Youth Contract Wage Incentives

Transcription

1 Youth Contract Wage Incentives Questions and Answers What is the wage incentive element of the Youth Contract? From 2 April 2012 and over three years of the Youth Contract, employers are able to take advantage of 160,000 wage incentives. These are worth up to 2,275 each where they employ an 18 to 24 year old for a least 26 weeks through Jobcentre Plus across England Scotland and Wales or from the Work Programme. What is the aim of the wage incentive element? The aim of the wage incentive scheme is to encourage employers to give young jobless people a chance in a weaker market by encouraging them to fill vacancies with young people. This is at a time when they might be overlooked because of a lack of skills or experience and the scheme can therefore help reduce the scarring that young people face as a result of a recession. Are all year olds eligible for a wage incentive? Not all year olds are eligible for a wage incentive. You can claim a wage incentive if you employ an year old through Jobcentre Plus, who has been out of work and getting benefits for at least six months. Wage incentives are also available if you recruit a young person from the Work Programme or Work Choice. I m interested in employing a young person using the wage incentive, what do I do next? You should contact Jobcentre Plus or one of your local Work Programme Providers. They will give you further information, advice on the eligibility conditions and support to identify the right person. When the young person starts with you they will issue a claim form and tell you how and when to make the claim. More details about the wage incentive scheme, including how to contact Jobcentre Plus or Work Programme providers can be found at: I am an employer who is considering employing an year old and claiming a wage incentive. I am concerned about possible legal challenges against me on the basis of age discrimination. Can DWP provide me with assurances that by getting involved in this way I am not at risk of a legal challenge? Where treating a person differently on the grounds of age is objectively justified as a proportionate means of achieving a legitimate aim, then there is no unlawful discrimination. As the policy owner, DWP believes there is a clear justification for the Youth Contract programme which provides special help for unemployed people aged 18 to 24. This is because of the general

2 position of young people within the labour market. Further detail can be found here: (Please note that DWP is not in a position to provide legal advice about the wage incentive to third parties: they will need to seek their own advice.) I want to employ someone on a part-time basis. Can I still get wage incentive support? Yes. We recognise that part-time work is a legitimate way for young people to enter and experience the work place. The wage incentive is available for employment from 16 hours or more per week. There is a part-time rate ( 1,137.50) between 16 and 29 hours and a full-time rate ( 2,275) for 30 hours or more. The job still has to be a sustained job that is expected to last for at least 26 weeks. I m a small business my cash flow means I can t wait 26 weeks? We recognise that in some circumstances an earlier payment might help so any business with fewer than 50 employees can choose to make a claim after 8 weeks of employment. A payment of 700 which equates to 8 weeks of the wage incentive will be made to help cash flow ( 350 for part-time work). Why can only employers with fewer than 50 employees claim a part payment? We recognise smaller employers are more likely to need some of the payment sooner to aid cash flow and/or to cover initial start-up costs of taking on a new employee. Allowing small employers the flexibility of a part payment that we do not seek to recover balances the aims of the policy with ease of administration. We believe larger employers can reasonably be expected to wait until the requirement of a sustained period of employment is fulfilled and receive the full payment at this point. I ve recently filled a vacancy with a young person who might qualify for a wage incentive. Can I claim retrospectively? No. The aim of the wage incentive scheme is to incentivise employers into giving young jobless people a chance in a weaker market by encouraging them to fill vacancies with young people. If the young person is already in work the Wage Incentive should not be necessary. I ve employed a young person but for legitimate reasons they leave before the 26 week period will I get a part payment for the period of employment? We are very clear that this is about helping young people into a period of sustained employment for at least 26 weeks and the wage incentive payment is based on that principle. We hope that the vast majority of employees will remain for the full period. However, we recognise that some individuals may leave and DWP will make a half payment for a period where the young person leaves after 13 weeks of employment but before the full 26 weeks.

3 Where a small employer has received a part payment at 8 weeks and the young person leaves employment after 13 weeks but before the final payment is made at 26 weeks, DWP will pay the half payment minus the part payment. Where an 8 week payment has been made but the young person leaves before the end of 13 weeks, DWP will not recover the 8 week payment. Are Central Government Departments able to use the wage incentive? No. The wage incentives are primarily available to the private, voluntary community sectors and social enterprise employers. While Central Government Departments, Non-Departmental Public Bodies and their Executive Agencies will be excluded from claiming them, the wider public sector, such as local government and NHS trusts will not. I m a Work Programme Provider can I employ a young person using a wage Incentive? DWP has determined that Work Programme providers should not be able to claim wage incentives for Work Programme participants. It does not feel it was appropriate, given that providers are already incentivised to find participants sustainable work via their Work Programme contracts, and that they handle finding suitable opportunities and administering the claim form. However, Work Programme providers can access wage incentives through Jobcentre Plus if employing eligible 18 to 24 year olds. How do I claim a wage incentive? Work Programme Providers or Jobcentre Plus will work with employers to identify employment opportunities and issue claim forms when an 18 to 24 year old starts suitable employment. The employer then claims the payment from DWP who will validate the claim and make the payment into the employer s bank account. I'm a large employer and I want to make arrangements to bulk claim, is this possible? Work Programme/Workchoice Providers and Jobcentre Plus can arrange for bulk claims and payments into a single bank account. Employers should contact the Provider or Jobcentre Plus to arrange for the Central Bank Account Form and the Bulk Claim Template to be issued. Up to twenty claims can be entered on the template but individual wage information must still be included. Details of when and what can be claimed are held on each claim form together with where to send the individual or bulk claim. Will employers need to supply any evidence to support their claims? Yes, but this will be minimal. Payment of the wage incentive will be based on evidence that the year old has been in employment with the employer shown on the original form as issued at the beginning of the period by the Work Programme provider or Jobcentre Plus. The employer will only be asked to provide copies of the individual s pay statements/slips for the period being claimed.

4 I want to take a young person on an apprenticeship; if they are aged can I claim a wage incentive as well as an Apprenticeship Grant for Employers payment? No, employers have the freedom to decide whether to claim either the 2,275 DWP-led wage incentive or the Department for Business, Innovation and Skills-led 1,500 Apprenticeship Grant for Employers, but not both. Employers will need to decide which of the incentives is most appropriate for an individual. What happens if the young person turns 25 whilst in employment? For a wage incentive to be paid, the young person must be aged when the employment starts. There is no change once the young person has entered that work - so the incentive would still be paid if they turned 25 during the period of employment. If I employ a young person on the wage incentive scheme and they go absent from work due to sickness, am I able to still claim a wage incentive? Where periods of sickness occur during the period being claimed for, it is possible that an employee could be paid sick pay or claim Statutory Sick Pay (SSP) from the employer. As the employer is paying the employee we can see no reason to alter claim eligibility. However, in cases where no sick pay is offered and SSP cannot be claimed as the employee s average weekly earnings are less than 107 per week (part-time work), they might be able to receive Employment Support Allowance (ESA) whilst remaining in employment. We will disregard periods of sickness of less than a week, but where ESA is payable in a period of sickness we will stop the clock in a similar way to how we manage term-time working. This would require employers to submit the claim when 26 weeks of paid active work has been achieved If I employ a young person on the wage incentive scheme and they start maternity leave, am I able to claim a wage incentive payment? Where maternity leave begins during the period of incentivised employment, the incentive will be paid at 26 weeks so long as the individual remains in employment and is paid employer maternity pay or statutory maternity leave. If, however, someone leaves employment, or receives Maternity Allowance from DWP, we will not pay a wage incentive. Are wage incentives taxable? In the UK it is general tax policy (and law) that revenue received in a business capacity is taxable as a business receipt. This principle is applied to grants in the same way as other sources of income hence the statement in the HMRC manual BIM40455 that the treatment for tax purposes of grants and subsidies from UK government departments, local authorities etc follow normal principles.

5 Can the young person attract more than one wage incentive? No. If a wage incentive has been paid, they will not be eligible for further wage incentive support. Where can I find the full terms and conditions? The full terms and conditions can be found at: