How can employers ensure they qualify for the £1,000 Job Retention Bonus?

Employers cannot claim the Job Retention Bonus where the employee is under notice of termination of employment before 1 February 2021.

In early July, the Government announced its intention to incentivise employers to retain furloughed employees until the end of January 2021 by paying a “Job Retention Bonus”. Further details of this scheme, which is part of the Government’s  Plan for Jobs, have now been published.

Broadly speaking, the bonus will be a one-off payment to employers of £1,000 in respect of every employee they have properly claimed for under the Coronavirus Job Retention Scheme (CJRS) and who remains continuously employed through to 31 January 2021. However, there are important eligibility criteria which employers should be aware of before they rely on being able to claim such bonus payments.

Eligibility for the Job Retention Bonus

Employers can only claim the bonus in relation to an employee if all of the following apply:

• The employer made an eligible claim in respect of the employee at any time during the course of the CJRS;
• The employee is continuously employed by the employer until 31 January 2021;
• The employee is not serving a contractual or statutory notice period that started before 1 February 2021;
• The employee earns on average at least £520 a month between 1 November 2020 and 31 January 2021; and
• Some pay was paid to the employee in each of those three months and was reported via Real Time Information (RTI) to HMRC.

As with CJRS claims, the bonus can be claimed in respect of office holders (such as company directors), agency workers and those on zero hours and fixed term contracts as long as they are paid through PAYE payroll and meet the eligibility criteria. 

What might stop the Job Retention Bonus being paid to employers?

Aside from the eligibility criteria above, it is important to note that bonus payments will not be made where HMRC believes there is a risk that fraudulent, inflated or incorrect claims have been made under the CJRS, or where HMRC has requested information from an employer which has not been provided.

Employers must also have maintained up to date and accurate RTI records and payments for all their employees (whether furloughed or not), continue to be enrolled for PAYE online and have a UK bank account.

The Job Retention Bonus and TUPE transfers

Employers who have recently taken on, or plan to take on, employees via TUPE, business succession or following a compulsory liquidation should not assume that they inherit the right to claim the Job Retention Bonus in relation to furloughed transferred employees.

TUPE transfers and business successions on or before 31 October 2020

The new employer can only claim the bonus in respect of a transferred employee if the new employer has itself successfully claimed for that employee’s wages under the CJRS. A new employer cannot therefore rely on a period of furlough while the employee was with the old employer.

TUPE transfers and business successions after 31 October 2020

Where the transfer takes places after 31 October 2020, the new employer will not be eligible for the Job Retention Bonus in respect of any transferring employees.

Tax implications of the Job Retention Bonus

The Job Retention Bonus will be taxable. The employer must include the amount received in bonus payments as income when calculating taxable profits for corporation tax or self-assessment.

Next steps for employers

Employers hoping to benefit from bonus payments should ensure that their payroll information and RTI records are up to date and that any requests by HMRC for missing information are promptly complied with.

We have previously covered HMRC’s approach to furlough fraud. Since the Finance Act 2020 was passed on 22 July, there has been in place a 90-day period during which employers can self-report inaccurate CJRS claims without incurring penalties.

Further guidance will be published by HMRC by the end of September and it is expected that employers will be able to claim bonus payments in February 2021.