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Insights // 03 September 2020

The Job Retention Bonus Scheme Explained

Partner Sue Dowling, head of our Employment Law team, explains the Job Retention Bonus Scheme.

What is the Job Retention Bonus Scheme?

In early July, the Chancellor of the Exchequer first revealed (as part of his “Plan for Jobs”) the prospect of employers receiving a new Job Retention Bonus in relation to furloughed employees who are kept on, in employment, until the end of January 2021, following the end of the Coronavirus Job Retention Scheme (CJRS), on 31 October 2020. Whilst the bonus scheme was not unwelcomed news, there is an appreciation that the ‘devil is in the detail’ and almost two months ‘down the line’ that detail is still awaited. It now appears that further specifics will not be available until later in September. 

Following the initial publicity, the scheme does not seem to have generated much of a shift in employers’ attitudes. Quite possibly this is because on comparing the amount of the possible one-off bonus payment of £1,000 per employee as against the minimum salary that must be paid to an employee (of £1,560 across a three month period) to qualify, one can quickly calculate that, even for the lowest paid qualifying employee, the bonus will only represent roughly 64% of basic salary costs. For employees on higher salaries, that percentage will be much lower and other expenses of employing staff including, for example, the cost of pension contributions and/or national insurance do need to be taken into account.     

On a more positive note for employers generally, the policy paper published earlier this Summer suggests that the Bonus may be payable even in relation to employees who returned to work before the bonus scheme was announced, provided that they are ‘eligible’ i.e. had been furloughed at some point in time. This appears to imply that employers may be rewarded regardless of whether there was any real risk of an employee, furloughed temporarily, not being retained in the longer term.    

Details of the Job Retention Bonus Scheme

Currently the details that are available about the proposed Job Retention Bonus are relatively scant but in summary provide:

  • For a one-off payment to employers of £1,000 for “every (eligible) employee who they previously claimed for under the CJRS and who remains continuously employed through to 31 January 2021”.
  • For the employee to be an “eligible” employee, he/she must earn an average of at least £520.00 per month between 1 November 2020 and 31 January 2021;
  • That any relevant bonus payments will not be made until the employer has filed PAYE for January 2021, and should then be received from February 2021
  • In certain TUPE transfer situations, the transferee employer will be able to claim for the bonus for employees transferred to it (before 31 October 2020) where the transferred employees have been furloughed and the new employer has successfully claimed under the CJRS for them.
  • That the bonus will only be payable where the employee was continuously employed by the employer from the time of the most recent CJRS claim made relating to that employee up to at least 31 January 2021.

Further information and advice

If you require further advice about the Job Retention Bonus Scheme and/or about the costs, merits or risks of implementing restructuring plans or a redundancy programme within your organisation, please contact us for helpful strategic Employment Law advice. We will provide further details of the Bonus scheme once published by the Government.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Sue Dowling

Sue Dowling

Partner, Employment Law & Venue Licensing

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