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Due to the impacts of coronavirus, the number of people claiming unemployment benefits has soared to over 2 million, according to data from ONS. Unemployment rates are particularly high in younger generations, where over 10% of 18-24 year olds are out of work. The Kickstart Scheme will tackle the impending problem – and could help your business, too.
Rishi Sunak announced the launch of the Kickstart scheme in early August, as part of the government’s Plan for Jobs.
It’s a new scheme being launched with a primary aim to prevent young people from facing long-term unemployment. The Kickstart Scheme is for 16-24 year olds receiving Universal Credit. Although graduates can apply, it’s generally for those who have a lack of experience and further education. This demographic is predicted to be the hardest hit by the job crisis.
Through the scheme the Government wants employers to create 6-month work placements for those aged between 16 and 24. Employers will need to provide training and teach valuable skills that’ll help with further career progression. In return, the Government is funding the scheme. They’ll cover the cost of paying minimum wage up to 25 hours a week, plus National Insurance and pension contributions. Encouraging employers to create new job opportunities for young people, without taking on the financial burden themselves. As it stands, the Government is putting £2 billion towards the scheme, creating an estimated 350,000 jobs.
The Government is encouraging all businesses to apply to be part of the Kickstart scheme. There’s no specific criteria – anyone from any industry, irrespective of size, can apply. Hopefully allowing a lot of micro-businesses and independent freelance companies to benefit too. In his announcement, Rishi Sunak said, “I urge every employer, big or small, national or local, to hire as many Kickstarters as possible.” He also promised that there’ll be no cap on the number of placements.
Ideally, each business would continue to employ their young Kickstarters following the end of their placements. However, this isn’t actually a specific requirement of the scheme. To apply for the scheme, employers need to prove that the jobs they’re creating are actually new, and haven’t been designed to replace already existing jobs as an excuse to get cheap labour. For example, they cannot make existing staff redundant to fill the positions with Kickstarters. No rules have been set out as of yet, but measurements are expected to be implemented to make sure employers don’t abuse the scheme.
As mentioned, the primary target of the scheme is those with limited experience and skills. This means that any company taking Kickstarters on need to be prepared to invest in mentoring and training employees. Companies looking to hire someone who can make an immediate impact may be better off utilising the apprentice scheme. The Government is encouraging small businesses to take on apprentices by giving them a £2,000 bonus. Find out more here.
Freelancers who run their own business could find hiring a Kickstarter to be highly advantageous. It’s expected that you’ll have to dedicate some extra time to get them “work-ready”. But the big benefit is that during this 6-month period the Government foots the bill. Many Kickstarters have plenty of transferable skills they’ve gained through their education and part time jobs. That allows for a easy transition to picking up the skills needed to work well in their new role.
All businesses take a lot of time and work, but particularly new ones. You’re also never making a profit straight off from day one and funds can be tight in the early days. It often takes several months for any new business to begin making a reliable profit. But applying for the Kickstarter campaign allows you the benefit of having someone help with your workload, without you having to pay them for the first few months. This scheme can really work well to help small, independent businesses. Especially if you have the time and capabilities to offer training to your Kickstarter. Then hopefully when the placement does comes to an end, you’ll be able to keep them employed. Meaning that realistically, by the time you start paying them they’ll be fully trained and it’d be the same as hiring any other employee.
Freelance sole traders won’t be able to apply for the scheme if they are not registered to pay employer contributions. So, if you’re currently a sole trader and want to take on a Kickstarter or two, you’ll need to incorporate as a Limited Company as soon as possible. This means you’re liable for National Insurance, pension contributions, and additional taxes – and will start paying yourself a salary (and dividends) instead of putting all business profit into your personal account.
You can still run your business on the face of it exactly the same as before – your clients won’t notice the difference. It’s a paperwork-based change, that’s all!
Some of these ideas may help you train and upskill Kickstarters.
Think about assigning a mentor to a Kickstarter. Mentors help new employees get orientated quicker and feel more comfortable in the workplace. Also making sure the employees have a go-to person that can help and advise them when it’s needed.
Regular training sessions throughout your Kickstarter’s placement could prove beneficial for both them and your business. Training sessions can cover any topics you think are relevant. It can be specific, industry-related skills, or day-to-day tasks that need to be carried out. Either way, training sessions help to ensure employees are ready to work, and are confident in what they’re doing.
If your Kickstarter doesn’t have the skills or knowledge required to carry out the tasks needed, you could assign a few free online courses that cover the basics before they actually start so they’ll be ready to get going straight away.
Reed offers lots of free courses that you can find here, while LinkedIn Learning is a paid-for subscription, it offers an abundance of courses including business management and marketing, software development.
Unfortunately, precise details about the scheme are yet to emerge and there’s nowhere to apply just yet. However, more information will be revealed in later August and early September. So keep an eye on the government website for the latest information regarding the Kickstart scheme.
For more helpful tips on being a freelancer and running your own business, check out some of the articles below.
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This statement (From article above) is not true. “Freelance sole traders won’t be able to apply for the scheme – because they don’t pay employer contributions.”
Many sole traders operate the HMRC pay as you earn system just the same as companies do. In which case they pay employers contributions and complete exactly the same documentation as a company.
It is however true (at the moment) that sole traders cannot apply for the Kickstart scheme. Something which could easily be remedied by the Department of Work and Pensions. Worth asking your MP about.
Hi Sam, thanks for this pointer, the article will be amended. We meant that people operating as single freelancers who are not on the PAYE system do not pay employer contributions. Any sole trader can’t apply for the Kickstarter scheme, either – at the moment. If the scheme is extended into 2021, that could change!
An informative article.