It was announced on 8 July 2020 that the Government will pay employers a £1,000 bonus for every furloughed employee they bring back to work and keep on until January 2021. This will replace the furlough scheme which will end in October 2020. The scheme is designed to continue to support jobs through the UK’s economic recovery from coronavirus by encouraging and helping employers to retain as many employees who’ve been on furlough as possible.
The government has now published details on the eligibility requirements for the Job Retention Bonus.
How will the Job Retention Bonus work?
Employers will receive £1,000 as a one-off payment for each furloughed employee who remains employed until the end of January 2021. These payments will be made from February 2021.
The employee must 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). However, 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. In order for an employer to receive the bonus, the employee must have been doing “genuine work” from November to the end of January.
Who is eligible for the Job Retention Bonus?
For an employer to be entitled to the bonus the employee must have been;
- furloughed and had a claim submitted for them. Those furloughed after the 10 June because they were returning from parental leave or time serving as a military reservist will also remain eligible for the bonus.
- Employees being served their redundancy notice will not be eligible.
- If an employee is on a fixed-term contract and was claimed for under the scheme then their employer can claim the Job Retention Bonus.
What employers are eligible?
An employer will be able to claim the Job Retention Bonus for any employees that were eligible for the Coronavirus Job Retention Scheme and they have claimed a grant for.
If an employer has made an incorrect claim for furlough or committed furlough fraud then they will not be eligible.
Employers must keep their payroll up to date and accurate and address all requests from HMRC.
A new employer may be eligible to claim the Job Retention Bonus in respect of employees of a previous business which were transferred to the new employer if TUPE applies.
How can employers claim the Job Retention Bonus?
From February 2021, employers will be able to claim the Job Retention Bonus through GOV.UK. More detail about this process will be published in guidance by the end of September 2020. To ensure employers will be able to claim they should ensure that their employee records are up-to-date, including accurately reporting their employee’s details and wages. Employers should also make sure all of their Coronavirus Job Retention Scheme claims have been accurately submitted and any necessary amendments have been notified to HMRC.
However, the one-off payment of £1,000 bonus will be taxable, so the business must include the whole amount as income when calculating their taxable profits for Corporation Tax or Self-Assessment.
What does Thrive think?
Here at Thrive, our biggest issue is that we can’t see the point in this scheme!
It is, in part, just rewarding those who were always going to bring their staff back, for example, because they were forced to be closed or those who just took advantage of the furlough scheme whilst it was available. It won’t necessarily nudge many employers who can’t afford to keep their employees, to keep them as it barely covers a month’s salary for many.
In some ways, we wondered whether it is a further investment in the hospitality and restaurant industry, but without calling it that. Since (for example) most restaurants will have furloughed all their staff, and now be unfurloughing them all, they will inevitably receive that extra income from the Government. Could it just be that the government wants to invest through an alternate route?
It’s been widely reported that many businesses are publicly refusing to engage in the scheme as they don’t feel they need it. Some companies are going as far as repaying furlough money.
What do you think? Will it help you?
By the Thrive Tribe