The Coronavirus Job Retention Scheme (CJRS) ends on 31 October 2020 and amongst alternative support initiatives now being considered, is the Job Retention Bonus (the Bonus).
The Bonus enables employers to claim a one-off taxable payment of £1,000 from HMRC (which is not required to be passed on to the employee) in relation to those employees that are being retained, where they might otherwise be made redundant. In simple terms, the Government’s aim is to incentivise employers to keep employees on.
There are certain conditions that apply to the Bonus to determine whether an employer is eligible to benefit. To qualify, the employee must:
- Be continuously employed by the employer from 01 November 2020 to 31 January 2021. Those employees who have been served with either statutory or contractual notice of the proposed termination of their employment will not be eligible;
- Receive a salary of at least £1,560 between 06 November 2020 and 05 February 2021; and
- Have previously been furloughed, as set out within the CJRS. This condition is to prevent employers receiving a bonus of £1,000 and retaining, for example, a zero-hours contract worker on the books and paying them a nominal amount prior to 31 January 2021.
Before making any claim, employers will need to have reported to HMRC all payments made between 06 November 2020 and 05 February 2021, to employees they are making a claim in respect of, through Full Payment Submission via Real Time Information (RTI). Where an employer has previously made an incorrect claim under the CJRS, the Bonus will not be payable.
Further guidance is to be provided by the Government at the end of January 2021, together with details of how to make and submit a claim for the Bonus.
Example of an employer deciding which employees meet the minimum income threshold for the Job Retention Bonus
ABC Ltd has 20 employees and 6 furloughed employees. The employer was eligible to make Coronavirus Job Retention Scheme claims for the furloughed employees and made successful claims.
On 01 February 2021, the employer wants to know if they can claim the Job Retention Bonus. All the employees who were furloughed have remained employed by the employer and are not serving any notice period. The employer now needs to decide if they meet the minimum income threshold.
Jack works part-time for a fixed salary of £1,000 a month, paid on the last day of each month. He was paid in each of the relevant tax periods and his taxable pay in each period was £1,000. The total paid was £3,000. This exceeds the minimum income threshold of £1,560. With tax code 1250L, no income tax was due in any of these periods, but the amount paid to Jack still counts as ‘taxable pay’. ABC Ltd can claim the Job Retention Bonus in respect of Jack.
Bob usually earns around £1,800 each month but was off sick and receiving Statutory Sick Pay (SSP) for several weeks, including the whole of December. His pay in the relevant tax periods was:
- 06 November to 05 December 2020: £1,500
- 06 December 2020 to 05 January 2021: £383
- 06 January to 05 February 2021: £1,750
SSP counts as taxable earnings, so Bob received a payment of taxable earnings in each relevant tax period. The total taxable pay was £3,633. This exceeds the minimum income threshold of £1,560, therefore, ABC Ltd can claim the Job Retention Bonus in respect of Bob.
HMRC have not confirmed yet as to how the claim is to be made, but all submissions must be made between 15 February 2021 and 31 March 2021 to be eligible.
It is imperative that all employers ensure that all previous furlough claims through the CJRS are filed in full submission and real-time information to HMRC, as failure to do so could lead to a delay in the Bonus being payable. More guidance on this area will be covered by The Treasury in due course.
Please note, the information included in this update is correct at the date of publishing.