Bonuses announced to avoid mass unemployment


22 July 2020

By Alexandra Dean

Chancellor Rishi Sunak has announced recently a new scheme worth £2billion that will seek to prevent the impending mass unemployment as the UK economy is hit by the Coronavirus crisis. In particular, the focus is on the young people as it is estimated that they are the most likely to be on the Coronavirus Job Retention Scheme – i.e. furlough.

The Chancellor has stated that the purpose of this new scheme is to avoid a whole generation being "left behind", suggesting that he wishes to avoid a situation where many young people are left out of work as the economy struggles through the pandemic. In doing so, the fund will subsidise the wages of work placements for young people between 16 and 24 that are on Universal Credits and are at risk of long-term unemployment. The plan is that the Government will cover the minimum wage of those individuals for 25 hours of work per week and the employer can choose whether to top up those wages.

In terms of timelines, the applications for the scheme are expected to open in August 2020 for jobs starting in Autumn 2020. It is expected that the scheme will continue to run until December 2021 but it is left open for extension further down the line. At the moment, the scheme is intended to cover England, Wales and Scotland.

Traineeships are also anticipated

At the same time, the Chancellor is also encouraging companies to take on trainees where possible, to get young people into work. Under this scheme, companies will receive £1,000 for each new trainee that they on-board and the funding available for this is approximately £111million in England alone, with Scotland, Wales and Northern Ireland expected to receive substantial funding for similar schemes.

Traineeships allow for workers to have on the job training alongside classroom based training. This means that it can last between 6 weeks and 6 months and will allow a trainee to complete approximately 240 hours of work experience. There is very little doubt that real-life work experience is invaluable in the job market and the hope is that this will help the younger generation get into the workplace meaningfully.

Contracts are still important

Whilst the schemes are welcome news, especially as we continue to hear about more and more companies cutting their workforce due to the impact of the pandemic, it is important that companies do not let up on the importance of having the correct documentation in place for their employees and workers. This includes contracts of employment and employee handbooks to set out policies and procedures for the new workers.

For more information on this topic please contact one of our employment team on 01245 228141 or via e-mail

This is not legal advice; it is intended to provide information of general interest about current legal issues.