On 8 July 2020, the Chancellor, Rishi Sunak, announced the Job Retention Bonus Scheme as part of the Government’s ‘Plan for Jobs’ aimed at incentivising employers to protect jobs and support the UK’s recovery in the wake of Covid-19.
What is the Job Retention Bonus (JRB)?
It is a one-off payment aimed at encouraging employers to retain staff in meaningful employment beyond the end of the Coronavirus Job Retention Scheme (CJRS) which is due to end on 31 October 2020.
Under the JRB, employers will be awarded a £1,000 bonus for every employee they bring back from furlough who remains in employment until the end of January 2021.
Which employers are eligible for the JRB?
An employer will be able to claim the JRB for any employees that were legitimately furloughed under the CJRS.
Employers should ensure that they have:
- Complied with the obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system.
- Maintained enrolment for PAYE online.
- A UK bank account.
If employers do not keep accurate and up to date records and cannot provide HMRC with missing employee data, this may prevent the employer’s claim from succeeding and HMRC may withhold the bonus.
An employer may be eligible to claim the JRB in respect of employees who transferred to the business under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), or if the PAYE business succession rules apply to the change in ownership.
To claim the JRB under these circumstances the transferred employees must have been furloughed in accordance with the CJRS and their new employer (i.e. the one that they transferred to), must have been successfully reimbursed under the CJRS. An employer will not be eligible for the JRB in respect of any employee transferred under TUPE or under the business succession rules after 31 October 2020.
Which employees can an employer claim the JRB for?
Employers can only claim for employees who were furloughed under the CJRS as long as they meet the below criteria.
To be eligible employees must also:
- Have been continuously employed by the employer from the time of the employer’s most recent CJRS 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. Only earnings recorded through HMRC RTI records can be counted towards the £520 monthly average.
- Have up to date RTI records for 1 November 2020 to 31 January 2021
- Employees must also not be serving a contractual or statutory notice period that started before 1 February 2021.
If an employee returned from statutory parental leave after 10 June 2020 and was claimed for under the CJRS scheme then they will be eligible for the JRB as long as they meet the other criteria.
Employees on a fixed-term contract will also be eligible. It is worth noting that contracts can still be extended or renewed without affecting eligibility for the bonus as long as continuous employment is maintained.
How can employers claim the JRB?
Employers will be able to claim the £1,000 one-off bonus from February 2021. The bonus will be taxable so employers must include the whole amount as income when calculating their taxable profits for Corporation Tax or Self-Assessment.
Employers have welcomed the stated aim of the JRB, however, there are concerns that the amount of the bonus is insufficient to provide enough support to allow employers to maintain jobs until the end of January 2021. Equally, there is currently nothing to prevent employers from receiving the bonus and then starting redundancy consultations immediately after, however, further guidance is expected this month, which may prevent this. We will ensure further updates are provided once they are issued.
If you would like further information on what the new schemes might mean for you, please contact James Simpson on 01494 478689 or at firstname.lastname@example.org or Debbie Sadler on 01494 478671 or via email at email@example.com.