Coronavirus Job Retention Bonus
The Job Retention Bonus aims to provide businesses with extra support when furloughed employees are retained in meaningful employment after the Coronavirus Job Retention Scheme (CJRS) ends on the 31 October 2020.
The Job Retention Bonus is part of the government’s Plan For Jobs initiative which outlines initiatives being provided to support the UK economy. This information is accurate as at 13 August 2020 and does not constitute legal advice.
What is the Job Retention Bonus?
The bonus is a one-off payment of £1,000 which will be paid to the employer for each employee who has previously been furloughed and the employer has previously submitted a claim for under the CJRS. The employee must be continuously employed by the employer through to the 31 January 2021.
The employee must earn a minimum of £520 a month on average between 1 November and 31 January 2021.
The employer will be able to claim the Job Retention Bonus for all employees who meet specific criteria. Full details of the scheme will be announced by the government at the end of September, but early indicators of the criteria are below:
- The employee must be continuously employed by the employer from the date of the most recent CJRS grant claim through to at least the 31 January 2021.
- The employee must have been furloughed and the employer submitted a CJRS claim for them that meets all the eligibility criteria for the scheme.
- The employee must have been paid an average of no less than £520 a month from 1 November to 31 January 2021. The employee doesn’t have to have earnt £520 each month but they must have received some earnings in each month and these earnings must been reported to HMRC through RTI.
- The employee must have up to date RTI records held for them by the employer for the period up to the 31 January 2021.
- Fixed term employees can be included provided they meet the eligibility criteria. Fixed term contracts can be extended or renewed provided that continuous employment is maintained.
- For those employees returning to work after a period of statutory parental leave including maternity leave, who returned to work after the 10 June 2020 and were then furloughed and claimed for under the CJRS grant, the employer can claim the Job Retention Bonus provided all other criteria is met.
- The employer may be able to claim a Job Retention Bonus for any employee who was mobilised as a military reservist who returned to work after 10 June 2020 where they were then furloughed and claimed for under the CJRS grant, provided all other criteria is met.
- The employee must not be serving contractual or statutory notice to leave the employer’s employment, that started before the 1 February 2021.
- All employees, office holders, company directors, agency workers including those employed through an umbrella company are eligible to be claimed for.
- All employers are eligible for the Job Retention Bonus scheme.
- Where a CJRS grant was made incorrectly for an employee, the employer will not be able to claim the Job Retention Bonus.
- Where an employee was not eligible for the CJRS furlough grant, the employer will not be able to claim the Job Retention Bonus
Other Factors to Take into Consideration
- The employer must have complied with their obligations to pay and file PAYE accurately and on time through RTI for all employees.
- The employer must have maintained enrolment for PAYE online.
- The employer must have a UK bank account.
- Employers must keep their payroll records up to date. Failure to do this may make claiming a Job Retention Bonus more difficult.
- HMRC reserve the option to withhold payment of Job Retention Bonus where they believe that a CJRS grant claim has been fraudulent or inflated and until an enquiry has been completed.
How is the £520 average per month made up?
- Only earnings recorded through HMRC’s RTI records count towards the average earnings.
- Employees must have been paid a minimum of £520 over the period between 1 November 2020 to 31 January 2021.
Further information is expected from the government by the end of September 2020.
TUPE or Change of Ownership
A new employer acquiring a company where TUPE applies or PAYE succession rules apply to the change of ownership may be able to claim Job Retention Bonus for any eligible employees.
Eligible employees must meet the above criteria and at the same time, it is the new employer that must have furloughed the new employees and claimed the CJRS grant.
No Job Retention Scheme bonus will be payable for employees TUPE transferred or transferred under PAYE succession rules after the 31 October 2020.
Claiming the Job Retention Bonus
More information will be provided but it is expected that employers will be able to claim the Job Retention Bonus from the 1 February 2021 through a claims portal.
How Much can be Claimed?
The Job Retention Bonus allows employers to claim £1,000 for each eligible employee. This bonus will be taxable and must be included as income when calculating taxable profits for corporation tax or self-assessment.
What can Employers do now to Prepare?
To make the claims process as smooth and trouble free as possible it is important for employers to take steps now to ensure that their payroll records are up to date and accurate.
This means ensuring that employee details and wages must be accurately reported on the Full Payments Submissions (FPS) through the RTI reporting system.
Employers must also ensure that their CJRS grant claims have been accurately submitted and that if amendments have been required, that these have been notified to HMRC.
Further information on the Job Retention Bonus scheme will be published by the government at the end of September 2020.
Please note, the information above is correct as of Thursday 13 August 2020 but may be subject to change and some elements of business support are devolved and therefore support may differ in Scotland, Northern Ireland and Wales.
For the latest guidance and professional advice, please contact us or speak to your dedicated Duncan & Toplis adviser.