Introduction

In March this year the government introduced the Coronavirus Job Retention Scheme (CJRS) to support businesses whose operations were severely impacted by the COVID-19 outbreak.  

The CJRS sought to avoid the need for permanent redundancies and layoffs by enabling employers to “furlough” employees (put them on ‘paid’ leave of absence) and re-claim a proportion of their wage costs.

From 1 August 2020 employers with staff on furlough have had to start contributing to the cost of payments made under the scheme.  The employer share of the cost will gradually increase until the scheme is phased out completely by the end of October.

On the 8 July 2020, the Chancellor of the Exchequer announced, as part of his Plan for Jobs, that the government would be introducing a Job Retention Bonus (JRB) as a way of incentivising employers to retain staff, who had previously been furloughed, in “meaningful employment” beyond the end of the CJRS.

Basic principles

The basic premise of the JRB is that employers will be paid a one off bonus of £1,000 for each employee, who had previously been furloughed, and who was retained in employment until 31 January 2021.

The payment is subject to terms and conditions which are outlined below.

Eligibility

The scheme is open to all UK employers (including recruitment agencies and umbrella companies) who legitimately claimed payments under the CJRS subject to:

• compliance with PAYE and Real Time Information (RTI) obligations for all employees
• continuous enrolment for PAYE online
• holding a UK bank account

The HMRC have indicated that they will rigorously check and enforce all conditions relating to the JRB and withhold payments where they believe there is a risk of fraudulent claims.

Employees for which a bonus can be claimed for

Employers can claim a JRB for all employees who:

• were legitimately furloughed and qualified for payments under the CJRS
• have remained employed by the employer claiming the bonus, between the most recent CJRS claim for that employee and the 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 payment in each month.  Note:  only earnings reported through RTI can be counted towards the £520 minimum earnings threshold
• have up-to-date RTI records for the period to the end of January
• are not working contractual or statutory notice as at 31 January 2020

Specific circumstances

Employees on fixed term contracts – A JRB can be claimed 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.

Employees who were excluded from the 10th June 2020 CJRS cutoff – under most circumstances, to qualify for CJRS payments from 1 July 2020 onwards, an employee must have been on furlough leave for the first time on or before 10 June 2020.  However, in specific cases – namely those returning from maternity, paternity, adoptive, shared parental or parental bereavement leave, or returning from mobilisation as a military reservist – employees were exempt from this cut off and could be placed on furlough for the first time after 10 June 2020.  A JRB can be claimed for people in these circumstances.

Employees who transferred employment under TUPE – will be able to be claimed for provided they had transferred prior to 31 October 2020 and the new employer had made a successful CJRS claim for them.  This also applies to employees of a previous business who transferred to a new employer where the PAYE business succession rules applied to the change of ownership.

Claiming under the JRB scheme

• Employers will be able to claim £1,000 for each qualifying employee
• Claims will be able to be made from February 2021
• Payments will be subject to tax so should be recorded as income on financial records when calculating Corporation Tax or Self-Assessment