Announcement of details of the Job Retention Bonus

It has been a couple of weeks since Chancellor, Rishi Sunak, unveiled his plans for the ‘Job Retention Bonus’: a mechanism to encourage employers to bring back, and keep, their staff post-furlough.

On 31 July 2020, further details of the Job Retention Bonus were announced.

What is the Job Retention Bonus?

Employers can claim a £1,000 payment for every employee who has been furloughed under the Coronavirus Job Retention Scheme (‘the Scheme’), on the condition that they are brought back to work and remain continuously employed until January 2021.

What are the eligibility criteria?

In order to claim the bonus in respect of an employee:

• They must have returned to work after previously being furloughed.
• They must remain continuously employed until at least 31 January 2021.
• They must not be serving a notice period, which started before 1 February 2021.
• They must earn per month, on average, at least the National Insurance lower earnings limit (which, at present, is £520) between the beginning of November 2020 and the end of January 2021.

Eligibility for parental leave returners and military reservists

Those returning from parental leave, or time serving as a military reservist, who have had a claim under the Scheme made for them after 10 June (when the Scheme closed to new entrants), will still be eligible for the bonus as long as they meet the remaining eligibility criteria.

Eligibility for TUPE employees and fixed-term contracts

Employers who acquire employees by way of a TUPE transfer will be able to claim for the bonus in respect of those employees, provided that all other eligibility criteria are satisfied, and the ‘new’ employer has also made a claim for those employees under the Scheme. Given that the Scheme ends on 31 October 2020, this will only apply to TUPE transfers up to and including this date.

Employers can claim in respect of employees on fixed-term contracts, as long as all other eligibility criteria are met. Contracts can be extended or renewed, without affecting eligibility for the bonus, provided that continuous employment is maintained.

How can employers claim the Job Retention Bonus?

Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January 2021. Payments will be made to employers from February 2021.

Claims will be able to be made through www.gov.uk. Further guidance about the Job Retention Bonus will be published in September 2020.

Important to note is that the bonus will be taxable, so the business must include the full amount as income when calculating its taxable profits for Corporation Tax or Self-Assessment.

What can employers do now, to ensure eligibility for the Job Retention Bonus?

Employers should spend some time ensuring that their employee records are up to date, particularly in respect of the details and wages submitted on the Full Payment Submission (FPS) through the Real-Time Information (RTI) reporting system.

In addition, they should check that all claims under the Scheme have been accurately submitted, and any necessary amendments have been notified to HMRC. HMRC will withhold payment of the Job Retention Bonus where it believes there is a risks that fraudulent claims may have been made under the Scheme, until the enquiry is completed.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Rachael Lloyd to discuss any issues you are facing.