The Chancellor has announced a Job Retention Bonus scheme to incentivise employers to retain furloughed staff after the furlough scheme comes to an end in October. We offer a brief summary of the scheme and our initial thoughts. 


Job Retention Bonus 

A Policy Paper published by HMRC on 31 July 2020 outlines the eligibility requirements and how employers can claim the bonus.  

Key points include:

  • There will be a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. 
  • Employees must not be serving a contractual or statutory notice period that started before 1 February 2021, for the employer making the claim.
  • Employers will be eligible to claim for employee transfers protected under TUPE legislation, provided they have been continuously employed and meet the other eligibility criteria, including that the new employer will have to have submitted a claim under the Coronavirus Job Retention Scheme (Scheme) for that employee.
  • Employees on fixed-term contracts who have been claimed for under the Scheme and employees returning from statutory parental leave after 10 June who have been claimed for under the Scheme can also be included.
  • Employees must earn at least £520 per month on average between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months).  Employees do not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via Real Time Information (RTI).  Only earnings recorded through HMRC RTI records can count towards the £520 a month average minimum earnings threshold.
  • Employers will be able to claim the bonus through GOV.UK from February 2021.  More detail about this process is due to be published in guidance by the end of September 2020.

Comment

We expect this to be a somewhat temporary reprieve as many employers have already made redundancies (or are making plans to do so) in spite of the assistance provided by the furlough scheme. The clear intention of the scheme is to discourage employers from making redundancies immediately after the furlough scheme ends in October, which is what many companies would have been expected to do. The 3-month period from November to January can be seen as a "cooling off" period post-furlough to give employers time and opportunity to think about potential long-term job retention strategy.  For those who were planning to retain furloughed jobs anyway, it will be bonus free money, although some companies who have remained profitable throughout the pandemic have already announced that they will not be claiming the bonus.  

Key contact

Sungjin Park

Sungjin Park

Knowledge Lawyer, Employment
London

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