Employers who bring workers back from furlough and retain them in employment until the end of January 2021 will qualify for a GBP 1,000 bonus payable after 15 February 2021. Further guidance on the scheme was published on 31 July and 2 October.
How will the job retention bonus work?
The Chancellor has been under continued pressure to extend the furlough scheme, particularly for employers in sectors such as retail, leisure and hospitality who face a gap between the planned end of the furlough scheme in October and the return of pre-Covid trading levels.
In his one-off summer statement on 8 July, the Chancellor announced further financial support in the form of a bonus for those employers who are able to bring staff back to work.
The details released after the statement confirm that employers will be paid a job retention bonus of GBP 1,000 for each employee they bring back to work from furlough. The bonus will be paid from February 2021. Further details have now been provided in a policy paper originally published on 31 July and additional guidance is provided in a new Treasury Direction of 2 October 2020. The full name of the scheme is the ‘Coronavirus Job Retention Scheme (Job Retention) Bonus’, abbreviated to ‘CJRS(JR)B’.
To qualify for the bonus, the employee must have remained continuously employed from the end of the last claim period for the Coronavirus Job Retention Scheme (‘CJRS’) through to 31 January 2021. Employees will need to have been paid the minimum income threshold (at least GBP 1,560 gross) for November, December and January (counting from the tax date of the 6th of each month). The employee must have earned something (properly deemed as taxable pay) during each of these months, and only earnings recorded through HMRC Real Time Information (RTI) records can be counted. Employers should note that periods of statutory leave or pension deductions may reduce an employee’s taxable pay below the minimum income threshold, making the employee ineligible for the bonus. HMRC have released some worked examples to show how the minimum income threshold works in practice.
A bonus will not be paid for any employee who is serving a contractual or statutory notice period (including a notice of retirement) that started before 1 February 2021, even if they are still employed on 31 January. As well as affecting employees who have been given notice of dismissal before this date, this means that an employer may lose out on the bonus if an employee resigns shortly before it would have become payable.
The job retention bonus is also available for office holders or agency workers, provided a grant was claimed for them under the CJRS and the above eligibility criteria are met.
The bonus amount is the same for each employee irrespective of the employee’s actual wages but is clearly targeted at employers with lower paid workers. If put towards the wages of someone earning an average of GBP 520 per month, the bonus would cover nearly two thirds of their wage costs, whereas it would cover only 13% of the wages of someone earning GBP2,500 per month.
The bonus scheme will open to employers via an online claim portal from 15 February 2021 and close on 31 March 2021. Employers must claim for the bonus within this six-week window. Employers should note that the bonus is taxable for Income Tax and Corporation Tax purposes, although not for individuals with employees not employed as part of a business such as domestic staff.
How will the job retention bonus impact employers?
Will employers reconsider redundancies?
The key question is whether this (in conjunction with the new Job Support Scheme) is enough of a subsidy to make employers reconsider redundancies, or if it will benefit only those employers who were planning to bring staff back anyway. It will have a greater beneficial impact in sectors such as retail, leisure and hospitality, where it could potentially tip the balance in favour of keeping staff on. However, for employers who have already decided that redundancies are inevitable, it is unlikely to be enough to make them reconsider.
Does any of money need to go to the employees?
The payment is a bonus for employers, rather than a wage subsidy for employees. Employers will not be under any direct obligation to put the money towards the wages of their staff or pass it directly to staff (as is the case with the furlough grant).
How does it affect ongoing redundancy programmes?
Employers who are currently in consultation over redundancies should put the announcement of the bonus and Job Support Scheme (if eligible) on the consultation agenda and be prepared to discuss if it could help to avoid, delay or mitigate the redundancies.
Will it prompt discussions about bringing employees back on reduced pay or hours?
If the bonus is not enough by itself to avoid redundancies, an employer may wish to use it in combination with the new Job Support Scheme (if eligible) or temporary pay or hours reductions.
Will it be paid to employers who have already brought employees back?
Yes. The new guidance is clear that the eligibility criteria requires employees to have been continuously employed from the end of the claim period of the last CJRS claim for them. The bonus will therefore be payable for employees who had returned to work even before the original announcement was made, so long as they had been furloughed at some point and they meet the minimum income threshold requirement
What if overall trading conditions have not been badly impacted or have improved?
A small minority of employers are even considering repaying their furlough grant in these circumstances. There are likely to be discussions about whether all employers should accept the new bonus, and a number of major employers have already said that they will not be claiming the job retention bonus. The guidance confirms that if an employer has repaid all the grant claimed for an employee under the CJRS, they will not be able to claim the bonus.
What about employees who can’t come back to work?
There may be some furloughed employees who are unwilling or unable to return when the furlough scheme ends in October, whether because of clinical vulnerability, concerns about travel, ongoing childcare disruption or otherwise.
Employers may need to explore a range of options for these employees, including unpaid leave, but it seems that the bonus would not be payable for non-returners unless they remain employed until 31 January 2020 and are paid at least GBP 1,560 between 6 November 2020 and 5 February 2021.