Last updated 5 November 2020

UPDATE 5 NOVEMBER 2020 - Following the Chancellor's announcement that the Coronavirus Job Retention Scheme (CJRS) has been extended until 31 March 2021, the latest HMRC policy paper states that:

"The Job Retention Bonus (JRB) will not be paid in February 2021 and a retention initiative will be deployed at the appropriate time. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is now being extended to 31 March 2021, the policy intent of the JRB no longer applies."

We will update this page further as we learn more.

UPDATE 2 NOVEMBER 2020 - Following the Government's announcement of the second lockdown in England from 5 November 2020, the Coronavirus Job Retention Scheme (CJRS) has been extended until December. We do not yet have details how the extended CJRS and the Job Retention Bonus (JRB) will interact. We will update this page as we learn more.

On 8 July, the Chancellor announced an incentive for employers to bring back staff who were furloughed during the period March to October 2020.

Under the Job Retention Bonus, the Government will pay £1,000 to employers for each previously furloughed employee who remains continuously employed until 31 January 2021. The bonus is intended to provide additional support to retain employees after the Coronavirus Job Retention Scheme (CJRS) ends on 31 October.

Unlike the CJRS and Job Support Scheme (JSS), any funds received under the bonus scheme by employers can be kept by them and do not have to be passed on to the employee. The bonus payment received will be taxable in the hands of the employer – unless the employer is an individual who has employees such as nannies or domestic staff who are not part of a business.  

Employer eligibility

To be eligible, the employer must have made valid claims for the employees in question under the CJRS.

If the employer has repaid any grant in respect of some or all of their employees – for whatever reason – then they will not be able to claim the bonus in respect of those employees.

Where employees have been transferred under TUPE or following a change in ownership prior to 31 October, a bonus claim may still be possible by the new employer, if the new employer continued to furlough the transferred staff. There is more detail on GOV.UK. 

Employee eligibility

A claim can be made for an employee provided that:

• They were eligible to be furloughed under the CJRS, were actually furloughed at some point and were included on an eligible CJRS claim by their employer. 
• They are continually employed up until at least 31 January 2021.
• They receive a payment in each of the tax months of November, December and January and the total of those payments exceeds the minimum income threshold of £1,560 gross (see below).
• They are not serving a contractual or statutory notice period that started before 1 February 2021.

There is no requirement for employees to still be on furlough when the CJRS closes at the end of October. The bonus will therefore be due even where the employee was only furloughed for the minimum period of three continuous weeks at some point during March to June and then went on to work throughout the rest of the CRJS period and for the months beyond.

The minimum income threshold

When it comes to the requirements for minimum income thresholds and frequency of payment, HMRC is working to tax months, not calendar months, so the minimum income threshold will be assessed over the following periods:

• 6 November to 5 December 2020
• 6 December 2020 to 5 January 2021
• 6 January to 5 February 2021

In addition, the rules require that a payment of taxable earnings has to be made at least once in each of the three tax months above, whether the employee is paid weekly, monthly or some other frequency.

The amounts paid in each tax month can vary, as long as the total, minimum income threshold of £1,560 is met. This is a welcome change from earlier guidance as it allows more flexibility for changes to working patterns (the initial guidance released in August had suggested that employees needed to be paid a minimum of £540 per month). 

The new flexibility will also be helpful in situations where an employee is off sick and not able to work in one of the periods above. Provided that they are eligible for SSP and so have some taxable income for that period, as long as the payments in other months combine to take them over the threshold they should still be eligible for a bonus claim. 

The threshold of £1,560 is based on taxable pay – even if due to the employee’s personal circumstances they are not actually earning enough to pay tax. This means that care will need to be taken where employees have pension contributions deducted under net pay arrangements, which reduces their taxable pay, as it could take them under the minimum income threshold.

We have commented further on the interaction of the minimum threshold with the JSS, where HMRC may be contributing towards employees’ wages in the period, below.

HMRC has published examples of employees who will qualify their employer for the bonus.

Company directors

Company directors and other office holders who have been furloughed can qualify, provided that they meet all the other conditions.

For directors of owner-managed businesses in particular, it will be important to ensure that they are paid an amount of taxable pay in each of the months in the relevant three-month period as often such directors opt to receive salary on an annual payroll to keep administrative costs low.

Interaction with other support claims

As noted above, use of the Job Retention Bonus depends on the employer having used the CJRS.

The Bonus scheme can be used in conjunction with the JSS. This means that employees taken off furlough can receive further support under JSS while potentially still qualifying their employer for a bonus claim, provided the minimum income threshold is met.

Further detail on how payments from the JSS will interact with the minimum income threshold test for the bonus scheme is required. Given the current guidance states taxable pay counts towards the minimum threshold and that the Government’s contribution to an employee under JSS is taxable, it is tempting to presume that the Government’s contribution under JSS can be counted towards the threshold for the bonus. However, explicit confirmation from the Government is needed on this point so that employers can budget accordingly.

Making a claim

Claims cannot be submitted until 15 February 2021 and all claims must be made by the deadline of 31 March 2021. As for the CJRS, agents will be able to make claims on behalf of employers.

HMRC have indicated that guidance on making the claims online will be available by the end of January 2021.

In order to check claims, HMRC needs all the relevant RTI data to confirm eligibility over the relevant periods and employers are advised to keep their payroll records up to date. HMRC are also reminding employers to:

• Retain their enrolment for PAYE online.
• Comply with their PAYE obligations to file PAYE accurately and on time under 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 that stop working before the end of the pay period that they leave in.
• Use the irregular payment pattern indicator in RTI for any employees not being paid regularly
• Comply with all requests from HMRC to provide any employee data for past CJRS claims

Where HMRC is checking an employer’s CJRS claims, they can still claim the bonus, but any payments might be delayed.