Following the Chancellor’s announcement on 8 July 2020 that employers of furloughed employees would be entitled to a job retention bonus if they kept employees employed until the end of January 2021, the Government published a policy paper on 31 July 2020 setting out more detail of this scheme.
The Job Retention Bonus Scheme (the “Scheme”) is intended to support employers who retain their furloughed employees after the Coronavirus Job Retention Scheme (“CJRS”) ends on 31 October 2020. The policy paper now issued by the Government provides more detail about the proposed operation of the Scheme.
The Scheme will entitle employers to receive a one-off payment of £1,000 (the “Job Retention Bonus”) for every employee who was furloughed under the CJRS, provided that they meet certain eligibility criteria. All employers are eligible for the Scheme, including recruitment agencies and umbrella companies. The Job Retention Bonus will be taxable, so an employer must include the whole amount received as income when calculating its taxable profits for Corporation Tax or Self-Assessment.
Employers will be able to claim a Job Retention Bonus for all employees who meet the relevant criteria and this will extend to office holders, company directors and agency workers, including those employed by umbrella companies. The criteria must be met regardless of the frequency of an individual’s pay period, hours worked and rate of pay.
An employee in respect of whom a Job Retention Bonus may be claimed must have been furloughed under the CJRS, and must have had a CJRS claim submitted for them that meets all relevant eligibility criteria under the CJRS. A claim for a Job Retention Bonus may also be made in respect of those furloughed after 10 June 2020, when the CJRS closed to new entrants, provided that those individuals were subject to one of the exemptions to the restriction on new entrants to the CJRS after that date - which include:
- employees on statutory family leave, who returned from that leave after 10 June 2020 and were claimed for under the CJRS; and
- employees mobilised as military reservists, who returned after 10 June 2020 and were claimed for under the CJRS.
In order for an employer to claim a Job Retention Bonus in respect of an employee, the employee must remain continuously employed from the time of the employer’s most recent CJRS claim for that employee until at least 31 January 2021. An employee may not have a Job Retention Bonus claimed in respect of them if they start serving a contractual or statutory notice period before 1 February 2021. A claim may be made in respect of a fixed-term employee whose contract is extended or renewed provided they meet the other eligibility criteria.
The continuous employment requirement may also be met by an employee who has transferred between employers under TUPE, or where the PAYE business succession rules apply to the change in ownership. In order for the new employer to claim a Job Retention Bonus in respect of employees in these circumstances, the transferred employees must have been furloughed and successfully claimed for under the CJRS by their new employer. An employer may not claim a Job Retention Bonus in respect of any employee transferred under TUPE or under the business succession rules after 31 October 2020.
For an employer to be able to make a claim in respect of an employee, the employee must have earned at least £520 per month on average between 1 November 2020 and 31 January 2021 (a total of at least £1,560). The employee does not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via Real Time Information (“RTI”).
Only earnings recorded through RTI records can count towards the £520 a month average minimum earnings threshold. Employers must have up-to-date RTI records for the period to the end of January 2021 in respect of each employee in relation to whom a claim is made for a Job Retention Bonus.
Where a claim for an employee was incorrectly made under the CJRS - for an employee who was not eligible for furlough under the CJRS - a Job Retention Bonus will not be payable. HMRC has said that it will withhold payment where it believes there is a risk that CJRS claims may have been fraudulently claimed or inflated, until an enquiry is completed.
When can claims be made, and what should employers do now?
Employers will be able to claim the Job Retention Bonus after they have filed their PAYE information for January 2021, and payments will be made to employers from February 2021.
Full guidance on the operation of the Scheme is due to be published by the end of September 2020, but employers who hope to take advantage of the Scheme should consider its eligibility requirements now. Employers should also ensure that they:
- comply with their obligations to pay and file PAYE accurately and on time, including accurately reporting their employee’s details and wages on the Full Payment Submission (FPS) through the RTI reporting system for all employees and maintaining enrolment for PAYE online.
- keep their payroll and employee records up to date and accurate and address all requests from HMRC to provide missing employee data in respect of historic CJRS claims.
- check that their CJRS claims have been accurately submitted and any necessary amendments have been notified to HMRC.