Guides & Advice

The Job Retention Bonus

Published: 15th October 2020
Area: Corporate & Commercial
UPDATE 5 NOVEMEBR: Following Rishi Sunak's announcement today that the furlough scheme will now be extended until the end of March 2021, the Job Support Scheme will now be delayed.

On 2 October 2020, the government produced new guidance relating to the Job Retention Bonus Scheme. The scheme has been put into place to reward and incentivise employers who keep on their furloughed employees.

So what is the Job Retention Bonus?

The bonus is a one-off taxable payment of £1,000 to UK employers for each eligible employee who was furloughed and who remains continuously employed through to 31 January 2021. There is no obligation on the employer to pass the bonus payment to the employee. Employers can put in a claim for the bonus between 15 February 2021 and 31 March 2021.

Who is eligible for the Job Retention Bonus?

An employer will be able to claim the bonus for any employees who were furloughed under the Coronavirus Job Retention Scheme (the “Furlough Scheme”) and for whom they have claimed a grant under that scheme.

Employers can claim the bonus for all employees who meet the criteria, including office holders, company directors and agency workers, as long as the employer claimed a grant for them under the Furlough Scheme and the other eligibility criteria are met.

The guidance confirms that employers can still claim the bonus even if they are planning to make a claim for that employee under the new Job Support Scheme, which we will discuss further below.

What is the minimum income threshold to be eligible for the Job Retention Bonus?

To be eligible to receive the bonus, the employer must have paid the “minimum income threshold” to the employee i.e. a total of at least £1,560 (gross) throughout the tax months:

  • 6 November to 5 December 2020
  • 6 December 2020 to 5 January 2021
  • 6 January to 5 February 2021

An employer must pay an employee at least one payment of taxable earnings (of any amount) in each of the relevant tax months.

The minimum income threshold criteria apply regardless of:

  • how often an employer pays its employees
  • any circumstances that may have reduced an employee’s pay in the relevant tax periods, such as being on statutory leave or unpaid leave.

The bonus is not available for employees who are serving a contractual or statutory notice period that started before 1 February 2021 (this includes people serving notice of retirement).

What about employees who have transferred under TUPE?

In TUPE situations, employers may be able to claim for employees who have transferred to them. However, to claim the Job Retention Bonus, the employer must have furloughed and successfully claimed for the individuals under the Furlough Scheme, as their new employer. This means that an employer cannot claim the bonus for any employees who transfer to them after the Furlough Scheme ends on 31 October 2020.

How does an employer prepare to make a claim?

Before an employer can claim the bonus, they will to need to have reported all payments made to the employee between 6 November 2020 and 5 February 2021 to HMRC through Full Payment Submissions via Real Time Information (RTI).

In preparation, employers should ensure that:

  • they are enrolled for PAYE online;
  • they comply with their PAYE obligations to file PAYE accurately and on time under Real Time Information (RTI) reporting for all employees between 6 April 2020 and 5 February 2021;
  • they keep their payroll up to date and report the leaving date for any employees who stop working for them before the end of the pay period that they leave in;
  • they use the irregular payment pattern indicator in Real Time Information (RTI) for any employees not being paid regularly; and
  • they comply with all requests from HMRC to provide any employee data for Furlough Scheme claims.
Expansion of the Job Support Scheme

The government has also just announced that the Job Support Scheme is being expanded to cover UK firms that are forced to shut due to coronavirus restrictions.

The government will pay two thirds of an employee’s salary (or 67%) up to a maximum of £2,100 per employee per month. Under the scheme, employers will not be required to contribute towards wages and only asked to cover NICS and pension contributions. Businesses will only be eligible to claim the grant whilst they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.

The scheme begins on 1 November 2020 and will be in place for six months with a review point in January 2021.

In addition, businesses forced to close in England would be eligible to an increase in business grants of up to £3,000 per month.

What does this mean for employers?

Both the Job Retention Bonus and expanded Job Support Scheme will be welcomed by employers who have been planning to bring back staff from furlough leave.  However, for employers who are experiencing a downturn in work, this may not be enough to prevent redundancies.

Contact us

We will continue to update this guide as and when new information becomes available. If you have any queries on the Job Support Scheme, or need any guidance or support, please speak to a member of your local employment team.

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