The Chancellor recently announced a new Job Retention Bonus for employers as the Coronavirus Job Retention Scheme (CJRS) winds down. The bonus aims to incentivise employers to retain furloughed staff when the CJRS closes on 31 October 2020. Government guidance has now been published setting out further details of the bonus.
The Job Retention Bonus will be a one-off payment to employers of £1,000 for each returning furloughed employee who remains continuously employed until 31 January 2021. All employers who have used the CJRS will be eligible. In order to qualify for payment, the returning employees must be paid an average of £520 per month between 1 November 2020 and 31 January 2021.
According to the Government guidance:
- The bonus is considered income for Corporation Tax purposes, so businesses may not ultimately benefit from the full £1,000.
- The minimum earnings threshold (£520 per month) is not a minimum per month, but an average. The bonus would still be payable if a returning employee earns less than £520 in a given month, provided they receive some earnings in each of the three months from 1 November 2020 to 31 January 2021 and, in aggregate, their earnings are at least £1,560 across the three months.
- Employers won't be able to claim for employees who have been served notice prior to 1 February 2021. However, the guidance does not expressly preclude claims for employees at risk of redundancy, so it appears possible in principle to start redundancy consultation before 31 January 2021, provided that notice of termination is not served before 1 February 2021.
- Claims can be made for employees who have transferred under TUPE prior to the end of the CJRS, provided the new employer has furloughed them and successfully claimed under the CJRS. The Job Retention Bonus will not be payable for employees who transfer under TUPE after the closure of the CJRS on 31 October 2020.
- Employers must keep their payroll accurate and up to date, and provide any information requested by HMRC about previous CJRS claims. Failure to do so may jeopardise a claim for the bonus. HMRC will also withhold a bonus payment where it believes CJRS claims have been fraudulent or inflated. This is another reminder for employers to ensure that their records are up to date and that all CJRS claims have been accurately submitted, with any errors notified to HMRC.
Some employers have announced that they do not, as a matter of principle, plan to claim the bonus. Others have said that the bonus will unfortunately not be enough to prevent redundancies.
If you would like to discuss how the bonus might affect your workforce planning, please get in touch with your usual Employment department contact. For more information about recent developments and support for business, please see our COVID-19 resources hub here.