Written by Brabners LLP
The Job Retention Bonus – what’s the latest?
In July, the Government announced as part of its Plan for Jobs 2020 that it would pay a £1,000 “Job Retention Bonus” to businesses (including umbrella companies) for each furloughed employee who remains continuously employed until at least 31 January 2021. Given the volume of workers that were furloughed under the Coronavirus Job Retention Scheme (“CJRS”), some companies stand to receive a substantial figure as an incentive for keeping staff on their payroll.
A Treasury Direction and further guidance on the Job Retention Bonus were published on 2 October, giving businesses greater detail about the requirements for claiming the bonus.
To be eligible for the bonus, employers must have a UK bank account, have kept their payroll up to date, maintained accurate records and complied with all PAYE obligations.
Employers will be pleased to learn that they can claim the bonus whether or not they make a claim for that employee under the Government’s Job Support Scheme (“JSS”), the successor scheme to the CJRS.
In respect of which employees can you claim?
A company may claim for each employee or worker that:
- it furloughed and in respect of whom it made an eligible claim under the CJRS;
- is kept continuously employed from the end of the last CJRS claim in respect of that individual until 31 January 2021;
- is not serving a notice period (statutory or otherwise) on 31 January 2021; and
- was paid at least £1,560 (gross) across the relevant tax months of 6 November – 5 December 2020, 6 December 2020 – 5 January 2021 and 6 January 2020 – 5 February 2021.
Crucially for umbrella companies, the guidance confirms that the Job Retention Bonus can be claimed in respect of agency workers provided that the above criteria are met.
Is the bonus worth it for employers?
Any bonus payments received under the scheme will be treated as income when calculating the company’s taxable profits, which somewhat reduces the overall figure received.
However, with the additional contribution costs for employers associated with retaining employees under the JSS, it may be that the amount received under the Job Retention Bonus scheme does not make up for the JSS contributions required to keep employees on payroll until 31 January 2021 (if sufficient work cannot be found for them to meet the minimum income requirement of £1,560 (gross) per month until 5 February 2021).
What should you do between now and February?
Employers are able to claim the bonus from 15 February 2021 to 31 March 2021, after which time no further claims can be made. Until February, employers should assess whether and to what extent they wish to make use of the JSS. They should also ensure that all furlough claims which they have made are accurate, as well as ensuring that any HMRC requests have been complied with and employee payroll is up to date.
This bulletin is for general guidance purposes only and should not be used for any other purpose. Brabners is a Limited Liability Partnership.