect an employee’s chances of finding work, businesses should be wary of workers who are emboldened to bring their claims in an Employment Tribunal, believing they have little to lose. So, employers should, where possible, err on the side of caution, follow their procedures and document and communicate their decisions. Provided that any decisions are based purely on what is best for the business and its survival, and not on any discriminatory grounds, an employer should be in a strong position to defend a claim.

The remarks in this article should not be taken to be formal legal advice. For further guidance on employment issues please call Rachel Lester on 0203 827 6100 or email at Rachel.Lester@axiomstone.co.uk

Note: the information contained in this article is accurate at the time of publication on 18 May 2020.