The Government has published new guidance on how businesses can claim the Job Retention Bonus, a package worth a reported £9 billion. The bonus will operate alongside the newly announced Job Support Scheme (JSS), a significant part of Chancellor Rishi Sunak's Winter Economy Plan, and is designed to encourage employers to retain as many employees who have been on furlough as possible.
The Job Retention Bonus is a £1000 one-off taxable payment to the employer for each eligible employee that has been furloughed and kept continuously employed until 31 January 2021. The bonus does not have to be paid to the employee, in whole or part.
With a relatively short window in which businesses can claim the bonus next year (from 15 February until the end of March 2021), this blog will look at the eligibility criteria for the bonus as provided for in the newly issued guidance.
Which businesses can take advantage of the bonus?
The bonus is open to any business that has furloughed employees and made an eligible claim for them through the Coronavirus Job Retention Scheme (CJRS). In the event the business has repaid any Coronavirus Job Retention Scheme grant amounts to HMRC, however, they will not be able to claim the bonus in relation to that employee(s).
As mentioned, the bonus is also still available for businesses that make a claim for employees through the new JSS - providing these were also furloughed under the CJRS - which is live from 1 November 2020. Further guidance on the particulars of the JSS is yet to be published.
In terms eligibility of employees, a business can claim the bonus for employees that:
- the business made an eligible claim for under the CJRS;
- the business kept continuously employed from the end of the claim period of the last CJRS claim for such employee(s);
- are not serving a contractual or statutory notice period for the business on 31 January 2020 (including people serving notice of retirement – this is the UK Government's wording, which is somewhat irrelevant to the vast majority of employers given the abolition of the default retirement age some years ago); and
- the business paid enough in each relevant tax month and enough to meet the Job Retention Bonus minimum income threshold (see below).
The guidance also makes clear that the bonus may be available in relation to employees that have transferred under TUPE or due to a change in ownership. The caveat to this position is that the bonus will be unavailable for employees that are transferred after the CJRS closes on the 31 October 2020.
Lastly, the guidance states that it is possible to claim the bonus for individuals who are not considered as employees (such as office holders or agency workers), provided that the business has claimed a grant for them under the CJRS, and that the other eligibility requirements for the bonus have been met.
The minimum income threshold
As noted above, to be eligible for the bonus, the employee must be paid at least the minimum income threshold, which is a total of at least £1560 (gross) throughout the following tax months:
- 6 November to 5 December 2020;
- 6 December 2020 to 5 January 2021; and
- 6 January to 5 February 2021
For these tax months, the employee must be paid at least one payment of taxable earnings (of any amount). The minimum income threshold criteria will apply regardless of how often employees are paid, and also regardless of any circumstances that may have reduced any employee's pay in the tax periods (for example where an employee is on statutory or unpaid leave), and only payments recorded as taxable pay will count towards the minimum income threshold.
Preparing for a claim
More guidance on exactly how to access the online claim service is due to be issued before the end of January 2021. However, with the bonus set to be available only from 15 February to 31 March 2021, it is important that businesses ensure they are ready as soon as possible, in the event they intend to claim, as any claims made after the 31 March 2021 will not be accepted.
With that in mind, and in the meantime, there are several steps that businesses can/should take now to get ready, including:
- still be enrolled for PAYE online;
- comply with PAYE obligations to file PAYE accurately and on time under Real Time Information (RTI) reporting for all employees between 6 April 2020 and 5 February 2021;
- keep payroll up to date and make sure the business report the leaving date for any employees that stop working for you before the end of the pay period that they leave in;
- use the irregular payment pattern indicator in RTI for any employees not being paid regularly; and
- comply with all requests from HMRC to provide any employee data for past CJRS claims.
The guidance is available here.
Get in touch
If you have any queries please don't hesitate to contact one of the employment team to discuss further.