Further detail has now been published about the Job Retention Bonus which employers who retain furloughed employees until the end of January 2021 will be eligible to claim.

Introduction

Following the Government’s previous announcement and policy paper concerning the Job Retention Bonus which is to be available to employers who keep furloughed employees employed until the end of January 2021, a Treasury Direction and detailed guidance were issued on Friday, 2 October 2020 setting out more details of the Job Retention Bonus.

The Job Retention Bonus

Employers will be eligible to claim a one off taxable Job Retention Bonus of £1,000 – which they are not obliged to pass on to the employee - in respect of each employee who was furloughed for the purposes of the Coronavirus Job Retention Scheme (“CJRS”) and who is kept continuously employed until 31 January 2021.

An employer who claims the Job Retention Bonus will still be able to rely on the recently announced Job Support Scheme which comes into effect on 1 November 2020 and further details of which are awaited.

Purpose of the Job Retention Bonus

Whilst it may be rare for there to be concern over this issue, employers making claims for Job Retention Bonus payments will wish to ensure that their claims are appropriate in their specific circumstances, particularly in light of the statement in the Treasury Direction that no claim may be made in respect of an employee if it is “abusive or is otherwise contrary to the exceptional purposes” of the CJRS or the Job Retention Bonus. The Treasury Direction states that the purpose of the Job Retention Bonus is to “enhance and consolidate the purpose of the CJRS” - it reiterates that integral to the purpose of the CJRS is that the amounts paid to an employer under the CJRS are “used by the employer to continue the employment of employees whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission”.

Employees in respect of whom the Job Retention Bonus can be claimed

Employers will be able to claim the Job Retention Bonus in respect of those employees:

• for whom they made an eligible claim under the CJRS;
• who they kept continuously employed from the end of the claim period of their last claim under the CJRS for them until 31 January 2021;
• who are not serving a contractual or statutory notice period on 31 January 2021 - this is specified to include employees serving notice of retirement; and
• who satisfy the applicable minimum income threshold.

Provided that the applicable eligibility requirements are met, an employer can claim the Job Retention Bonus in respect of those individuals who are not employees but in respect of whom a valid claim was made under the CJRS, such as office holders and agency workers.

The Treasury Direction states that an employee does not qualify for the Job Retention Bonus if the individual “is on notice of termination of the employee’s employment with the employee’s employer on 31 January 2021”. On its face that provision disqualifies an employee who has resigned as well as one who has been served with notice by his or her employer.

The minimum income threshold

For an employer to be able to claim the Job Retention Bonus in respect of an employee, the employee must have met a minimum income threshold by way of taxable income.

There are two requirements with regard to an employee’s income which need to be satisfied in order for an employer to be able to claim the Job Retention Bonus in respect of that individual:

• The employer must have paid to the employee a total by way of taxable pay of at least £1,560 (gross) during the tax months 6 November to 5 December 2020, 6 December 2020 to 5 January 2021, and 6 January to 5 February 2021. If the total gross taxable pay paid to an employee during this period falls below that £1,560 figure, the employer cannot claim the Job Retention Bonus in respect of that employee.
• The employer must also have made at least one payment of taxable earnings (of any amount) to the employee in each of these tax months. If an employee receives no taxable pay during one of the relevant months, the employer cannot claim the Job Retention Bonus in respect of that individual.

This minimum income threshold applies regardless of how often employees are paid – monthly, weekly or otherwise - and whether their pay is currently reduced - for example, as a result of being on statutory or unpaid leave.

That the minimum income threshold has been met will be checked by HMRC by reference to the information submitted by the employer through Full Payment Submissions via Real Time Information (RTI).

Examples have also been provided of how the Job Retention Bonus will work in practice. These examples remind employers that statutory sick pay constitutes taxable earnings so its payment during the relevant period counts towards satisfaction of the minimum income threshold.

TUPE transfers

Employers will not be able to claim the Job Retention Bonus in respect of employees who transferred to their employment under TUPE after the closure of the CJRS on 31 October 2020. An employer can claim the Job Retention Bonus in respect of those employees who transferred to its employment before that date under TUPE and in certain other circumstances provided that the new employer furloughed them and made successful claim under the CJRS and that they satisfy the other eligibility requirements for payment of the Job Retention Bonus.

Making a claim

Employers will not be able to make claims for the Job Retention Bonus before 15 February 2021 and then will be able to make claims until 31 March 2021. Guidance for making online claims will be available by the end of January 2021 on GOV.UK.

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

Agents authorised to do PAYE online for employers will be able to claim the Job Retention Bonus on the employer’s behalf.

The Job Retention Bonus will not be paid where an incorrect claim was made under the CJRS and the employee was not eligible for the grant available under the CJRS. Payment may be delayed if checks of the employer’s CJRS claims are ongoing.

Tax treatment of the Job Retention Bonus

The Job Retention Bonus constitutes income for the purposes of calculating taxable profits for Income Tax and Corporation Tax purposes.

Is action needed now?

The HMRC guidance reminds employers of the need to:

• still be enrolled for PAYE online, comply with 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;
• keep payroll up to date and report leaving dates before the end of the pay period that they leave in;
• use the irregular payment pattern indicator in Real Time Information (RTI) for any employees not being paid regularly; and
• comply with all requests from HMRC to provide employee data in respect of past claims under the CJRS.

Conclusions

Employers who are eligible to make claims for payment of the Job Retention Bonus may still wish to consider whether it is appropriate, reputationally and otherwise, to make a claim - in the same way that several organisations decided not to make a claims under the CJRS or to return monies they had received when it transpired that their financial position was better than anticipated.

Whilst the low level of the Job Retention Bonus may be insufficient to enable or incentivise many employers to avoid redundancies or to defer them until after 31 January 2021, those employers who do wish to claim the Job Retention Bonus need to ensure they are aware of and comply with the various eligibility and other requirements and are ready to make their claims in the window for doing so in February/March next year.