Job Retention Bonus details published

ON 5 NOVEMBER 2020 THE JOB RETENTION BONUS WAS SCRAPPED

As announced in the 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 been published.

More information was published on 2 October 2020, along with a Treasury Direction setting out the legal basis for the bonus..

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.

The government has confirmed that employers will be able to claim the bonus in a six-week window between 15 February 2021 and 31 March 2021. The money does not have to be paid to the employee.

Who can claim the Job Retention Bonus

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.

Employers can still claim the bonus if a claim is made for an employee through the Job Support Scheme. 

All employers are eligible for the bonus, 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

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.

Where employees have been transferred under TUPE etc.

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.

Which employees can the bonus be claimed for

Employers will be able to claim the bonus for employees who:

• were furloughed and had a grant 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
• are not serving a contractual or statutory notice period, that started before 1 February 2021, for the employer making a claim

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.

What earnings can be included in the £520 a month average minimum earnings threshold

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.

On 2 October HMRC published examples to help employers decide which employees meet the minimum income threshold. Two of these examples show where the employee would not qualify for the bonus.

Employee E

Ebrill works part-time on a fixed salary of £400 paid every 4 weeks. She was paid on 3 December 2020, 31 December 2020 and 28 January 2021 so her pay in the relevant tax periods was:

• 6 November to 5 December 2020 - £400
• 6 December 2020 to 5 January 2021 - £400
• 6 January to 5 February 2021 - £400

Ebrill received a payment of taxable earnings in each relevant tax period but the total taxable pay is £1,200. This is less than the £1,560 threshold so Z Ltd cannot claim the JRB in respect of Ebrill.

Employee F

Frans works full time for Z Ltd, with a monthly salary of £4,000 paid on the last day of each month, he takes a month of unpaid leave every December to visit family overseas. His pay in the relevant tax periods was:

• 6 November to 5 December 2020 - £4,000
• 6 December 2020 to 5 January 2021- £0
• 6 January to 5 February 2021 - £4,000

Frans did not receive a payment of taxable earnings in each of the relevant tax periods even though the total taxable pay is £8,000 and exceeds the minimum income threshold of £1,560, Z Ltd cannot claim the Job Retention Bonus in respect of Frans.

Employees who have returned from statutory parental leave

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.

Employees who are military reservists returning to work

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.

Employees on fixed term contracts

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.

How employers can claim the bonus

1 When employers will be able to claim the bonus

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.

2 How much employers will be able to claim

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.

3 What employers can do now

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.