Job Retention Bonus: further details published

Job Retention Bonus: further details published

The 2020 budget delays the re-introduction of HMRCs priority in insolvency proceedings

On 8 July 2020, the Chancellor, Rishi Sunak, announced a new Job Retention Bonus (JR Bonus) as part of the Government’s plan to support the UK’s economic recovery in the wake of the Coronavirus pandemic. 

The JR Bonus is intended to support job retention after the closure of the Coronavirus Job Retention Scheme (CJRS) at the end of October 2020, by encouraging and helping employers to retain as many employees who have been on furlough as possible. The Government set out further details on eligibility requirements and how employers can claim the JR Bonus in a policy statement published on 31 July, which can be accessed here. Full guidance will be published in September. We set out below what we know so far about the JR Bonus scheme. 

Eligibility criteria

Employers will be eligible for a one-off payment of £1,000 for every previously furloughed employee who:

  • Was furloughed and met the eligibility criteria for the employer to claim a grant under the CJRS. 
  • Remains continuously employed by the employer in question until 31 January 2021.
  • Is paid at least £520 a month on average between 1 November 2020 and 31 January 2021. (The employee does not need to be paid £520 in each month, but must receive some earnings in each of the three calendar months of November 2020, December 2020 and January 2021, and such payments must be reported to HMRC via the Real Time Information (RTI) reporting system. Employers should be aware that this criterion must be met, regardless of the frequency of the employee’s pay periods, their hours worked and rate of pay, which may potentially exclude some otherwise eligible employees, such as company directors paid on an annual basis.)

All employers are eligible for the JR Bonus scheme, provided they have:

  • Complied with their obligations to pay and file PAYE accurately and on time under the RTI reporting system for all employees
  • Maintained enrolment for PAYE online, and
  • A UK bank account.

What happens if employees have given or been given notice before 1 February 2021?

As the JR Bonus scheme is designed to protect jobs, employers will not be eligible to claim the JR Bonus in respect of any employee serving “a contractual or statutory notice period, that started before 1 February 2021”. Although the press release announcing the policy paper refers explicitly to those who are serving notice for redundancy, the policy paper appears to exclude from the JR Bonus scheme employees serving notice for any reason (including those who may have served notice to their employers).

Business transfers

A new employer may be eligible to claim the JR Bonus in respect of employees who transferred to the new employer under TUPE or who transferred as a result of the purchase of an insolvent business, providing other eligibility criteria are met.

How and when do employers claim?

Employers will be able to submit a claim for the JR Bonus after they have filed PAYE for January 2021 and payments will be made to employers from February 2021. HMRC will withhold payment of the JR Bonus where it believes there is a risk that CJRS claims may have been fraudulently claimed or inflated. 

The JR Bonus will be taxable, so the employer must include the whole amount as income when calculating their taxable profits for Corporation Tax or Self-Assessment.

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