UPDATE: On 3 March 2021, in his Budget announcement, the Chancellor announced an extension of the furlough scheme to the end of September 2021 for all parts of the UK. The Government’s contribution to employees’ wages remains at 80% for hours not worked up to a cap of £2,500 per month but only to the end of June 2021. Employers will be required to contribute to wages for hours not worked, specifically, 10% from July 2021 and 20% in August and September 2021. The Job Support Scheme and its extension for closed businesses remain postponed.
Employers barely had time to absorb the details of the new Job Support Scheme when further information and guidance were published about the Coronavirus Job Retention Scheme Bonus.
UPDATE: On 5 November, the Chancellor announced an extension of the furlough scheme to the end of March 2021 for all parts of the UK. The Government’s contribution to employees’ wages will be 80% for hours not worked up to a cap of £2,500 per month but this will be reviewed in January. The Job Retention Bonus will not be paid in February 2021 after all, because of the furlough extension. For more details see our article.
For more details about the Job Support Scheme see our recent article.
The Coronavirus Job Retention Scheme Bonus was first announced back in July and the purpose behind this Government initiative is to encourage employers to continue the employment of their employees through these difficult and unprecedented times. The initiative focuses on those employers whose activities have been adversely affected by both coronavirus and measures implemented by the Government to prevent or limit its further transmission.
What is the bonus?
It is a £1,000 one-off taxable payment, available as a bonus for the benefit of an employer, for each eligible employee.
What are the requirements for a successful claim?
An employer can claim for employees who:
- Have had a Coronavirus Job Retention Scheme (“CJRS”) claim made in respect of them by the employer (i.e. they have previously been furloughed);
- Have been kept employed continuously by the employer until 31 January 2021;
- Are not serving a contractual or statutory period of notice for the employer on 31 January 2021; and
- The employer has paid the employee at least the minimum income threshold.
To meet the minimum income threshold, the employer must pay the employee a total of at least £1,560 gross in the tax months:
- 6 November to 5 December 2020;
- 6 December 2020 to 5 January 2021;
- 6 January to 5 February 2021.
In addition, the employer must make at least one payment of taxable earnings (of any amount) in each of the relevant tax months.
The Government has published useful examples of how the minimum income thresholds are met and details are at the end of the article.
Significantly, an employer can still claim the Bonus if they make a claim for an employee through the new Job Support Scheme.
When to make a claim for the bonus?
Guidance on how to make a claim is expected by the end of January 2021.
Claims can be made within a six-week window between 15 February 2021 and 31 March 2021, after which the scheme will close and no further claims will be accepted.
Before an employer can make a claim, there is a need to have reported all payments made to the relevant employee(s) between 6 November 2020 and 5 February 2021 to HMRC through Full Payment Submissions via Real Time Information (RTI).
There are some steps an employer must take now to ensure they are ready to claim and they must:
- Still be enrolled for PAYE online;
- Comply with their 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 their payroll up to date and make sure they report the leaving date for any employees who stop working for them before the end of the pay period that they leave in;
- Use the irregular payment pattern indicator in Real Time Information (RTI) for any employees not being paid regularly; and
- Comply with all requests from HMRC to provide any employee data for past Coronavirus Job Retention Scheme claims.
What is the expected take up of the bonus?
It is hard to say at this stage. A number of high profile businesses have already announced that they will not be taking up the option of the Bonus, including Primark. An increasing number of employers are in fact paying back their furlough grants, for example, Asos and Ikea. Indeed, where an employer has repaid their furlough grants, they cannot claim the Bonus anyway, regardless of the reason for repaying the grants.
One of the main reasons for not making a claim for the Bonus is likely to be that £1,000 for each employee is not enough of a financial incentive for employers bearing in mind that they have to pay each employee a minimum of £1,560 over the three months period. Where employees are on a fairly high salary, there is even less of a financial incentive.
Another reason is that some organisations are facing a very uncertain future. One of the conditions when applying for the Bonus is to keep employees in employment until 31 January 2021. In the current climate, this may not be feasible for many employers. However, it is important to bear in mind that there is a wide range of other Government support in place for businesses and these will all form part of an employer’s decision-making process.
- The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction
- Government guidance – Check if you can claim the Job Retention Bonus from 15 February 2021
- Government guidance – Example of employer deciding which employees will meet the minimum income threshold for the Job Retention Bonus
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