What is the Job Retention Bonus and How Can You Use it?

On 8 July 2020, the Chancellor announced a new Job Retention Bonus for employers who have used the Job Retention Scheme. You can receive a £1000 cash bonus for every furloughed employee provided that:

  • you bring the furloughed employee back to work and continue to employ them for the period of November 2020 to the end of January 2021; and
  • the employee earns a minimum of £520 average per month between November and January 2021.

Payments will be made from February 2021.

Can You Claim the Bonus?

All employers who furloughed staff are eligible for the JRB (Job Retention Bonus) including recruitment agencies and umbrella companies.

You should ensure that you have:

  • complied with your 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.

Failure to maintain accurate payroll data may jeopardise a claim so it is important that you keep your payroll up to date and address all requests from HMRC to provide missing employee data in respect of historic Job Retention Scheme claims.

Which Employees can You Claim the Bonus For?

Employees must be eligible for the Job Retention Scheme and you must have claimed a grant from the Scheme for them. Government guidance says that this includes office holders, company directors and agency workers, including those employed by umbrella companies.

The JRB can be claimed for employees who:

  • were furloughed and had a Job Retention Scheme claim submitted for them that meets all relevant eligibility criteria for the scheme
  • have been continuously employed by you from the time of your 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 Real Time Information
  • have up-to-date RTI records for the period to the end of January 2021
  • are not serving a contractual or statutory notice period, that started before 1 February 2021, for the employer making a claim.

Here are some other questions that you might have:

1. What about those categories of people who were excluded from the 10 June ‘first time furlough’ cut off date?

You can still claim the JRB for them. The Job Retention Scheme included a cut-off date on 10 June 2020 after which no employee could be furloughed for the first time. Those on maternity, paternity, adoption, shared parental or parental bereavement leave which started before and ended after 10 June were exempt from the cut off, as were those employees who were on a period of mobilisation with the Reserve Forces which started before and ended after 10 June. Employers can claim the JRB in relation to these employees whose furlough started after 10 June 2020 provided they meet all other criteria.

2. Are the rules any different for fixed term employees?

You can claim the JRB for employees on fixed term contracts that are extended or renewed provided that continuity of employment is not broken and all other criteria are met.

3. Can you claim the bonus for employees transferred to your business under TUPE?

You will be able to claim the JRB for employees who were transferred to you under TUPE law provided that you, as the new employer, furloughed the employee and successfully made a claim to the Job Retention Scheme for them.

This also applies to employees of a previous business who transferred to the new employer where the PAYE business succession rules applied to the change of ownership.

In both cases, the employees must have transferred on a date which falls by the end of the Job Retention Scheme i.e. by 31 October 2020. You cannot claim the JRB for any employee who transferred after 31 October 2020.

What earnings count towards the £520 per month minimum limit?

This is restricted to earnings recorded through HMRC Real Time Information (RTI) records. More detailed guidance on this will be published in September 2020.

How much is the bonus?

It is a one-off payment of £1000 for every furloughed employee who meets the criteria set out above. If you have furloughed many staff who meet the criteria, the bonus could total several thousands of pounds.

Is the bonus taxable?

Yes. If you receive the JRB, you must include the whole amount as income when calculating your taxable profits for Corporation Tax or Self-Assessment.

When can I claim the bonus?

From February 2021. You will be able to claim it through gov.uk. More information on this will be published in September 2020.

What should I do to prepare for claiming the bonus?

You should make sure your employee records are up-to-date, and are accurately reporting your employee’s details and wages on the Full Payment Submission (FPS) through the Real Time Information (RTI) reporting system. You should also make sure all of your claims to the Job Retention Scheme have been accurately submitted and that you have notified HMRC of any necessary amendments to your claims.

Is there anything which may prevent the bonus being paid to me?

HMRC will withhold payment of the JRB where it believes there is a risk that Job Retention Scheme claims may have been fraudulently claimed or inflated, until they have completed an enquiry.

Where a claim to the Job Retention Scheme was incorrectly made, the JRB will not be paid.

Lots of questions and hopefully this blog has given you all the answers you need. If there is anything else that you need to discuss, please do get in touch. You can call me on 0118 940 3032 or click here to email me.

Source: CIPD