COVID-19: Job Retention Bonus

Louise McCosh | 08 July 2020

Job Retention Bonus 

Written Wednesday 8th July 2020.

‘Unprecedented’ is probably the most overused word of 2020, but when it comes to the Coronavirus Job Retention Scheme, unprecedented is the best description.  First, we took the unprecedented step of paying employers to keep their workers at home for up to 8 months in a world-renowned scheme estimated to cost the taxpayer £60 billion.  Now the Chancellor has unexpectedly announced a further unprecedented measure of rewarding employers for using the scheme if they guarantee employment, and this could cost up to £9 billion. 

This has been a surprising and generous development by Rishi Sunak who announced on 8 July 2020, “If you stand by your workers, we will stand by you”, but despite the initial headline splash, it is likely to be a drop in the ocean when it comes to protecting against the anticipated tidal wave of redundancies as the furlough scheme gradually comes to an end.

 

What is the bonus?

In short, employers will be rewarded for bringing back their furloughed staff.  For an employer to qualify, the employee must have been:

1. Paid over £520 per month in November 2020, December 2020 and January 2021. This means the employer needs to pay above the Lower Earnings Limit. 
2. Furloughed at any point and legitimately claimed for under the Coronavirus Job Retention Scheme. This suggests even if an employer furloughed their staff for a short period of time at the beginning of the crisis (e.g. the minimum 3 weeks) but brought their staff back, they will be eligible which is encouraging.
3. Continuously employed up to the 31 January 2021, and submitted in the January 2021 RTI submission.

Providing the employer meets all of the criteria, it appears they will receive a £1,000 bonus per employee in February 2021.

  

What we don’t know yet.

The devil will always be in the detail with this type of announcement - that detail will not be given until the end of July and even then, full guidance will not be available until Autumn.  

As many employers will be aware, the furlough scheme was fairly straight forward as a concept when initially announced by the government, but the HMRC had to rush to produce guidance to get the scheme working in practice, and none of this was or is straight forward.  In an attempt to prevent fraudulent claims, the calculations and rules around the scheme are complex, and this complexity has been exacerbated by flexible furlough coming in for July. 

Whilst the detail is not yet clear, we anticipate there will be similar measures put in place by the HMRC for the Job Retention Bonus to avoid abuse, and we will continue to keep you updated as information emerges.

 

Our Advice for Employers.

This is a very clear and deliberate effort by the government to avoid an avalanche of redundancies, and it will be welcomed by employers who have already brought back or plan to bring back staff from furlough.

However, the bonus is already facing significant criticism, both generally and by particular sectors.  It is being viewed as supporting businesses who are able to keep going during this crisis, but not those businesses or industries hanging by a thread as a result of the epidemic.

Our advice is to view the bonus for what it says on the tin – it is a bonus, and should not be a deciding factor for businesses who are either struggling or considering reducing their headcount to the 'right size' for the future for the following reasons:

• The pay out of the bonus is over 6 months away;
• We don’t yet know what caveats might be added to the guidance so your employees may not qualify;
• The furlough scheme will start to cost employers from August 2020 onwards– please see our CJRS Changes – Claim Information Table;
• You need to pay the employee at least £1,560 between November and January to qualify for the £1,000 bonus; and
• It is expected the employee will need to be physically working so you need to have the work for them to do.

The furlough scheme offered a much needed temporary lifeline for businesses and employees alike.  Many companies have already returned or will soon return to work, but for some the scheme has been a sticking plaster. Whilst this is not an insignificant bonus by any stretch, we would advise caution in avoiding difficult decisions on the staffing structure you need to embrace the new world of work. 

We have produced a range of guidance download to support you in your decision making as follows:

• Our 10 Step Guide to Furlough and the Job Retention Scheme (click here), which includes our FREE TEMPLATE documents all about furloughing staff.
• Summary of the CHANGES to the Job Retention Scheme, including our Table of 'who pays what when', and Key Dates to remember.
• How to make a Furlough Claim - plus how we can help ease the burden of doing that.
• Holiday and Furlough - 5 Key Points to remember.
• Our Guide to Redundancy, a must-read resource for any business considering that.
• Alternatives to Redundancy, some things to consider which might help in the short-term.

 

Further Support

Our HR team are on hand to support you in handling any employment issues you face at this time.

Please click on the link to find out how we can support you in Navigating Coronavirus Employment Issues.  Alternatively, please call 0141 221 2984 or email Louise McCosh, HR Director at L.McCosh@frenchduncan.co.uk

 

Other similar resources:

Full details of how we can help you around COVID-19 / Coronavirus is available on our special page (www.frenchduncan.co.uk/covid-19) which you can access by clicking here. We will be keeping all our information updated as things progress and schemes are clarified, so please check back regularly, or follow us on Twitter or LinkedIn to keep informed of all the changes.

 

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