As announced in the recent Summer Economic Update a Job Retention Bonus will give employers £1,000 for each worker they bring back from furlough and continue to employ through to 31 January 2021.
Further details of how this will work have now been published.
The Flexible Furlough Scheme ends on 31 October and those who are brought back into the workforce from furlough either then or before stand to receive a £1,000 grant for every person who was furloughed as long as they are continuously employed up to the end of January next year.
In addition, eligible employees must earn at least £520 a month on average between the 1 November 2020 and 31 January 2021.
Employers will be able to claim the grant after they have filed PAYE for January. Payments will be made to employers from February 2021.
An employer can claim the bonus for any workers that were put on the furlough scheme (Coronavirus Job Retention Scheme (CJRS)) and a grant was claimed under that scheme.
However, if an incorrect claim for a worker was made under the furlough scheme, the bonus will not be payable.
All employers are eligible for the bonus, including recruitment agencies and umbrella companies.
Employers should ensure that they have:
The bonus rules are strict in that employers must keep their payroll up to date and accurate and deal with requests from HMRC for missing employee data in respect of historic furlough scheme claims.
Where accurate records are not kept, or HMRC thinks fraudulent furlough scheme claims were made, the bonus may not be paid until enquiries are complete.
A new employer may be paid the bonus in respect of workers of a previous business which were transferred to it if either the Transfer of Undertakings (Protection of Employment) Rules (TUPE) or the PAYE business succession rules apply to the change in ownership.
The new employer may also be eligible where it has employees from a business transferred from the liquidator of a company in compulsory liquidation, where TUPE would have applied were it not for the compulsory liquidation.
To claim the bonus in these circumstances, the transferred workers must have been furloughed by their new employer.
An employer cannot claim the bonus for any employee transferred under TUPE or under the business succession rules after 31 October 2020.
Employers will be able to claim the bonus for employees who:
Employers can claim the bonus for all those who meet the above criteria, including office holders, company directors and agency workers, including those employed by umbrella companies.
The above criteria must be met regardless of the frequency of the employee’s pay periods, their hours worked and rate of pay.
Only earnings recorded through HMRC RTI records can count towards the £520 a month average minimum earnings threshold.
For an employee to be eligible, employees must have been paid at least £520 a month on average between 1 November 2020 and 31 January 2021.
Detailed guidance will be published in September 2020.
Where a worker was on statutory parental leave who returned after 10 June 2020 and was claimed for under the furlough scheme, then the employer will be able to claim a bonus for that employee as long as the other eligibility criteria are met.
If a worker was mobilised as a military reservist and returned after 10 June 2020 and was claimed for under the furlough scheme, then the employer can claim the bonus in respect of that person provided the other eligibility criteria are met.
An employer can claim the bonus for a worker on a fixed term contract who was furloughed, provided the other eligibility criteria are met.
Contracts can be extended or renewed without affecting eligibility for the bonus, provided that continuous employment is maintained.
From February 2021, employers will be able to claim the bonus through GOV.UK. More detail about this process will be published by the end of September 2020.
The bonus is a one-off payment of £1,000 to the employer for every eligible worker that is claimed for. It is taxable, so the business must include the whole amount as income when calculating their taxable profits.
Employers need to ensure that their employee records are up-to-date, including accurately reporting their employee’s details and wages on the Full Payment Submission (FPS) through RTI.
Employers should also make sure all of their furlough scheme claims have been accurately submitted and any necessary amendments have been notified to HMRC.
For further help, please check out our Business after COVID-19: Transition Knowledge Hub.