The Coronavirus Job Retention Scheme Bonus
Updated: Feb 16
In a mini summer budget on 8th July 2020, the Chancellor announced a further update to the Coronavirus Job Retention Scheme, in a move designed to protect jobs and kickstart the economy after the effects of the COVID-19 lockdown. One of the measures announced was a new job retention bonus as part of the Government’s Plan for Jobs 2020.
rradar solicitor Tom Bernard looks at the latest measure and what it involves.
While furlough (i.e. the Job Retention Scheme) has proved essential for many businesses and has worked to give some protection to the millions of affected employees across the country, there have been concerns raised, particularly in certain sectors such as retail and hospitality.
In those sectors, the effects of Coronavirus are likely to last well beyond the end of the Job Retention Scheme. Despite restrictions being eased and businesses reopening, it is expected to take some considerable time for businesses to be operating at pre-COVID-19 levels – if that is even attainable. As such, the financial pressures remain.
The Job Retention Scheme will be brought to an end in October 2020, meaning staff currently asked to stay away from work but receiving 80% of wages (up to £2,500 a month), will, if they do not go back to work, receive no further income. As such, an incentive scheme for businesses to reopen and to bring back their furloughed workforce has been announced. This is the Job Retention Bonus scheme.
Under the scheme, employers will be paid a job retention bonus of £1,000 for each employee they bring back to work from furlough. To qualify for the bonus, the employee would need to remain continuously employed from their return in October 2020 to the end of January 2021 and earn an average of at least the lower earnings limit of £520 per month over that period. The bonus of £1,000 per employee will be paid from February 2021. The bonus amount is the same for each employee, irrespective of the employee’s actual wages.
It should be noted that the payment is a bonus for employers, rather than a bonus or a subsidy for wages for employees. On the basis of the available information at present, it does not appear that there will be any direct obligation for the employer to pass the bonus on to the employee or worker. That, of course, will be a decision for the business to make when the bonus is received.
As always with these new schemes, there will be plenty of questions arising and unique circumstances for different businesses and employers.
For example, if an individual is unable to return to work in October due to sickness, maternity leave, shielding etc, despite the Job Retention Scheme ending, would the employer be able to receive the bonus? The answer remains unclear, subject to further guidance. However, it would be expected that to qualify for the bonus for that employee, the business must ensure that they are paid at least the lower earnings limit every month – if the employee is receiving statutory sick pay, or has expired entitlements to such payments, then this limit may not be reached and the bonus would thus not be payable.
A question arises as to whether the bonus would be payable to a business if they had already returned their workers from furlough leave prior to this announcement. If those workers remained employed in October and through to January 2021, then do they meet the criteria for a bonus? It seems unlikely that they would not be entitled to the bonus, as their actions are the exact actions that the bonus is used to encourage i.e. retaining employment and keeping business running.
We would expect answers to questions such as these to be provided when further details on the scheme are released later this month (July 2020).
Ultimately, this scheme is designed to discourage employers from having to make redundancies when the Job Retention Scheme ends i.e. giving them an incentive to keep business trading on the same staff levels as pre-lockdown. Obviously, this is not going to be possible for every business and there may be a need to commence a redundancy process regardless to safeguard the future of the business. While asking whether the redundancy process can be delayed to access the bonus scheme is a relevant one, the availability of the bonus should not be the determining factor when it comes to the future of the business and safeguarding its interests.
Looking for more advice or guidance on this matter, or any other business-related issue?
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