Incentivising job retention

A new Job Retention Bonus of £1,000 per employee has been designed to encourage the retention of furloughed staff after the Coronavirus Job Retention Scheme (CJRS) ends on 31 October 2020.

The bonus can be claimed for all eligible employees, including company directors and agency workers. A claim under the new Job Support Scheme (running for six months from 1 November 2020) will not affect eligibility for the bonus.

Conditions

The one-off payment of £1,000 will be given for every previously furloughed employee who remains continuously employed through to 31 January 2021. But the bonus will only apply to those employees who have been legitimately furloughed.

• Eligible employees must earn at least £520 a month (the NIC lower earnings limit) on average between 1 November 2020 and 31 January 2021  ̶  therefore a total of at least £1,560 across the three months. However, there must be some earnings in each of the three months.
• The employee must not be serving a contractual or statutory notice period which started before 1 February 2021.
• The employer must comply with their RTI payroll reporting obligations through to 31 January 2021.

Only those earnings reported under the employer’s RTI (real time information) payroll will count towards the £520 a month average minimum earnings. For directors especially, it will be important they are paid sufficient salary each month.

Special cases

There are specific provisions for certain groups.

• Fixed term contracts An employee’s fixed term contract can be extended or renewed without affecting bonus eligibility, provided they remain in continuous employment.
• TUPE transfers The bonus will also be available where an employee transfer is protected under the TUPE legislation (and in certain other similar circumstances). The transfer must have occurred prior to 31 October 2020, there must have been continuous employment and the new employer must have submitted a CJRS claim for the employee.

Claiming

Employers will be able to claim the bonuses after filing their PAYE for January 2021. Payments will be made from February.

The bonus will be taxable, so the amount received must be included as income when calculating taxable profits.

In this edition

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice as at 9 October 2020.