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Coronavirus – Job Retention Bonus provides important lifeline for employers

The government is now offering a ‘Job Retention Bonus’ (‘Bonus’) to employers who bring employees back from furlough.

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Published 9 July 2020

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  • Employment law for employers
  • Employment law for employees

Yesterday, 8 July 2020, the Chancellor announced a number of measures to help the UK weather the financial storm our economy is facing. Whilst perhaps for those who are fed up ‘eating in’ the most eye-catching is half price restaurant deals and hot take-aways on Mondays – Wednesdays throughout August, a lifeline has also been given to employers taking advantage of the furlough scheme.

The government is now offering a ‘Job Retention Bonus’ (‘Bonus’) to employers who bring employees back from furlough. The Bonus is a one-off payment and whilst we do not know all the details (there is another announcement due before the end of the month), the government has broadly outlined how the Bonus will work.

How will the Bonus work?

The Bonus is payable to employers for every furloughed employee who returns to work on or before 1 November and remains continuously employed to the end of January 2021. The employee must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme (’Scheme’) (31 October 2020) and 31 January 2021. The government will pay employers a one-off Bonus of £1,000 per employee who satisfies that criteria payable from February 2021.

We do not yet know the intricacies of the scheme; such as whether the employee  must have been on furlough on a certain date, whether there is a cap on the number of employees an employer can claim for, or whether there is a minimum length of time for which an employee must have been furloughed. We will follow up on this detail when it becomes available at the end of July.

One thing which is clear, however, is that the government is cracking down on employers who are erroneously or fraudulently using the Scheme. We anticipate that the Bonus will be equally scrutinised. The government has already made it very clear that the Bonus will only apply if an employee is brought back to work after they have been furloughed and they genuinely have work to do. In the case of an employee having no work, employers should unfortunately be looking to make redundancies instead. Using the Bonus for employees who are not working could expose the employer to an investigation into fraud by HMRC – and no one wants that!

In reality we think it is unlikely that offering a Bonus at this modest level will be enough to persuade employers to retain staff after the Scheme ends on 31 October. On the contrary, it seems that many organisations are taking the opportunity to go through redundancy consultation whilst their employees remain on furlough and thereby take advantage of the government subsidising their salary during the employees notice period.

If you have any questions about furlough, redundancies, the Job Retention Bonus or any other employment-related queries our Employment Lawyers are on hand to help.

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Shorter Reads

Coronavirus – Job Retention Bonus provides important lifeline for employers

The government is now offering a ‘Job Retention Bonus’ (‘Bonus’) to employers who bring employees back from furlough.

Published 9 July 2020

Associated sectors / services

Authors

Yesterday, 8 July 2020, the Chancellor announced a number of measures to help the UK weather the financial storm our economy is facing. Whilst perhaps for those who are fed up ‘eating in’ the most eye-catching is half price restaurant deals and hot take-aways on Mondays – Wednesdays throughout August, a lifeline has also been given to employers taking advantage of the furlough scheme.

The government is now offering a ‘Job Retention Bonus’ (‘Bonus’) to employers who bring employees back from furlough. The Bonus is a one-off payment and whilst we do not know all the details (there is another announcement due before the end of the month), the government has broadly outlined how the Bonus will work.

How will the Bonus work?

The Bonus is payable to employers for every furloughed employee who returns to work on or before 1 November and remains continuously employed to the end of January 2021. The employee must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme (’Scheme’) (31 October 2020) and 31 January 2021. The government will pay employers a one-off Bonus of £1,000 per employee who satisfies that criteria payable from February 2021.

We do not yet know the intricacies of the scheme; such as whether the employee  must have been on furlough on a certain date, whether there is a cap on the number of employees an employer can claim for, or whether there is a minimum length of time for which an employee must have been furloughed. We will follow up on this detail when it becomes available at the end of July.

One thing which is clear, however, is that the government is cracking down on employers who are erroneously or fraudulently using the Scheme. We anticipate that the Bonus will be equally scrutinised. The government has already made it very clear that the Bonus will only apply if an employee is brought back to work after they have been furloughed and they genuinely have work to do. In the case of an employee having no work, employers should unfortunately be looking to make redundancies instead. Using the Bonus for employees who are not working could expose the employer to an investigation into fraud by HMRC – and no one wants that!

In reality we think it is unlikely that offering a Bonus at this modest level will be enough to persuade employers to retain staff after the Scheme ends on 31 October. On the contrary, it seems that many organisations are taking the opportunity to go through redundancy consultation whilst their employees remain on furlough and thereby take advantage of the government subsidising their salary during the employees notice period.

If you have any questions about furlough, redundancies, the Job Retention Bonus or any other employment-related queries our Employment Lawyers are on hand to help.

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