Job retention bonus – initial guidance released

10 Aug 2020

HMRC have published initial guidance on the Job Retention Bonus which was announced by Chancellor Rishi Sunak in his summer statement.

Full guidance will be available by the end of September but the detailed published now gives us an outline of which employers will be eligible and in respect of which employees.

What is the job retention bonus?

The Chancellor announced that employers who have previously placed employees on furlough will be able to claim a £1,000 bonus per previously furloughed employee provided those employees are still employed as at 31 January 2021.

Which employees does it apply to?

In order for the employer to qualify for a bonus under the scheme in respect of an employee the employee must:

  • Have been furloughed and had a Coronavirus Job Retention Scheme claim submitted for them that meets all relevant eligibility criteria for the scheme

  • Have been continuously employed by the relevant employer from the time of the employer’s most recent claim for that employee until at least 31 January 2021

  • Have been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months). 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 RTI;

  • Have up-to-date RTI records for the period to the end of January

  • Not be serving a contractual or statutory notice period, that started before 1 February 2021, for the employer making a claim

For these purposes employees include office holders and company directors who meet these criteria. There are specific rules about employees returning from parental leave, military reservists and those on fixed term contracts.

Which employers can receive a grant?

All employers are eligible for the scheme including recruitment agencies and umbrella companies. Employers should ensure that they have:

  • Complied with their obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system for all employees

  • Maintained enrolment for PAYE online

  • A UK bank account

It is essential that employers keep their records up to date and respond to any HMRC request for information about prior furlough claims. Failure to do so may compromise their ability to make a claim. If HMRC suspect any previous furlough claims have been made fraudulently then any payment of the bonus will be withheld until any HMRC enquiry is completed.

How will the claim system work?

At this stage all we know is that claims will be possible from February 2021 onwards. The bonus will be a one off payment and will be subject to income tax or corporation tax on the full amount received.

WR Comment

While full details of the scheme are yet to be announced we now have a broad idea of how the scheme will work and what the requirements are that need to be met. It will be especially important for employers to ensure all of their PAYE records are up to date to avoid delays in the payment of the bonus.

More broadly the question remains whether the opportunity to claim a £1,000 bonus in February will be sufficient to persuade employers to retain individuals in employment until the end of January. At best it may only influence relatively marginal cases and the majority of those employers that benefit are those that would have no intention of reducing their workforce come what may. Unfortunately many employers will still have to face the upsetting prospect of making staff redundant.

Given there is a process to be followed in any redundancy situation which may take a number of weeks employers should be facing up to these decisions now. Waiting until employees return from furlough at the end of October delays the start of this process, introducing more cost into the business and putting further pressure on the employer’s ability to protect the jobs of their other employees.

At the same time it essential that employers meet all of the legal requirements of any redundancy process which can be complex and onerous. We are able to provide support and guidance to employers facing up to these difficult decisions, protecting them from the threat of legal action if they do not ensure they meet all of their obligations.

Please get in touch with your usual WR contact should you require any assistance.

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