What is the Coronavirus Job Retention Scheme Bonus?

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.

For more details of other recent furlough developments, read our articles on the extension of furlough and what furlough means for employers. 

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.

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.

Useful links:

• 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

This article has been co-written by Tim Forer and Dylan Withanage.