Job Retention Scheme Bonus Details Announced

Further information about the Job Retention Scheme Bonus was released this month by HMRC. Please find below key points related to the Bonus and where to source further information.

What is the Job Retention Scheme Bonus?

The bonus is a £1,000 one-off taxable payment to the employer, for each eligible employee that was furloughed and subsequently kept continuously employed until 31 January 2021.

Who can claim the bonus?

Employers will still be able to claim under the scheme even if they are also receiving support from the recently announced Job Support Scheme (the replacement to the Coronavirus Job Retention Scheme), which launches on 1 November.

The bonus is available to any employer that has furloughed employees and made an eligible claim for them through the CJRS but is not payable to any employer who repaid a CJRS grant.

The new guidance outlines arrangements for employees who have been transferred from another employer, and those who are not employees but classified as office holders or agency workers.

There is a minimum income threshold the employer must pay the employee – a total of at least £1,560 (gross) throughout the tax months 6 November to 5 December 2020; 6 December 2020 to 5 January 2021; and 6 January to 5 February 2021.

What steps must employers take to claim the bonus?

Before employers can claim the bonus, they will to need to have reported all payments made to employees between 6 November 2020 and 5 February 2021 to HMRC through full payment submissions via real time information (RTI).

Businesses must include payments they receive under the scheme as income when calculating their taxable profits for income tax and corporation tax purposes but can deduct employment costs as normal.

Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) will not have to pay tax on grants received under the scheme.

Is there a minimum wage threshold?

To be eligible for the bonus, employers must make sure that their employees have been paid at least the minimum income threshold of £1,560 (gross), or a minimum of £520 per month throughout November, December and January.

When can employers claim the bonus?

You cannot claim the bonus until 15 February 2021 and employers will have until 31 March 2021 to make a claim after which the scheme will close. No further claims will be accepted after this date.

This guidance will be updated by HMRC at the end of January 2021 with details on how to access the online claim service at https://www.gov.uk/guidance/check-if-you-can-claim-the-job-retention-bonus-from-15-february-2021

COVID-19 Redundancy Pay Level Protected

The UK Government has confirmed that in the event of redundancy, workers’ wages will be protected regardless of being on furlough.

In response to a minority of firms taking advantage of the current COVID-19 pandemic to pay a lower rate of redundancy, any furloughed workers that lose their jobs will now be eligible for redundancy pay based on normal wages, rather than the furlough rate. The UK’s 95 million furloughed workers are currently only being paid 80% of their normal wage, raising the anomaly in redundancy pay level.

Workers with more than 2-years continuous service that are made redundant are usually entitled to a statutory redundancy payment that is based on their length of service, age and pay up to a maximum statutory level. Additionally, the new law will also apply to statutory notice pay, which is where employees must be given a notice period before their employment ends. Notice periods can vary from one week to up to 12 weeks’ notice, depending on length of service. Another change will ensure basic awards for unfair dismissal cases will be based on full pay, rather than furlough-level wages.

It is estimated that 150,000 people have so far been made redundant during the crisis, but there are estimates that this figure could climb much higher, especially when the Government’s furlough scheme ends in October. Indeed, the National Institute of Economic and Social Research think tank warned that the ending of the furlough scheme could lead to 1.2 million people being unemployed by Christmas.

In a recently announced step by the UK Government to encourage employers to retain staff, further details about the Job Retention Bonus Scheme have been publicised. The plan will see businesses receive a one-off payment of £1,000 for every previously furloughed employee that earn at least £520 a month on average, if they are still employed at the end of January 2021.

To claim the bonus, employers will need to have relevant up-to-date payroll RTI records for the period to the end of January, and for an employee to be eligible employees must have been paid at lease £520 a month on average between 1 November 2020 and 31 January 2021. Details guidance on the process of how to claim the bonus will be issued in September 2020.